The Department of Defense Office of the Actuary on the Survivor Benefit Plans. Richard Allen provided an update on the new blended retirement system to our educators. The basic qualifications for retirement do not change, and the pension is still the primary component of military retirement. The new plan is no longer an all or nothing retirement plan that covers more people and offers a lump sum option at retirement. For more information, check out the Department of Defense Office of the Actuary.
The theme on retirement continued as we heard from the TSP office of Education on the Thrift Savings Plan. Damien explained the TSP withdrawal options a retiree would have – Age-based withdrawals, delayed, partial, and full withdrawals. Aged-based withdrawals are participants age 59 ½ or older who may take a lump sum withdrawal while still in the service of a minimum of $1,000. Taking a delayed withdrawal from your TSP, you will not receive any penalties because your TSP account will never expire.
One caveat to the TSP account – once you close your TSP account, you will not be allowed to reopen a TSP account.
Your TSP withdrawals will act like your RMD, and you will need to take distributions from the account and pay taxes on the amount every year starting at age 70 ½. The minimum amount is calculated every year for those who are married or separated.
If you have more questions about your TSP – follow the link to learn more.
One of our last presenters for the symposium was Andrew Corso on the Military Compensation Policy, Retirement and Annuitant Pay. Andrew made a lasting impression on the importance of the Survivor Benefit Plan (SBP).
“Military retired pay STOPS with the death of the retiree! SBP allows a service member or retiree to provide a portion of retired pay to eligible survivors.”
The SBP is a benefit plan the retiree pays a premium of 6.5% of their retired pay* to ensure their loved one(s) are taken care of financially. The premium payments end after the retiree has made 360 payments and has reached 70-years-old. The pay amount is dependent upon who the beneficiary will be.
The beneficiaries can include any of the following – spouse, child, spouse & child, former spouse, former spouse & child, special needs trust, and insurable interest.
Andrew provided a comparison of the SBP and the Dependency and Indemnity Compensation. The two programs are similar in regards that they intend to serve populations of survivors. They are managed by different departments – the SBP is managed by the Department of Defense and paid out of the Military Retirement Fund whereas the Dependency and Indemnity Compensation is managed by the Department of the VA. The SBP is taxable where the Dependency is not taxable and the amount paid out of the SBP varies whereas the Dependency is a set amount.
Navy Mutual truly appreciated everyone who made this two-day symposium an impactful and educational experience. We look forward to continuing to serve our military community by providing the latest information to enable financial readiness among our servicemembers, veterans, and their families.