How is CRSC paid?

NavyLDO

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Registered Member
Good evening,
I'm embarrassed to say that I cannot figure out the simplest concepts re: CRSC. I've read everything I could find online and have made three calls to DFAS during which the two level 2 representatives and the person in the VA section have all given me different answers - all were helpful... just not consistent.
Some relevant numbers - retired with over 30 years of service, VA has rated my disability at 100%, and the Navy has determined my CRSC at 90%. I'm ok waiting for DFAS to determine the actual dollar value - my questions are a bit more global:
- How is the 90% translated into a dollar amount? Is it 90% of my retired pay or some algorythmic formula?
- Will CRSC be deducted from my retired pay?
- Will there be a separate line item on my retired LES - retired pay, VA disability pay and CRSC?
- CSRC is totally separate from the VA pay - correct?
- If CRSC is tax-free and retroactive, does DFAS reissue W-2s for the affected years?
Thanks in advance for any light you can shed on this.
 

RonG

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Hello,

You mentioned 30 years service; does that include at least 20 years AD? If you are a reservist, do you have 20 Good Years?

Many of the laws and rules depend on the type retirement you receive (e.g., disability; regular, reserve).

CRSC replaces some or all of waived retired pay. It is a separate payment and has a separate statement.

Generally, one receives the lesser of the
--dollar amount of the longevity portion of retirement
OR
--The amount associated with the approved percentage by your service (rates are in the VA compensation tables).

--CRSC is not taxable. If one receives retroactive CRSC, the DFAS does not go back and issue corrected 1099 forms. However, one could file amended returns for certain years.

Recommend you review the following:

New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS) LINK: A New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS)

Supplement to CRSC Information (use red download button) LINK: Supplement to CRSC Information (use red download button)

A Guide to Computing Combat Related Special Compensation (CRSC) for Chapter 61 Disability Retirees LINK: A Guide to Computing Combat Related Special Compensation (CRSC) for Chapter 61 Disability Retirees

DFAS CRSC LINK: https://www.dfas.mil/retiredmilitary/disability/crsc.html

Ron
 

RonG

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If you accept CRSC:

Your retired pay will be reduced by the amount of VA compensation received.

CRSC will replace some or all of the reduced/waived retired pay.

If your CRSC is 90% and you have a regular retirement, it might be best to continue with CRDP since the CRSC @ 90% would not replace all the waived retired pay. VA compensation continues to be paid.

CRDP (regular retirement) would allow you to receive all your retired pay and the VA compensation as well.

Ron
 

RonG

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If you want a CRSC estimate...

The information associated with all of the six numbered items below is needed. Incomplete answers will preclude an accurate estimate. Each numbered item below is a factor in the CRSC calculation.

1. High three base pay average for retirement or your current DoD disability retirement gross found on page one of the DFAS RAS. Please indicate whether you are providing the high three average or the retirement gross found on the DFAS RAS. The high-36 method is the average of the highest 36 months of basic pay divided by 36. This is generally the last 3 years of service and is sometimes called high-3. EXAMPLE: High three average $3333 (or alternative: Gross Retired Pay on DFAS RAS $xxxx.xx)

2. DoD disability retirement percentage. EXAMPLE: 50% DoD

3. Years and months of active duty EXAMPLE: 11 years and 3 months
Note: The creditable years of service (active duty equivalent) for a reserve calculation is determined by the sum of accumulated reserve points divided by 360.

4. VA compensation:
-- percentage
and
--amount
plus
--identify dependents by category and number EXAMPLE: 60% VA Compensation, $1600, Spouse and 6 children under 18
and
---Any SMCs awarded and amount(s)


5. Approved or expected combat related disability percentage (application was required). EXAMPLE: 70% CRSC

6. Do you qualify for another type retirement besides CH 61 disability? Example: Yes, REDUX


Ron
 

NavyLDO

New Member
Registered Member
Hello,

You mentioned 30 years service; does that include at least 20 years AD? If you are a reservist, do you have 20 Good Years?

Many of the laws and rules depend on the type retirement you receive (e.g., disability; regular, reserve).

CRSC replaces some or all of waived retired pay. It is a separate payment and has a separate statement.

Generally, one receives the lesser of the
--dollar amount of the longevity portion of retirement
OR
--The amount associated with the approved percentage by your service (rates are in the VA compensation tables).

