Meet retired Air National Guard Maj. Fred T. At age 42, he has 20 years of service.
recent deployments, you finally receive your Notice of Eligibility for Retired Pay (NOE). But you’re not quite home free yet. The notice arrives with a date stamp and re- quires a response within 90 days. You have an important deci- sion to make regarding whether and when your dependents will receive your retired pay in the event of your death and how much you want to pay for that benefit. Without an immediate or a delayed Survivor Benefit Plan (SBP) elec- tion, retired pay ends the day you die. Sorry to be so blunt, but that’s how it goes. In a nutshell, as a guardmember
A
or reservist, you have three election options to choose from.
Option C — full and immediate SBP If you fail to make your desires known within the 90-day time frame, this option is good news for your spouse; by default, he or she gets option C, or the whole thing — full and immediate SBP. This means should you die for any reason, at any time, your spouse will begin to get the full amount of the SBP annuity immediately. The full amount or maximum benefit is 55 percent of the annuity base amount — in other words, 55 percent of what would have been your full retired pay is paid to your survivor immediately in the “gray area” between your mili- tary retirement and full retirement. Naturally, your spouse will need to apply for the SBP annuity, so it
fter what might seem a lifetime of monthly drills, annual active duty for training, and
Meet Fred’s family. He is married and has two children. His wife is 42, and his sons are 15 and 17.
Because guardmembers and reservists don’t receive retired pay immediately,
they’re in what’s called the “gray area” until they reach age 60. Fred won’t start receiving retired pay until then, so there is a gap in Survivor Benefit Plan (SBP) coverage. Fred has to make a decision within 90 days of retiring. Should he take SBP option A, B, or C?
Option A Option B Option C
Fred’s not sure what to do and decides
to wait on making a decision about SBP until he reaches age 60 and starts receiving his
retired pay. One morning, at age 43, he gets hit by a bus and dies. His spouse will not receive any of his retired pay.
Fred decides to defer the SBP annuity. When he reaches age 60, he will
start receiving his retired pay. One morning, at age 43, he gets hit by a bus and dies. His spouse will receive 55 percent of his retired pay starting the date Fred would have turned 60.
Fred decides to take the immediate annuity option. When he reaches age 60, he will start
receiving his retired pay. One morning, at age
43, he gets hit by a bus and dies. His spouse will receive 55 percent of his retired pay immediately.
Fred’s spouse would receive $0 55% 55%
when Fred would have turned age 60.
immediately. AUGUST 2012 MILITARY OFFICER 59
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