Disposable income Medical Retirement CDRP

Armywarrior23

PEB Forum Regular Member
Registered Member
Good afternoon, I am trying to understand what the Army considers disposable income as far as Divorce division is concerned. Here’s my situation I am divorced and during the divorce my ex was granted $400 per month of my retirement. I fought it to no success because she was cheating while I was deployed. Judge said oh well didn’t matter. I currently am almost done with the IDES process where I was found 100%DOD/100%VA and will be placed on TDRL. My injuries were combat coded so they are Tax Free from what I was told. I have completed 20 yrs and 6 months active so I will qualify for CDRP. I know that when the VA kicks in My military retirement cannot exceed my LOS amount. My question is I think chapter 61 is not considered Disposable income, but with my retirement being changed to Length of Service amount is it still considered Non Disposable? I know if I file CRSC it’s not considered disposable, but would a Medical Discharge CDRP be divisible? Thanks for everyone’s assistance.
 
Hello,

Excellent question.

The process:

--Your disability retired pay will be 75% of your high three.
--Your retired pay will be reduced by the amount of VA compensation received.
--20.5 years active duty x 0.025 = 51.25% longevity multiplier
--high three x 0.5125 = longevity portion of your retirement (and CRDP)--this is what your divisible retired pay will be based. CRDP restores waived longevity retired pay.

CRSC: Is not divisible with a former spouse per current law. However, certain courts have taken into consideration the entire amount of income (funds) a retiree might receive.

Recommend you visit with an attorney in the state where you live, for guidance. I am not an attorney, but Jason Perry, owner of this board, is an attorney. I do not think he practices divorce-related law however.

Ron
 
Ohio, for example, does not care. If it shows on a pay stub of some sort, it counts as income.
 
Thank you for your response. The divorce papers pretty much says Disposable income. I know on the DFAS site regulation states Chapter 61 Medical retirement will be deducted before any income is considered disposable. Since my percentage is 100% I assume there is no disposable income left. I will get with JAG to see if maybe they have any insight also.
 
Thank you for your response. The divorce papers pretty much says Disposable income. I know on the DFAS site regulation states Chapter 61 Medical retirement will be deducted before any income is considered disposable. Since my percentage is 100% I assume there is no disposable income left. I will get with JAG to see if maybe they have any insight also.
Hello,

Perhaps I can provide some insight.

Your 75% of high three (75% is the maximum multiplier) is the result of the formula I provided above.
It is reduced by the amount of your VA compensation.
It is restored via CRDP (which is longevity retired pay) as follows:
--20.5 years active duty x 0.025 = 51.25% longevity multiplier
--high three x 0.5125 = longevity portion of your retirement (and CRDP)--this is what your divisible retired pay will be based. CRDP restores waived longevity retired pay.

That longevity portion of your retired is subject to division between retiree and former spouse. This is not esoteric; it occurs often.

Again, CRDP is retired pay; additionally, it is not based on any reduction of the disability portion of retired pay.

Seeing JAG is a good idea; a better idea would be to visit with a divorce lawyer familiar with the divorce laws in your state.
Examples:
Texas is a community property state.
Colorado is a common law property state.

Good luck,
Ron
 
File for CRSC ASAP not CRDP CRSC is NOT divisible your order gives her a portion of your retirement as property, remember retired pay is PROPERTY its not alimony its not child support. Thus you are reducing her portion if not entirely and the Howell v Howell decision has it were the courts can not make you "indemnify" her another way.

 
Interesting case, however, there is no mention of CRSC in the narrative. Perhaps I overlooked it...

Nevertheless, the 2017 court decision is likely subsequent to the cases of which I read previously where certain courts took the position, "I don't care what is the source of the $xxxx you pay each month; you must still pay it." In other words, the cases which I have mentioned before predated the 2017 decision I suppose.

CRDP is retired pay; therefore, CRDP is divisible with a former spouse. The advice of a divorce attorney in one's state is always a good idea in complicated cases.








CRSC

CRDP

Qualified Injury

combat-linked disabilities

service-connected disabilities

Classification

Special Compensation (not subject to rules and regulations governing military retired pay)

Military retired pay (subject to rules and regulations governing military retired pay)

Federal Taxation

Non-taxable

Taxable, according to your current retired pay Federal Income Tax Withholding (FITW) tax rate

Subject to Division with a Former Spouse

No*

Yes

Subject to Collection / Garnishment

Yes

Yes

SBP (Survivor Benefit Plan) Premiums Deducted

Yes**

Yes

Ron
 
Last edited:
Interesting topic here, but i think what was missed was that the OP was Chapter 61, which would make even the CRDP disability pay and not subject to division in divorce. If the OP was regular CSDP then it would be divisible in court.

just my .02
 
Interesting topic here, but i think what was missed was that the OP was Chapter 61, which would make even the CRDP disability pay and not subject to division in divorce. If the OP was regular CSDP then it would be divisible in court.

just my .02
Unfortunately, your comment regarding CRDP is incorrect.