--CRSC is not taxable. If one receives retroactive CRSC, the DFAS does not go back and issue corrected 1099 forms. However, one could file amended returns for certain years.

Recommend you review the following:

New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS) LINK: A New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS)

Supplement to CRSC Information (use red download button) LINK: Supplement to CRSC Information (use red download button)

A Guide to Computing Combat Related Special Compensation (CRSC) for Chapter 61 Disability Retirees LINK: A Guide to Computing Combat Related Special Compensation (CRSC) for Chapter 61 Disability Retirees

DFAS CRSC LINK: https://www.dfas.mil/retiredmilitary/disability/crsc.html

Ron
Thank you Ron.
Yes, all of my service was AD - a regular retirement.
"Waived retired pay" is where it gets confusing. To the best of my knowledge, I have no waived retired pay. I've been receiving all of the pay I've been entitled to in addition to all of my VA disability compensation.
Reading all, will my retired pay be reduced by the amount of my CRSC? In other words, let's say my retired pay is $1000 and my VA compensation is $500. If my CRSC comes in at $200, will the remaining $800 of my retired pay be taxable? Will the three pay lines still add up to $1500 with only $800 of it all taxed?
 

RonG

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Staff Member
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Registered Member
Thank you Ron.
Yes, all of my service was AD - a regular retirement.
"Waived retired pay" is where it gets confusing. To the best of my knowledge, I have no waived retired pay. I've been receiving all of the pay I've been entitled to in addition to all of my VA disability compensation.
Reading all, will my retired pay be reduced by the amount of my CRSC? In other words, let's say my retired pay is $1000 and my VA compensation is $500. If my CRSC comes in at $200, will the remaining $800 of my retired pay be taxable? Will the three pay lines still add up to $1500 with only $800 of it all taxed?
As a regular retiree who meets the requirements for CRDP, you have been receiving all your retired pay plus your VA compensation. Page 2 of your DFAS RAS should show the amount of CRDP that is included in the gross retired pay on page 1.

Your CRSC will be different.
1. Your retired pay will be reduced (waived) by the amount of the VA compensation.

2. Your CRSC will be the 90% rate found at :
The dollar amount for 90% CRSC can be found at LINK: Veterans Compensation Benefits Rate Tables - Effective 12/1/18 - Compensation

3. I did not look at the rate for 90%; however since your VA compensation is at 100%, it will be less than the amount of retired pay waived. In other words, you will lose money by accepting CRSC.

4. Your retired pay is not reduced by CRSC; it is reduced by the amount of VA compensation. CRSC is the mechanism that replaces some or all of the reduction/waiver.

5. Some examples using random numbers for CRSC:
Retired pay 4000; VA compensation 3000; CRSC rate from tables 900
Computation: 4000 - 3000 = 1000 residual retired pay. CRSC = 900; So...1000+900 = 1900 from DFAS and 3000 from VA. Total = 4900 You lose 2100

Retired pay 3000; VA compensation 4000; CRSC from tables 2500
Computation 3000 - 4000 VA comp = zero residual retired pay. CRSC = 2500; So... CRSC @ 2500 and 4000 from VA, Total= 6500 You lose 500

I did not show a case where the full waiver would be replaced because your case does not have that feature.

Any residual retired pay shown in the examples would be taxable.

Recommend you remain with CRDP.

Ron
 

NavyLDO

New Member
Registered Member
As a regular retiree who meets the requirements for CRDP, you have been receiving all your retired pay plus your VA compensation. Page 2 of your DFAS RAS should show the amount of CRDP that is included in the gross retired pay on page 1.

Your CRSC will be different.
1. Your retired pay will be reduced (waived) by the amount of the VA compensation.

2. Your CRSC will be the 90% rate found at :
The dollar amount for 90% CRSC can be found at LINK: Veterans Compensation Benefits Rate Tables - Effective 12/1/18 - Compensation

3. I did not look at the rate for 90%; however since your VA compensation is at 100%, it will be less than the amount of retired pay waived. In other words, you will lose money by accepting CRSC.

4. Your retired pay is not reduced by CRSC; it is reduced by the amount of VA compensation. CRSC is the mechanism that replaces some or all of the reduction/waiver.

