A closeup of Marines' white-gloved hands folding an American flag at a military funeral.

The ‘widow’s tax’ for survivors will disappear entirely from February 1.

Benefit checks from February 1 will not have the so-called “widows tax” that reduces the income of surviving spouses of military retirees who participate in two programs.

Until 2020, survivors could not receive the full amount of two survivor benefits at the same time. Under the rule known as “compensation” of the Survivors Benefit Plan (SBP), the government reduced the payments that were part of that program by the amount of Dependency and Indemnity Compensation (DIC) that beneficiaries received from the Department of Public Affairs. of Veterans.

DIC is generally for the families of veterans who have died in the line of duty or as a result of a service-connected injury or illness. With the Department of Defense SBP, by contrast, veterans choose to pay premiums that will guarantee their spouses or other beneficiaries a percentage of their retirement pay after their death. That choice is typically made at retirement.

The monthly DIC payment for a veteran who died on or after January 1, 1993 is $1,562.74 for 2023. Without the change in law, the government would have reduced payments for SBP recipients by at least that much.

The decision to eliminate the “widow’s tax” was a “huge victory” and “the right thing to do,” Mark Belinsky, director of currently serving/retired affairs for the United States Military Officers Association and an Army retiree, said by phone. . interview. The SBP is a “very good plan,” he added.

Congress realized that the reduction was unfair and established a process in the National Defense Authorization Act of 2020 to gradually close the gap.

Rather than simply changing the reductions to SBPs, the law began awarding affected survivors the Special Survivor Indemnity Allowance (SSIA) in 2021. The SSIA increased each subsequent year and will now be the same to DIC compensation.

The reduction required when veterans participated in both programs discouraged some from choosing to contribute to the SBP. Coinciding with the change in deductions, the VA will give veterans a rare second chance to enroll this year.

The SBP provides much more financial support than most forms of private life insurance. After a retiree dies, the SBP pays a beneficiary up to 55% of the retiree’s monthly retirement payment, adjusted for inflation, for the remainder of the surviving spouse’s life or until a child reaches an age limit.

Those who enroll during the open season, which runs through January 1, 2024, will need to catch up on the premiums they stopped paying since they retired, plus pay interest and “any additional amounts” deemed needed to maintain the “soundness” of the Defense Department’s retirement fund, under the new law.

Current members can also opt out during the open season, but will not receive a refund for premiums already paid.

The new opportunity to register became law when President Joe Biden signed the National Defense Authorization Act of 2023 on December 23, 2022. Until registration forms and processes are available, the Department of Defense recommends that retirees update their information in the myPay system.

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Related Topics: Military Headlines, Family & Spouse, Military Widow, Military Taxes, Spouse & Family Benefits, Military Retirement, Veterans Benefits

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