Chapter 61 Retirement Question

O

Otherguy05

PEB Forum Regular Member
Registered Member
All,

I went through an MEB back in 2022 and was found unfit (60% DoD/100% VA) with combat ratings on all my rated 199 conditions. I was approved for a COAD so that I can stay in until I hit 20 years (August 2025). I managed to stumble on RonG thread about "Revision to Concurrent Receipt of Military Retired Pay and VA Compensation (formerly CRDP)" and noticed the blurb about Chapter 61 retirees, specifically the "retired pay in excess of the longevity must be waived.". In a couple months I will have to pick between the two methods I listed below for retirement.

Method A - Medical Retirement (Disability Percentage)
Monthly $3,322
Yearly $39,862
Method B - Medical Retirement (Years of Service)
Monthly $2,791
Yearly $33,495

I'm trying to figure out what would be more beneficial. I believe if I select method "A", I am going to get reduced to method "B" anyways. Just looking to clear up the mud so I can actually get a decent idea on what I will be receiving once I retire.

Thanks.

Mr. O
 
Otherguy05 said:
All,

I went through an MEB back in 2022 and was found unfit (60% DoD/100% VA) with combat ratings on all my rated 199 conditions. I was approved for a COAD so that I can stay in until I hit 20 years (August 2025). I managed to stumble on RonG thread about "Revision to Concurrent Receipt of Military Retired Pay and VA Compensation (formerly CRDP)" and noticed the blurb about Chapter 61 retirees, specifically the "retired pay in excess of the longevity must be waived.". In a couple months I will have to pick between the two methods I listed below for retirement.

Method A - Medical Retirement (Disability Percentage)
Monthly $3,322
Yearly $39,862
Method B - Medical Retirement (Years of Service)
Monthly $2,791
Yearly $33,495

I'm trying to figure out what would be more beneficial. I believe if I select method "A", I am going to get reduced to method "B" anyways. Just looking to clear up the mud so I can actually get a decent idea on what I will be receiving once I retire.

Thanks.

Mr. O
Click to expand...
If approved for COAD you aren't medically retiring. You are bypassing a chapter 61 pension to finishing up with our AD regular retirement which is fine. You max out compensation with a regular retirement and VA as long as total VA% is 50% or higher. You will need to apply for VA compensation as none of your exams counts. You can do the exams again while in via the BDD program so look it up.

That is a common misconception for COAD is that your PEB findings remain the same. That is not true. You are saying I don't want to medically retire and so they let you stay in to hit 20 years. BTW, that is a great decision. It guarantees you max out your compensation. If you had accepted the findings and not applied for COAD you would be risking a lot of money as you would have to wait until after you get out to apply for CRSC and hope that you can be made whole by CRSC. If not, you just out on a lot of money for the rest of your life.
 
Provis said:
If approved for COAD you aren't medically retiring. You are bypassing a chapter 61 pension to finishing up with our AD regular retirement which is fine. You max out compensation with a regular retirement and VA as long as total VA% is 50% or higher. You will need to apply for VA compensation as none of your exams counts. You can do the exams again while in via the BDD program so look it up.

That is a common misconception for COAD is that your PEB findings remain the same. That is not true. You are saying I don't want to medically retire and so they let you stay in to hit 20 years. BTW, that is a great decision. It guarantees you max out your compensation. If you had accepted the findings and not applied for COAD you would be risking a lot of money as you would have to wait until after you get out to apply for CRSC and hope that you can be made whole by CRSC. If not, you just out on a lot of money for the rest of your life.
Click to expand...

I don't think that is correct.... USAPDA are the ones cutting my orders for retirement and presenting me with the two options I listed above. I even had to pull back my regular retirement packet per my COAD branch manger. The COAD, as explained by branch, is just a ETP that allows me to stay in till 20 while still accepting the results of the PEB. I'm being told I will be a Chapter 61 retiree by USAPDA as well.

VA is also telling me that my rating are suspended until I supply my DD214. They said I will not have to do any further exams unless something drastically changed and I'm claiming additional items.

Not doubting you, just I'm being told differently by those organizations.
 