5. Some examples using random numbers for CRSC:
Retired pay 4000; VA compensation 3000; CRSC rate from tables 900
Computation: 4000 - 3000 = 1000 residual retired pay. CRSC = 900; So...1000+900 = 1900 from DFAS and 3000 from VA. Total = 4900 You lose 2100

Retired pay 3000; VA compensation 4000; CRSC from tables 2500
Computation 3000 - 4000 VA comp = zero residual retired pay. CRSC = 2500; So... CRSC @ 2500 and 4000 from VA, Total= 6500 You lose 500

I did not show a case where the full waiver would be replaced because your case does not have that feature.

Any residual retired pay shown in the examples would be taxable.

Recommend you remain with CRDP.

Ron
Again, thank you Ron.
I think I'm getting it now. Curiously, no one has told me that VA compensation plays a part in this. The bottom line is that with a VA rating of 100% and a regular retirement, CRSC may simply not be the most advantageous path - even considering the tax implications.
I appreciate your taking the time to explain it to me in laymen's terms.
 

RonG

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Registered Member
Again, thank you Ron.
I think I'm getting it now. Curiously, no one has told me that VA compensation plays a part in this. The bottom line is that with a VA rating of 100% and a regular retirement, CRSC may simply not be the most advantageous path - even considering the tax implications.
I appreciate your taking the time to explain it to me in laymen's terms.
That very well might be the case (i.e., CRSC not being the best choice for you).

Upon creation of your CRSC account, the DFAS will automatically pay you the higher amount (probably CRDP). You will be given the opportunity to change it.

I have received either CRDP or CRSC since the advent of the programs. My VA ratings have changed several times over the years, including one temporary rating.

I once chose CRSC over CRDP even though the CRSC approved percentage did not replace/cover all the waived retired pay. The reason? I ended my Army career about the time you began your Navy career and later retired from a university. I determined that taking the lower amount (CRSC in this case) was advantageous because of the other taxable income I received (including 85% of my social security for age). Now I am 100% T&P with the VA and 100% approved CRSC.

Some History of Concurrent Receipt:

In 1891, Congress first prohibited payment of both military retired pay and a disability pension under the premise that it represented dual or overlapping compensation for the same purpose. The original law was modified in 1941, and the present system of VA disability compensation offsetting military retired pay was adopted in 1944. Under this system, retired military personnel were required to waive a portion of their retired pay equal to the amount of VA disability compensation, a dollar-for-dollar offset.1 If, for example, a military retiree received $1,500 a month in retired pay and was rated by the VA as 70% disabled (and therefore entitled to approximately $1,000 per month in disability compensation), the offset would operate to pay $500 monthly in retired pay and the $1,000 in disability compensation. The advantage for the retiree was that VA disability compensation was not taxable. For many years some military retirees and advocacy groups sought a change in law to permit receipt of all, or some, of both payments. Opponents of concurrent receipt frequently referred to it as double dipping, maintaining that it represented two payments for the same condition.

Concurrent receipt refers to the simultaneous receipt of two types of federal monetary benefits: military retired pay and Department of Veterans Affairs (VA) disability compensation. Prior to 2004, existing laws and regulations dictated that a military retiree could not receive two payments from federal agencies for the same purpose. As a result, military retirees with physical disabilities recognized by the VA would have their military retired pay offset or reduced dollar-for-dollar by the amount of their non-taxable VA compensation. Legislative activity on the issue of concurrent receipt began in the late 1980s and culminated in the provision for Combat-Related Special Compensation (CRSC) in the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (P.L. 107-314). Since then, Congress has added Concurrent Retirement and Disability Payments (CRDP) for those retirees with a disability rated at 50% or greater, extended concurrent receipt to additional eligible populations, and further refined and clarified the program.
There are two common criteria that define eligibility for concurrent receipt: (1) all recipients must be military retirees and (2) they must also be eligible for VA disability compensation. An eligible retiree cannot receive both CRDP and CRSC. The retiree must choose whichever is most financially advantageous to him or her and may change the type of benefit to be received during an annual open season.
In FY2017, approximately one-third of the retired military population was receiving either CRSC or CRDP at a cost of $12.4 billion.

Selected CRSC Information:

Combat-Related Special Compensation (CRSC) Program

This program provides a special monthly payment equivalent to the offset to military retired pay due to receipt of VA disability compensation determined to be combat-related. Qualified individuals include any military retired members with an offset to retired pay due to VA compensation determined to be combat-related. Today, more than 75,000 retirees are receiving CRSC payments of over $71 million per month.


