Severance pay recommended, now what?

[RonG]

Hello,

The conditions and procedures for recoupment are at
M21-1, Part III, Subpart v, Chapter 4, Section B - Recoupment of Separation Benefits See this ---->LINK

When I was a PVT E-2 draftee going through the Army finance school in early 1967, one of the first things our instructor said about payments was: "Anything with the word "Pay" included is taxable. The only exception is Hostile Fire Pay." (1967 instructions)

He was speaking about Basic PAY; Foreign Duty PAY; Proficiency PAY; etc. Allowances were exempt. Of course that was a lifetime ago and just a memory that popped up. Things have changed...

Ref: DoD 7000.14-R Financial Management Regulation Volume 7A, Chapter 35 * October 2018

*350504. Taxability and Withholding
A. General. Disability severance pay is normally taxable income. However, it is not subject to tax withholding or reporting if at least one of the following two conditions exists:
1. The entitlement resulted from combat-related injury or illness, as determined by the Secretary of the Military Department concerned, which happens as a result of any of the following activities:
a. As a direct result of armed conflict;
b. While performing extra-hazardous service, even if the service does not directly involve combat;
c. Under conditions simulating war, including maneuvers or training; or d. By an instrumentality of war, such as weapons;
or
2. The member is entitled to disability compensation as determined by the VA or has received a proposed disability rating from the VA at the time of separation through the Integrated Disability Evaluation System.

https://comptroller.defense.gov/Portals/45/documents/fmr/current/07a/07a_35.pdf <---LINK

Ron

 

[MilitaryBlake]

Okay, I did meet with Counsel today. Sorry for all the confusion, and certainly not calling you "wrong" - I am confused myself. I can't be the only one in this situation..... VA recovery of funds seem commonplace.... even mandatory. But Counsel today actually told me just the opposite. He said that the VA will recover funds based on the DoD rating minus from the 100%. The actual rating, not the pay from the table. So, I am 100% VA, and 20% DoD. So, 100-20 = 80 and 80% gives me more or less 1900 a month. 3500-1900 a month = 1600 so they will be recovering that much. NOT - DoD rating of 20%, look it up in the table = 280 and that is the amount deducted - no.

Perhaps someone that has actually gone through the process can chime in and how their actual severance is recovered so we don't have to conjecture anymore. Anyone out there able to do this? For the record, my Counsel is actually a pretty reasonable and humble guy..... if he is wrong (according to him) he is more than willing to change his interpretation if there is some legitimate data out there for him to change his mind. Again, these are not trivial differences. In my case, the difference being recovered per month is 1600 vs. 280. One takes about 6 years the other takes around 47!!

Okay, so I did more research. A really good thread to read is:

Severance Pay and VA payment

Ok have a few questions, playing the what if game. BTW I searched the Severance Pay thread before posting. If one receives DoD Disability Severance pay is that payment based on active service points only or both active and inactive service points. My PEBLO is stating only active service points...

www.pebforum.com

Based on my reading, others experiences on this thread, and the VA laws discussed there, I think tdrecord is correct. I think the $$ from severance is recovered based on one's rating for the condition for which they received the severance deducted from overall VA monies received. NOT the way my Counsel said it was recovered. In my case, 280 (20% va rating) will be deducted from my overall check. NOT 20% from 100%, giving me 80% disability which is only 1900. Important stuff when you are planning financial future for family b/c these are very difference figures..

I will reach out to my Counsel and share this with him...

 

[RonG]

Okay, so I did more research. A really good thread to read is:

Severance Pay and VA payment

Ok have a few questions, playing the what if game. BTW I searched the Severance Pay thread before posting. If one receives DoD Disability Severance pay is that payment based on active service points only or both active and inactive service points. My PEBLO is stating only active service points...

www.pebforum.com

Based on my reading, others experiences on this thread, and the VA laws discussed there, I think tdrecord is correct. I think the $$ from severance is recovered based on one's rating for the condition for which they received the severance deducted from overall VA monies received. NOT the way my Counsel said it was recovered. In my case, 280 (20% va rating) will be deducted from my overall check. NOT 20% from 100%, giving me 80% disability which is only 1900. Important stuff when you are planning financial future for family b/c these are very difference figures..

I will reach out to my Counsel and share this with him...