Just talked to my COAD branch manager again. He insisted that I would be falling under a chapter 61 and cited AR 635-40

6 – 9. Disposition at end of continuation period

Approval authorities for COAD/COAR Soldiers (HRC or National Guard Bureau, as appropriate) will manage all
COAD/COAR Soldiers during the COAD/COAR period. When the Soldier is within seven months of the end of the con-
tinuation period, the COAD/COAR manager must ensure the Soldier's unit commander and supporting MTF are aware of
the expiration of the COAD/COAR period so the procedures identified below can be accomplished. If the decision is made
that the Soldier needs to go through the IDES again prior to separation/retirement, the COAD/COAR manager will ensure
that referral occurs. If the decision is made that the Soldier does not need to through IDES again, the COAD/COAR
manager should notify USAPDA. USAPDA will ensure that the Soldier's orders are issued reflecting a disability separation
or retirement, and that VA is notified of his or her pending separation/retirement, so that VA benefits can be awarded after
discharge, if applicable.
 
Went to my VA office on my installation for clarification... The VA rep can still see my proposed ratings from my PEB in VTA IDES and told me directly that I will not need to do any further exams unless I am trying to add or change something. They then proceeded to tell me that all I need to do for the VA side is give them a copy of my DD214 when I receive it to finalize the claim.
 
As a COAD you will be a disability retirement. With over 20 years you don’t choose method A or B. You are capped at longevity no matter what. You are maxed out on pay. As far as ratings, if they are within a year before you retire you do not need to go back through C&P exams. If it’s over a year then you will have to complete new C&P exams prior to your retirement. I went through this exact process prior to retiring, and had the same questions. Hope that clears things up for you.
 
CrustyGrunt said:
As a COAD you will be a disability retirement. With over 20 years you don’t choose method A or B. You are capped at longevity no matter what. You are maxed out on pay. As far as ratings, if they are within a year before you retire you do not need to go back through C&P exams. If it’s over a year then you will have to complete new C&P exams prior to your retirement. I went through this exact process prior to retiring, and had the same questions. Hope that clears things up for you.
Click to expand...
Thank you for explaining in better detail than I did. He mentioned MEB in 2022 and COAD through 2025 so I knew he had to redo it all.
 
Provis said:
Thank you for explaining in better detail than I did. He mentioned MEB in 2022 and COAD through 2025 so I knew he had to redo it all.
Click to expand...
No problem! It’s a different and complicated process. I had the same issues getting conflicting information from the DoD side as well as the VA.
 
CrustyGrunt said:
As a COAD you will be a disability retirement. With over 20 years you don’t choose method A or B. You are capped at longevity no matter what. You are maxed out on pay. As far as ratings, if they are within a year before you retire you do not need to go back through C&P exams. If it’s over a year then you will have to complete new C&P exams prior to your retirement. I went through this exact process prior to retiring, and had the same questions. Hope that clears things up for you.
Click to expand...

So is my Installation VA rep* wrong then? He told me today that I will not have to go back through the C&P process at all. This whole process is so frustrating with conflicting information.
 
Yes, they are incorrect. The VA has no input on the DoD side as far as what USAPDA requires. USAPDA will require you to conduct BDD C&P exams when you’re 180 days out from your disability retirement date, just as if you are a regular retiree. I thought the same as you and received the same incorrect information. The problem is that the COAD program is complicated and representatives are unfamiliar with how the process works. Will your initial proposed ratings change? More than likely not. Mine did not change. It is part of the process. Let me know if you have any more questions battle buddy!
 
CrustyGrunt said:
Yes, they are incorrect. The VA has no input on the DoD side as far as what USAPDA requires. USAPDA will require you to conduct BDD C&P exams when you’re 180 days out from your disability retirement date, just as if you are a regular retiree. I thought the same as you and received the same incorrect information. The problem is that the COAD program is complicated and representatives are unfamiliar with how the process works. Will your initial proposed ratings change? More than likely not. Mine did not change. It is part of the process. Let me know if you have any more questions battle buddy!
Click to expand...
That makes sense... Its just frustrating that this process doesnt have a defined outline. It was even a pain in the ass to get my leave approved because they wanted in hand retirement orders...

I guess the only question I have now is this... What is the point of method a or b when you are only going to paid the maximum of longevity?
 
Otherguy05 said:
That makes sense... Its just frustrating that this process doesnt have a defined outline. It was even a pain in the ass to get my leave approved because they wanted in hand retirement orders...

I guess the only question I have now is this... What is the point of method a or b when you are only going to paid the maximum of longevity?
Click to expand...
They have to give you the choice by law. No one actually makes a choice. DFAS chooses the method that benefits you the most. You can make an election to change it within so many days of receiving your retirement rolls letter. If you do nothing it is permanent.