Effective June 1, 2003: I: Initial benefits were payable only to members with at least 20 years of active duty or equivalent reserve duty (i.e. 7200 points) who had combat-related disabilities totaling a rating of 60% or more, or with a rating of 10% or more for combat-related injuries for which they were awarded a Purple Heart.


Effective January 1, 2004: Eligibility was extended to members with any level of VA rating for combat-related disabilities or Purple Heart which results in an offset to military retired pay. Additionally, eligibility was extended to members receiving Reserve retired pay (i.e., Reserve members at age 60 or younger in certain cases and with 20 "good" years or Reserve members retired under Temporary Early Retirement Authority (TERA)).


Effective January 1, 2008: Eligibility was extended to military disability retirees (i.e., Chapter 61 of title 10 United States Code) and members retired under active duty TERA rules.


Effective January 1, 2013: The method for computing the monetary entitlement for members with military disability retirements under Chapter 61 of title 10 United States Code was changed to ensure no such members were disadvantaged from receiving an increased disability rating.


Special Rules for Chapter 61 Disability Retirees: According to law, members retired for disability under Chapter 61 of title 10 United States Code must have the CRSC entitlement limited to an amount that when combined with any military retired pay remaining after offset for VA disability compensation will not exceed the retired pay they would otherwise be entitled to for retirement computed for years of service (i.e., 2 1/2 percent x years of service x pay base).

Ron
 

NavyLDO

New Member
Registered Member
Thank you for all the advice Ron. I think I've got it. At least in my case, CRDP = the VA disability compensation.
Coincidentally, I received my DFAS election letter today. What has been baffling to this point is what is taxable and what is not taxed. By all accounts CRDP (the VA disability payment) is not taxed. However, the DFAS letter clearly states that CRDP payments are subject to tax withholding and are subject to the provisions of the USFSPA. Taking all of this into account, again, in my case, even if my CSRC was adjudged at 100%, there would be no real reason to take it over CRDP. There are no tax implications as CRDP is not taxed (and also not subject to divorce division). Am I getting this right?
 

RonG

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Staff Member
PEB Forum Veteran
Registered Member
Thank you for all the advice Ron. I think I've got it. At least in my case, CRDP = the VA disability compensation.
Coincidentally, I received my DFAS election letter today. What has been baffling to this point is what is taxable and what is not taxed. By all accounts CRDP (the VA disability payment) is not taxed. However, the DFAS letter clearly states that CRDP payments are subject to tax withholding and are subject to the provisions of the USFSPA. Taking all of this into account, again, in my case, even if my CSRC was adjudged at 100%, there would be no real reason to take it over CRDP. There are no tax implications as CRDP is not taxed (and also not subject to divorce division). Am I getting this right?
You have discussed two separate elements or payments.

VA compensation, which is paid by the VA, is nontaxable.

CRDP (paid by DFAS), which often is the same amount of VA compensation, is paid by DFAS and is usually taxable since it is retired pay by another name. I think you might incorrectly think that VA compensation replaces retired pay. The amount of VA compensation reduces your retired pay, not the VA compensation itself. I am discussing the waiver in the context of your specific case.

Here is another example for a regular retirement, retiree with =>50% VA compensation. Retired pay =3000; VA compensation 2000
1. Before the implementation of CRDP, the retiree would
--have his 3000 retired pay reduced by the AMOUNT of VA compensation
--the retiree would receive 1000 retired pay and 2000 VA compensation
TOTAL: 3000

2. After the implementation of CRDP, the retiree receives
--gross retired pay of 3000, of which 2000 is CRDP which allows concurrent receipt
---2000 VA compensation
TOTAL: 5000

3. Your remark about the taxes on CRDP is incorrect. In most cases, CRDP is 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.

4. Your comment about CRDP NOT being subject to divorce division is also incorrect. On the other hand, VA compensation is not subject to a division.


Subject to Division with a Former Spouse
CRSC
No*
CRDP
Yes


5. See https://www.dfas.mil/retiredmilitary/disability/comparison.html LINK to comparison, CRSC and CRDP

6. See Link for
New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS) LINK: A New Webpage Explains the VA Waiver, Retired Pay, CRDP and CRSC (Info Provided by DFAS)

7. See CRDP link https://www.dfas.mil/retiredmilitary/disability/crdp.html

8. See CRSC link https://www.dfas.mil/retiredmilitary/disability/crsc.html

9. See DFAS Tax info, Retired Pay at link https://www.dfas.mil/retiredmilitary/manage/taxes/isittaxable.html

Ron
 
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