As mentioned previously, that is exactly what is shown in the VA manual, Method 1:

III.v.4.B.3.i. Withholding an Amount That Is Most Advantageous to the Veteran

When calculating the monthly amount of VA compensation to withhold from a Veteran with both severance and non-severance-pay disabilities, always use the withholding that pays the Veteran the higher rate of compensation. Example: VA assigns a combined disability rating of 70 percent to a married Veteran based on a severance-pay disability rated 50-percent disabling, and non-severance-pay disability rated 40-percent disabling. Two methods exist for calculating how much of the Veteran’s compensation VA should withhold each month: [method one is the process discussed in this thread] Method 1: Withhold the amount of compensation payable for the severance-pay disability, to include the additional amount for a spouse. Method 2: Pay the Veteran the amount payable for the non-severance-pay disability, to include the additional amount for a spouse, and withhold everything else. Result: The table below shows the calculations for each of the two methods, using rates from the December 1, 2006, compensation rate table for a Veteran with a spouse only. Because Method 2 provides the Veteran with a higher rate of compensation in this example, use that method to determine how much of the Veteran’s compensation to withhold. Method 1 $1,232.00 Start with the rate payable for a combined disability rating of 70 percent. - 781.00 Withhold the amount payable for the severance-pay disability. 451.00 Pay the remaining amount to the Veteran. Method 2 $1,232.00 Start with the rate payable for a combined disability rating of 70 percent - 556.00 Pay the Veteran the amount payable for the non-severance-pay disability. 676.00 Withhold the difference between the two rates.

Just a somewhat related comment. I believe matters such as this, a technical issue, are best answered by a SME,,,this would involve someone who works for or is a former employee of the VA, who has the expertise, not a JAG officer. I am not a subject matter expert in matters involving the VA.

Ron

 

[awnewell21]

I'm kind of going through the same situation right now as well. 30% DOD and 100% VA. Was put on the TDRL March of 2018, had my re exam Feb 2020 and they reduced my DoD to 20%. Requested a Formal board to fight the decision of the reduction during COVID.. Ended up doing it phonetically in Nov 2020 because they wouldn't cut me orders to go to DC. At the end of the day they kept my DoD rating at 20%. They found me unfit.. yada yada yada. Well in the paperwork that I have received and also talking to my attorney, I did not see anything about a severance pay with disability or non-severance pay honorable discharge. This all ended the first week of December 2020, so am I going to be receiving a severance check in the mail or will I be seeing an electronic payment from DFAS this month because I know it usually takes 30 days from what I've read prior. Thanks!

Adam

 

[RonG]

Hello,

Yes, you qualify for severance pay based on the information you provided. I suspect your severance pay will be generated using the same method of payment you had for your retired pay. In other words, if you previously had direct deposit, your payment should be via direct deposit.

You can call DFAS at the following number to obtain the info you want concerning "when."
Customer Service

800-321-1080
M-F, 8 a.m. to 5 p.m. ET

Good luck,
Ron

 

[RonG]

This is from a Fort Bliss (Army) case:

Jun 24, 2020
Update: ETS was 9 June. Received severance payment 1 of 2. Total payment was $99,999.99. Total severance is $171,000.
---

I imagine each situation/case could be different.

Ron

 

[awnewell21]

This is from a Fort Bliss (Army) case:

Jun 24, 2020
Update: ETS was 9 June. Received severance payment 1 of 2. Total payment was $99,999.99. Total severance is $171,000.
---

I imagine each situation/case could be different.

Ron

Yeah I have been reading through quite a few forums on here with people talking about severance when they are just getting out, or if they went through a med board and put on the TDRL and then received a severance instead of being put on the PDRL. I like to comb through and find something as close to mine as possible because it is always nice to talk to someone who has been going through the same situation instead of calling someone from DFAS that i'm assuming gets hundreds of calls a day with the same question, and they just give a generic answer back. BUT I will call them Monday for peace of mind. haha

 

[RonG]

Yeah I have been reading through quite a few forums on here with people talking about severance when they are just getting out, or if they went through a med board and put on the TDRL and then received a severance instead of being put on the PDRL. I like to comb through and find something as close to mine as possible because it is always nice to talk to someone who has been going through the same situation instead of calling someone from DFAS that i'm assuming gets hundreds of calls a day with the same question, and they just give a generic answer back. BUT I will call them Monday for peace of mind. haha

Re: Calls

When I used to call DFAS, I would begin calling at 0659 hours central time since they opened at 0800 hours eastern time. I kept re-dialing (calling repetitively) until I finally reached someone. I was usually one of the first it seemed.

Ron