CRDP does not restore waived disability retired pay. CRDP is limited to the amount of the longevity portion of retired pay.

CRDP is longevity retired pay.

Ron
 
From two years ago:

Hello,

Perhaps I can provide some insight.

Your 75% of high three (75% is the maximum multiplier) is the result of the formula I provided above.
It is reduced by the amount of your VA compensation.
It is restored via CRDP (which is longevity retired pay) as follows:
--20.5 years active duty x 0.025 = 51.25% longevity multiplier
--high three x 0.5125 = longevity portion of your retirement (and CRDP)--this is what your divisible retired pay will be based. CRDP restores waived longevity retired pay.

That longevity portion of your retired is subject to division between retiree and former spouse. This is not esoteric; it occurs often.

Again, CRDP is retired pay; additionally, it is not based on any reduction of the disability portion of retired pay.

Seeing JAG is a good idea; a better idea would be to visit with a divorce lawyer familiar with the divorce laws in your state.
Examples:
Texas is a community property state.
Colorado is a common law property state.

Good luck,
Ron
 
Not trying to be argumentative, but under chapter 61 in a person over 20 years service (as is OP), the CDRP part "is" a disability payment from the DoD, and he also can recieve a va disability. they are both exempt from divorce

Servicemembers retired under Chapter 61 with VA disability ratings of 50% or greater are eligible to receive, and do receive, Concurrent Retirement and Disability Pay or CRDP. CRDP replaces some or all of the Servicemember's retired pay waived in order to receive VA disability compensation under the VA's Title 38. A twist with CRDP is a Chapter 61 retiree may only receive the amount of CRDP they would have qualified for had the Servicemember retired for longevity. Historically, and to this day, DFAS exempts CRDP received by a Chapter 61 retiree as disposable retired pay subject to division in divorce.

So, the current status is CRDP is divisible in all cases where the Servicemember retired for longevity but in is not divisible in any Chapter 61 disability retirement. That posture is under challenge. A case is pending decision in the Defense Office of Hearings and Appeals (DOHA) on whether CRDP received in a Chapter 61 retirement is divisible in divorce. No decision has been made yet. Right now, DFAS is sending Former Spouse's who apply for court-ordered Former Spouse retired pay letters informing that DFAS cannot process the application now since this question about CRDP is pending in DOHA.

Should DOHA decide that CRDP is divisible in a Chapter 61 retirement/divorce, the decision would have a monumental impact for Former Spouses who have been denied anything due to a Chapter 61 retirement. There is no forecast as to when DOHA will decide. If DOHA decides that CRDP in a Chapter 61 divorce is divisible as marital property, whether DOHA's decision would have any retroactive effect is unknown. Stay tuned.
 
In regards to DOHA:

Servicemembers retired by their Military Department under 10 U.S.C. Chapter 61 do not qualify to receive CRDP unless they retire with 20 or more years of creditable service.1 A good number of Chapter 61 retirees fall into this category. For these disability retirees, the pending decision by the Defense Office of Hearing and Appeals (DOHA) about whether CRDP is divisible in a Chapter 61 retirement has no meaning since DOHA's decision will have no impact upon these cases.
 
I am quite familiar with CRDP, but am not an expert in divorce law.

Re: “A twist with CRDP is a Chapter 61 retiree may only receive the amount of CRDP they would have qualified for had the Servicemember retired for longevity.” That is because it is based on the longevity and not the pre-reduction of retired pay which includes disability retired pay.

Ron
 
Not trying to be argumentative, but under chapter 61 in a person over 20 years service (as is OP), the CDRP part "is" a disability payment from the DoD, and he also can recieve a va disability. they are both exempt from divorce

Servicemembers retired under Chapter 61 with VA disability ratings of 50% or greater are eligible to receive, and do receive, Concurrent Retirement and Disability Pay or CRDP. CRDP replaces some or all of the Servicemember's retired pay waived in order to receive VA disability compensation under the VA's Title 38. A twist with CRDP is a Chapter 61 retiree may only receive the amount of CRDP they would have qualified for had the Servicemember retired for longevity. Historically, and to this day, DFAS exempts CRDP received by a Chapter 61 retiree as disposable retired pay subject to division in divorce.

