Army Reserve PDRL and upcoming non-regular retirement

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MSG_Raven2-3

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PEB Forum Veteran
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Thanks for all the information you provide, it is been invaluable.

I had a question, called DFAS, was transferred around and no one could give me a straight answer. Figure I'd ask the question here.

Situation: 28 yos, Army Reserve, E8, 10 yrs 8 months AD for longevity purposes based on retirement order. PDRL retired. Combat Related. CRSC application pending.

1. I began to receive DFAS Ch 61 retired pay. I already have the VA offset, in my case my Ch 61 pay is greater than VA (100%) so I get about $300 from DFAS, which basically just pays the SBP costs.

2. I am currently 47 years old with 3840 retirement points, non-regular retirement calculator puts me somewhere around 2K for non-regular retirement pay when I hit 60 (not assuming an earlier effective date due to qualified deployments).

3. I am currently 47 YOA and maxed out DOD Ch 61 percentage (75%) at $5089 (high three) which means as OF NOW, my SBP premium is based on this high three ($5089).

Questions:

1. What happens when I hit 60 years of age? Does PDRL or Ch 61 retirement convert to CRDP? My understanding is that I would have to apply through Army HRC for non-regular retirement as I am getting close to 60 YOA.

2. Does this mean that I would still collect Ch 61 Retired pay (minus the VA offset, in my case my Ch 61 pay is greater than VA) AND collect the non-regular retirement?

3. When I become eligible for non-regular retirement at age 60 will my SBP premium be based off the non-regular retirement (2K) OR the Ch 61 high three ($5089) ?


Hopefully, there is someone here with a similar situation that just hit 60. Thanks again.
 
#1. Apply for your Reserve Retirement and you get the combination of all of your earned non regular retirement + VA compensation. If already approved for CRSC its very possible that you max out compensation that way and so you don't even need to do this.

#2. No. You get one or the other. Basically the most you can get is the combination of your earned longevity pension and VA compensation with the rare exception that if your chapter 61 pension amount was greater than that total.

#3. Whatever you selected for SBP for chapter 61 pension stays the same. Applying at age 60 is just allowing you to get paid more if some of that VA offset results in you losing out on compensation. You would think that you could make changes but when you are already retired via chapter 61 all that is really done is some accountant by DFAS to allow concurrent receipt of earned longevity pension and VA compensation. That calculation is independent of your chapter 61 pension.

Bottom line. More than likely if approved for CRSC that will max out your pay between the VA compensation, the small left over amount for chapter 61 pension and CRSC. Since you are 47 you want to ensure you get approved for CRSC and that it maxes out your compensation so that you don't need to utilize your Reserve Retirement at age 60. That is what my wife did. When she compared her chapter 61 pension amount to the combination of her longevity + VA compensation she was missing out on $1,500 a month. She was approved for 80% CRSC which is 2k+ but since she is capped she got $1,500. Now there is no reason for her to apply for her Reserve retirement. Just like you all of it is tax free. The VA compensation, the leftover chapter 61 compensation since it was combat related and CRSC is exempt from taxes too.

Also, my personal opinion is that SBP sucks! My wife opted for the low cost threshold amount instead of full coverage since they charge only 2.5%. The threshold amount is changed each year with COLA. For 2024 its $1,011 which costs only $25.28 a month. Coverage is 55% so the benefit is $556.05 so its not a lot of money but more affordable. Since my wife is 100%P&T after 5 years I would qualify for DIC which is over $1,600+ a month for me + extra to cover kids. That's only 5 years to take the risk. We don't even have that risk though because we bought term life insurance. While my wife was healthy she bought 30 year term life insurance for 2 million in coverage for only $112 a month. Even if we didn't have life insurance I would have been much more comfortable putting that SBP premium in a retirement account than giving it to the government. Its just a horrible ROI unless you die shortly after receiving your chapter 61 pension.

There are options to change SBP. One is during the open period between 24 months and 36 months. Another is that you can cancel it once you have qualified fro DIC through the VA.
 
Man that’s an excellent explanation. Thank you.

First, based on this forum estimates on CRSC, and anticipating approval of CRSC (which is based on longevity). In my particular situation, yes I do project that my non-regular retirement (CRDP) and CRSC would probably be comparable when considering taxes on CRDP. So CRSC might be the better deal.

Second, SBP has been really weighing on my mind. Since SBP participation really depends on a lot of variables to weight the pros and cons it’s complicated.

As it stands, since I am 47 years old and let’s say I decide to continue with MAX SBP coverage that means I have to pay either 30 years worth of payments OR achieve 70 years of age before I can stop paying for SBP. That’s 23 years (70-47 current age) of payments @$332 per monthx12 months=$3984 per year. BLUF: SBP at max coverage would cost me a whopping $91,632. My wife would get $2500 a month off SBP.

I have to consider the following:
1. Civilian pension (gov job) will provide payment for wife.

2. VA DIC will be available. 9 more years to hit the 10 year PT for her to be eligible.

3. I have whole life 250k plus accumulated value approx 50k.

4. Healthy retirement accounts in place.

Thanks for detailed explanation and advice is much appreciated. I’ll do some research on maybe lowering SBP to a more manageable #.

Thanks again
 
MSG_Raven2-3 said:
Man that’s an excellent explanation. Thank you.

First, based on this forum estimates on CRSC, and anticipating approval of CRSC (which is based on longevity). In my particular situation, yes I do project that my non-regular retirement (CRDP) and CRSC would probably be comparable when considering taxes on CRDP. So CRSC might be the better deal.

Second, SBP has been really weighing on my mind. Since SBP participation really depends on a lot of variables to weight the pros and cons it’s complicated.

As it stands, since I am 47 years old and let’s say I decide to continue with MAX SBP coverage that means I have to pay either 30 years worth of payments OR achieve 70 years of age before I can stop paying for SBP. That’s 23 years (70-47 current age) of payments @$332 per monthx12 months=$3984 per year. BLUF: SBP at max coverage would cost me a whopping $91,632. My wife would get $2500 a month off SBP.

I have to consider the following:
1. Civilian pension (gov job) will provide payment for wife.

2. VA DIC will be available. 9 more years to hit the 10 year PT for her to be eligible.

3. I have whole life 250k plus accumulated value approx 50k.

4. Healthy retirement accounts in place.

Thanks for detailed explanation and advice is much appreciated. I’ll do some research on maybe lowering SBP to a more manageable #.

Thanks again
Click to expand...
Your welcome. If you have high enough amount from CRSC you max out total compensation. So there is no point in applying for your non regular retirement. That is what you want. If you aren't able to max out via CRSC its means you are missing out on income until age 60. That is not taking into account that CRSC is non taxable while your earned 20 year non regular retirement at age 60 is taxable:)
 
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