To ensure their family continues to receive a portion of their future retirement income, reservists with dependents will automatically receive coverage under the Reserve Component Survivor Benefit Plan.
The RCSBP is the only program to provide eligible survivors a guaranteed lifetime income, just as the retiree is guaranteed retired pay during his or her lifetime unless the retiring Airman elects not to participate.
The maximum annuity is 55 percent of the retired pay. An established annuity increases automatically at the same rate as retired pay based on Consumer Price Index increases. Note: Airmen pay nothing until they begin drawing retired pay, normally at age 60.
Eligibility
Once guardsmen or reservists qualify for Reserve retired pay, they are eligible for RCSBP.
A notification letter is sent to members with instructions on how to download the “Reserve Component Survivor Benefit Plan Information” packet from the vPC-GR dashboard found within myPers. This packet contains complete information on RCSBP. Members may also download a copy of their 20-year letter.
They will have 90 calendar days to either concur or non-concur to update/change the automatic election they were given based on their dependents updated in MilPDS. The chance to choose RCSBP could very well be a one-time opportunity. Many retirees think that they can become RCSBP participants any time during their retirement. However, this is not true.
Although retirees have been afforded the opportunity to enroll several times since SBP became law in 1972, it should be considered a “now or never‚” decision.
There were four open seasons allowing eligible members to enroll or increase existing coverage legislated in 1981, 1992, 1999 and 2005 by Congress because significant changes and improvements had been made to the plan.
However, with open seasons come a cost penalty of up to 11 percent and a survival clause, meaning that the retired Airman has to live two years after submitting an election before RCSBP coverage becomes effective. When enrolling at retirement, the cost is less and there is no survival clause.
Options
Airmen have three RCSBP options:
- Option A -- Decline to make an RCSBP election until the retirement entitlement age. They remain eligible to elect SBP coverage when becoming entitled to retirement pay. No RCSBP is payable to the beneficiaries if the Airman dies before reaching retirement age.
- Option B -- Choose coverage for an annuity to begin on their 60th birthday if they die before age 60, or to begin immediately if they die after age 60.
- Option C -- Choose coverage for an annuity to begin immediately upon their death, whether they die before or after retirement entitlement age.
Designating a Beneficiary
Reservists may choose one of these designations:
- Spouse only -- To be eligible for an annuity, the spouse must be married to the reservist when the RCSBP election is made and on the date of the Airman’s death. Spouses must be married to the reservist for one year or be the parent of a child by that marriage. If Airmen have eligible children and elect spouse only and the spouse dies or otherwise becomes ineligible to receive the annuity, the annuity does not pass on to the children. To continue the annuity to an eligible child, they need to elect spouse and children coverage.
- Children only -- Child coverage is limited to unmarried children younger than age 18, or 22 if a full-time student, or any age if disabled and incapable of self- support, if disability existed before age 18 or occurred between 18 and 22 while a full-time student.
- Spouse and children -- Same limitations as above.
- Former spouse only -- When designated by court of law as directed by final dissolution of marriage.
- Former spouse and dependent child -- Covered child must have resulted from the marriage to the former spouse. This choice prevents payment of an annuity to the Airman’s current spouse or children from marriages other than to the former spouse designated as a beneficiary.
- Other persons with an insurable interest in the reservist -- An insurable interest person is one who has a basis to expect some financial benefit or advantage from the continuance of the Airman’s life. This option only applies if the Airman is unmarried and has no dependent children at the time of election. If the Airman is not married and has no dependent children, he or she may elect coverage for an insurable interest person.
- This must be a person (not a company, organization, fraternity, trust, etc.). It may be a close relative or business partner. If the Airman is not married and has only one child, they may elect insurable interest coverage for that child regardless of the child’s age or dependency status.
- Any other person may qualify if the Airman provides proof showing that person benefits in some manner from the Airman’s continued life, for example, a business partner.
Annuities
- Base amount for computing annuity -- The amount of the annuity is 55 percent of the base amount the Reservist selects. The base amount can be full retired pay or a reduced amount. The least amount the Airman may elect is $300. For an Airman electing Option B or C, the annuity is reduced by the amount of the cost of the RCSBP program, Reserve component cost, based on the Airman’s age and the age of the beneficiaries at the time the Airman makes the election. The annuity is also affected by provisions in the law on the date the Airman became eligible for the RCSBP.
- Amount received by the survivor of an Airman completing 20 years of qualifying service -- The spouse receives 55 percent of the base amount of retired pay designated.
- Dependency and Indemnity Compensation Reduction -- The spouse/former spouse of an Airman who dies of a service-connected cause as a result of serving on AD, ADT, or IDT will have the annuity reduced by an amount equal to the Dependency and Indemnity Compensation, being paid.
If the Airman is older than age 60 at the time of death and DIC is greater than the RCSBP annuity, RCSBP is not paid and the spouse receives a refund of all money paid into RCSBP.
If the RCSBP beneficiary is not a spouse/former spouse, no RCSBP annuity reduction is made, even if the beneficiary is a dependent receiving DIC.
Other RCSBP Provisions
- Spouse’s Remarriage -- The RCSBP annuity is suspended if a spouse/former spouse remarries before age 55. The annuity can be reinstated if the remarriage ends, either through death or divorce. If the spouse/former spouse remarries after age 55 the RCSBP annuity continues.
- Cost of RCSBP to Airman -- There is no cost for RCSBP coverage until Airmen begin collecting retired pay. The cost is a percentage of the base amount designated, based on the Airman’s age and the age of beneficiaries when RCSBP coverage was selected, and the option chosen. RCSBP cost increases by the same percentage as increases in retired pay.
- Termination of eligibility -- The reduction in retired pay stops when there are no longer eligible beneficiaries with two exceptions: if Airmen elected child-only coverage, or if they elect insurable interest coverage and later cancel the coverage, monthly deduction continues for life.
- Medical and other benefits for beneficiaries -- If Airmen die before reaching age 60, the eligible spouse and children are entitled to medical care beginning on the Airman’s 60th birthday. Before age 60, the spouse and children are entitled to unlimited commissary and exchange privileges.
- Revocation -- RCSBP election is basically irrevocable after the initial eligibility period with the following exception. Airmen have a one-year period to discontinue participation in the plan. The one-year window opens on the second anniversary of receipt of retired pay and ends on the third anniversary.
This discontinuation carries some penalties.
There is no refund of premiums properly collected, no benefits are paid in conjunction with previous participation, and Airmen may not resume participation for any category of beneficiary. RCSBP premiums will continue to be collected, even though the SBP premium portion is cancelled. This pays for the period of coverage from the date of election until the retired pay effective date.
- Federal Service Employees -- Federal service employees may elect RCSBP coverage under both the Air Force RCSBP program and the Civil Service SBP program.
- Spousal Consent -- Effective May 1, 2008, Airmen who elect anything less than full coverage or selecting “Child Only Coverage” under RCSBP are required to complete a DD Form 2656-5, RCSBP Election Certificate, and acquire spousal consent. This form, as required by law, must be notarized.
- Retirement and Estate Planning -- The cost of RCSBP is withheld from the gross retired pay and is not subject to federal income tax, but annuity payments are fully taxable for federal income tax purposes.
Airmen should check state inheritance and estate tax laws to determine if their state is one of the few that tax RCSBP annuities or immediately tax the expected lifetime annuity amount as a part of the total estate value. RCSBP annuities are not subject to federal estate tax.
Airmen who are single at the time of election or who divorce but remarry, have one year from the time of marriage to add new spouse to their RCSBP election.
For the latest and most current information visit myPers and search for RCSBP.