So, the current status is CRDP is divisible in all cases where the Servicemember retired for longevity but in is not divisible in any Chapter 61 disability retirement. That posture is under challenge. A case is pending decision in the Defense Office of Hearings and Appeals (DOHA) on whether CRDP received in a Chapter 61 retirement is divisible in divorce. No decision has been made yet. Right now, DFAS is sending Former Spouse's who apply for court-ordered Former Spouse retired pay letters informing that DFAS cannot process the application now since this question about CRDP is pending in DOHA.

Should DOHA decide that CRDP is divisible in a Chapter 61 retirement/divorce, the decision would have a monumental impact for Former Spouses who have been denied anything due to a Chapter 61 retirement. There is no forecast as to when DOHA will decide. If DOHA decides that CRDP in a Chapter 61 divorce is divisible as marital property, whether DOHA's decision would have any retroactive effect is unknown. Stay tuned.
From DOD Finaincial Management Regulation:
I am quite familiar with CRDP, but am not an expert in divorce law.

Re: “A twist with CRDP is a Chapter 61 retiree may only receive the amount of CRDP they would have qualified for had the Servicemember retired for longevity.” That is because it is based on the longevity and not the pre-reduction of retired pay which includes disability retired pay.

Ron
From DOD Finaincial Managment Regulation: Chapter 3 - Former Spouse Payments from Retired Pay

c. Disposable Retired Pay. Disposable retired pay is the gross pay entitlement, including renounced pay, less authorized deductions. Disposable retired pay does not include annuitant payments under 10 U.S.C. Chapter 73. For court orders issued on or before 14 Nov 1986, (or amendments to such court orders), disposable retired pay does not include retired pay of a member retired for disability under 10 U.S.C. Chapter 61.
 
VOLUME 7B, CHAPTER 64: “CONCURRENT RETIREMENT AND DISABILITY PAYMENT (CRDP)”

DoD 7000.14-R Financial Management Regulation Volume 7B, Chapter 64

640401
. Special Rule for Disability Retirement Members retired for disability under 10 U.S.C., Chapter 61, §§ 1201 through 1222 remain subject to the offset required under 38 U.S.C. §§ 5304 and 5305 for any retired pay they receive that is in excess of the amount of retired pay to which they would be entitled under any other provision of law based on service in the Uniformed Services, had they not retired for disability. Since retired pay in excess of the amount calculated for years in service is still subject to offset under the CRDP program, a member with an amount of retired pay remaining after offset of VA disability compensation, that is greater than the amount calculated for years of service, is not eligible for any increase in payment of retired pay under the CRDP program

Ron
 
VOLUME 7B, CHAPTER 64: “CONCURRENT RETIREMENT AND DISABILITY PAYMENT (CRDP)”

DoD 7000.14-R Financial Management Regulation Volume 7B, Chapter 64

640401
. Special Rule for Disability Retirement Members retired for disability under 10 U.S.C., Chapter 61, §§ 1201 through 1222 remain subject to the offset required under 38 U.S.C. §§ 5304 and 5305 for any retired pay they receive that is in excess of the amount of retired pay to which they would be entitled under any other provision of law based on service in the Uniformed Services, had they not retired for disability. Since retired pay in excess of the amount calculated for years in service is still subject to offset under the CRDP program, a member with an amount of retired pay remaining after offset of VA disability compensation, that is greater than the amount calculated for years of service, is not eligible for any increase in payment of retired pay under the CRDP program

Ron
In the OPs case his DOD disability rating was 100% and he only had 20 years of service (50%), so none of his retired pay would have been over the disability pay, and therefore none of it eligible to be split with his ex.

Good discussion
 
Hello @SRVC_CMPLT

I agree that this has been a good discussion and I have learned a few things from it.

My characterization of CRDP for a CH 61 retiree as being solely non-disability retired pay is incorrect. The computation for CRDP in such cases includes a ceiling of the dollar amount of the longevity portion of retired pay, but that does not change the fact that some or all of it is disability retired pay, restored. Bottom line: If your retired pay is non-taxable, your CRDP is also non-taxable.

Reference: Defense Finance and Accounting Service > RetiredMilitary > manage > taxes > isittaxable <---LINK
See this extract from DFAS:

Is it Taxable?

For many military retirees, the pay they receive each year is taxable. But, like everything in life, there are always exceptions.