For example, my wife could have changed options and went off longevity. She didn't' hit 20 years so she wasn't maxed out for compensation without later on applying for CRSC. DFAS chose the 75% DOD which was $6,029 a month. If she wanted to she could choose longevity which was 42% which would have been $3,375 per month. No one would do that unless they were doing it for moral reasons. She read the letter and of course didn't mail in a request to change the payment method. She would have rather had $6,029 a month as a floor than $3,375. Since you earned all of your regular retirement and get VA compensation you max out compensation. So there isn't anything you need to do regarding that. You get the reitrement rolls letter from DFAS and they choose the method and there is no reason to change it. If you did change it the results are permanent and cannot be changed back.
 
Otherguy05 said:
That makes sense... Its just frustrating that this process doesnt have a defined outline. It was even a pain in the ass to get my leave approved because they wanted in hand retirement orders...

I guess the only question I have now is this... What is the point of method a or b when you are only going to paid the maximum of longevity?
Click to expand...
You’re limited to longevity because you are being compensated for your disabilities by the VA. The DoD is responsible for paying your earned longevity pension. You don’t get paid your disability multiplier by the DoD because it would be as if you’re being paid twice for the same disability. That is why you’re capped at longevity. The multiplier is more for those disability retirements that do not have 20 AFS and do not qualify for CRDP.
 
Otherguy05 said:
That makes sense... Its just frustrating that this process doesnt have a defined outline. It was even a pain in the ass to get my leave approved because they wanted in hand retirement orders...

I guess the only question I have now is this... What is the point of method a or b when you are only going to paid the maximum of longevity?
Click to expand...
It is a different process. My orders didn’t get cut until I was two weeks out from my terminal leave start date. I know your frustration. Let me know if any more questions, I’m more than happy to help.
 
CrustyGrunt said:
It is a different process. My orders didn’t get cut until I was two weeks out from my terminal leave start date. I know your frustration. Let me know if any more questions, I’m more than happy to help.
Click to expand...

Is your disability retirement taxed?
 
CrustyGrunt said:
If your disability is combat related then your pension will not be taxed.
Click to expand...
Ok, cool this makes sense now... I received V1/V3 codes on everything on my 199 and have the "The disability did result from a combat-related injury under the provisions of 26 USC 104 or 10 USC 10216".
 
@Crusty Grunt:
PEB Forum Team:

You are correct. Ron has posted DFAS taxable information for Chapter 61 retirees many times. Combat related DoD disability rating amounts are tax free. DoD only recognizes combat related for tax free treatment. I disagree with DoD's position. The Federal Court has ruled otherwise. Supporting cases are St. Clair v. IRS and Keeter v. IRS. I will continue to fight for Chapter 61 retirees (26 USC 104(a)(4) who receive VA compensation (26 USC 104(b)(2)(D). They are eligible for tax free treatment. 26 USC 104 is a two step process. In St. Clair v. IRS, the court approved disability severance pay as an allowance similar to disability retirement under 26 USC 104 (a)(4). How could DoD recognize tax free treatment for disability severance pay and not disability retirement? I am in contact with the House and Senate Veterans Committee to get this issue resolved. If you can, please provide comments. The DFAS letter makes to sense. I highlighted the lies and contradictions. Any advice is much appreciated.
 

Attachments

Otherguy05 said:
Just talked to my COAD branch manager again. He insisted that I would be falling under a chapter 61 and cited AR 635-40

6 – 9. Disposition at end of continuation period

Approval authorities for COAD/COAR Soldiers (HRC or National Guard Bureau, as appropriate) will manage all
COAD/COAR Soldiers during the COAD/COAR period. When the Soldier is within seven months of the end of the con-
tinuation period, the COAD/COAR manager must ensure the Soldier's unit commander and supporting MTF are aware of
the expiration of the COAD/COAR period so the procedures identified below can be accomplished. If the decision is made
that the Soldier needs to go through the IDES again prior to separation/retirement, the COAD/COAR manager will ensure
that referral occurs. If the decision is made that the Soldier does not need to through IDES again, the COAD/COAR
manager should notify USAPDA. USAPDA will ensure that the Soldier's orders are issued reflecting a disability separation
or retirement, and that VA is notified of his or her pending separation/retirement, so that VA benefits can be awarded after
discharge, if applicable.
Click to expand...
What was the process to get your orders? Did you go through your PEBLO or unit S1? How far out from your retirement date did you receive your orders?
 
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