The following list of deductions and exemptions are some of the more common concerns among military retirees:

Survivor Benefit Plan and Retired Serviceman's Family Protection Plan Premium Deductions: Premiums paid to fund survivors’ benefits under these plans are treated as deductions from your taxable income.

Debt Deductions: Amounts collected to recoup overpayments of retired pay, retroactive Survivor Benefit Plan premium adjustments and some retroactive Department of Veterans Affairs payments are treated as deductions from your taxable income.

Upon completion of debt repayments, DFAS will mail you a tax certificate stating that you have repaid a valid debt over a specific period and stating the amount repaid. You can then use that certificate to adjust tax returns filed during the repayment period by claiming a deduction for the amount paid.
---------------------------------------
**TDRL/PDRL Exemption:If you retired under a disability law (Temporary Disability Retirement List or Permanent Disability Retirement List), your retired pay will be fully non-taxable if your pay is calculated based upon your military (not VA) disability percentage and you meet one of the following conditions:
  • You were in the military or under a contractual obligation to join the military on September 24, 1975, or
  • Your military disability rating is combat-related
The welcome letter you received from DFAS when you first retired indicates whether your pay is computed using your military percentage of disability or your years of service.

**VA Compensation Deduction:For most members who retired under a non-disability law, retired pay taxable income is simply reduced by the amount of any VA compensation received. For members who retired under the Temporary Disability Retired List or the Permanent Disability Retired List, retired pay taxable income is reduced by whichever of the following is greater:
  • The amount of VA compensation received or
  • A tax-exempt amount of gross pay determined by the following formula:
Step 1:
Military (not VA) disability percentage: %
x (times) Active Duty pay at the time of retirement: [note: should be High-3: If you entered active or reserve military service after September 7, 1980, your retired pay base is the average of the highest 36 months of basic pay. ]
= (equals) Initial amount of tax-exempt gross pay

Step 2:
Initial amount of tax-exempt gross pay:
x (times) applicable Cost-Of-Living-Adjustment (COLA): %
= (equals) Current tax-exempt gross pay

This information is reported by DFAS on your 1099-R.
---------------------------------------------------------

Combat Related Special Compensation (CRSC): These payments are non-taxable.

Concurrent Retirement Disability Payments (CRDP): CRDP is a restoration of your retired pay, not a separate entitlement. Therefore, if your retired pay is taxable so is any CRDP payments you receive. If your retired pay is non-taxable, your CRDP is also non-taxable.

Former Spouse Deductions:
The retiree is not liable for taxes on payments made to their former spouse. The Uniformed Services Former Spouse Protection Act defines community property payments established in accordance with a court order and approved by the DFAS legal department as pre-tax deductions.

--------

Ron

CC: @Provis , @Guardguy11 , @chaplaincharlie , @Jason Perry
@SRVC_CMPLT
 
See the decision of 1 March 2022:

https://doha.ogc.osd.mil/Claims-Div...Claims-Appeals-Board-Decisions/FileId/168697/ <—-LINK

[selected text pertaining to the decision] We further note that if Congress had intended Chapter 61 disability retirees receiving CRDP to be exempt from the provisions of the USFSPA, Congress would have done so by clear direction in the statute, as Congress did for Combat-Related Special Compensation (CRSC) under 10 U.S.C. § 1413a. The CRSC statute, like the CRDP statute, contains special rules for Chapter 61 disability retirees. See 10 U.S.C. § 1413a(b)(3). However, subsection (g) of 10 U.S.C. § 1413a(g) specifically states that CRSC payments are not retired pay. See also, DoDFMR, Volume 7B, Chapter 63, paragraph 630101(C) (stating that CRSC is not retired pay and is not subject to the USFSPA relating to payment of retired pay in compliance with court orders).4 Unless the plain language of a statute clearly conflicts with its intent, we will construe a statute consistent with its explicit terms. See 71 Comp. Gen. 125, supra; and 56 Comp. Gen. 943, supra. In this case, the member retired under Chapter 61 and subsequently became entitled to receive CDRP. The restoration of his retired pay under the statute authorizing CRDP, 10 U.S.C. § 1414, is subject to division under the USFSPA. CRDP is a restoration of retired pay based on longevity, which is 20 years of service. It is divisible under the USFSPA. The USFSPA is consistent with the CRDP statute and the implementing regulations contained in Chapter 64 of Volume 7B of the DoDFMR. Any contrary interpretation would provide the member with an entitlement or benefit that was not explicitly authorized by Congress.

Ron
 
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