VA Retro Program: Retired and Annuitant Pay - Retroactive Payment
Retired and Annuitant Pay: Retroactive Payment
VA Retro is a program designed by the Defense Finance and Accounting Service (DFAS) and the Department of Veterans Affairs (DVA) to pay eligible military retirees any retroactive money due as a result of increases in their percentage of disability.
VA Retro payments include retroactive adjustments to Combat-Related Special Compensation (CRSC), Concurrent Retirement and Disability Pay (CRDP) and DVA disability compensation.
CRSC and CRDP are laws passed by Congress which allow eligible military retirees to be paid additional retired pay or special compensation to overcome some or the entire offset from retired pay associated with the receipt of disability compensation from the DVA. Prior to passage of these laws, a retiree was not allowed to receive both military retired pay and DVA disability compensation. The VA Retro program makes payments based on retroactive increases to the percentage of disability as determined by the DVA.
What is CRSC?
The CRSC program provides special compensation to retirees who have an offset to military retired pay due to receipt of VA disability compensation for combat-related disabilities. It is for retired members with combat-related disabilities regardless of disability rating percentage. To be eligible, a member must have completed 20 years of service. This entitlement is not retired pay, but rather a special compensation and not subject to the rules and regulations governing military retired pay. Qualified members are entitled to CRSC payments beginning June 1, 2003, for any month in which all eligibility requirements are satisfied.
What is CRDP?
The CRDP program provides a 10-year phase-out of the offset to military retired pay due to receipt of VA disability compensation. The phase out began in January 2004. This entitlement is restored retired pay and is subject to all rules and regulations governing military retired pay. Qualified members are entitled to CRDP payments beginning January 1, 2004, for any month in which they were entitled to both retired pay and VA disability compensation.
Who should I contact if I have questions concerning entitlement to VA Retro?
Retirees may call DFAS toll free at 1-877-327-4457 with questions concerning their entitlement to VA Retro. This phone number is exclusively for VA Retro questions. Trained customer service representatives are available at this number Monday through Friday from 8 a.m. to 4:30 p.m. (ET). Questions concerning disability ratings or percentages should be directed to DVA at 1-800-827-1000.
Am I eligible to receive both CRSC and CRDP?
A disabled military retiree may be eligible for both CRSC and CRDP but, by law, cannot receive payments for both during the same period. However, if you are eligible for CRSC and CRDP which cover different periods of retroactive entitlement, you may be entitled to separate VA Retro payments.
Do I need to apply or submit a claim in order to receive my VA Retro payment?
No application or claim is required. The DVA is providing DFAS with the social security numbers of eligible retirees. Both organizations are working together to provide eligible retirees with their full entitlement to both DVA compensation and CRSC or CRDP payments.
When can I expect payment?
DFAS began issuing VA Retro payments in September 2006 and DVA began releasing payments in November 2006. Every effort is being made to pay as many accounts as rapidly as possible without sacrificing correctness.
Who will issue the VA Retro payment?
Any monies owed may be paid by either the DVA, DFAS, or from both agencies. You may be eligible for payment from DFAS as a restoration of pay and/or from the DVA as part of disability compensation. Individual amounts will vary based on differences in disability amount and length of the retroactive period.
How will I know when a payment has been made?
After account review and a determination is made if any monies are due, DFAS will inform you by letter of any payment due or paid. The letter will indicate which agency will be making the payment. If you are due a payment from DFAS, the letter will inform you of the amount being paid. If no payment is due, the letter will so inform you.
What if I am owed money from the DVA?
The DFAS letter will advise you if additional compensation may be due from the DVA. DFAS provides the DVA with information to enable them to determine if any additional payments are due. It may take up to 30 business days for the DVA to make this determination and issue a payment. Any questions regarding monies which may be due from the DVA should be directed to its toll free telephone number, 1-800-827-1000.
Where will DFAS send my VA Retro payment?
Your payment will be sent in the same manner as you receive your military retired pay. If you normally receive your retired pay via electronic funds transfer (EFT), the payment will be deposited directly into your account at your financial institution. If you have your retired pay checks mailed, the payment will be sent to your check mailing address that is on record at DFAS.
I received a letter from DFAS but have not received a payment. What should I do?
If the letter indicates that payment is to be made by the DVA, you should contact the DVA at its toll free number, 1-800-827-1000. If it is a DFAS payment, which should have been sent via EFT, and it has not been posted by your financial institution, you should contact DFAS at its toll free number, 1-877-327-4457. You should allow at least 10 business days from receipt of the DFAS letter if it involves a check which should have been sent to your check mailing address. If after 10 business days you still have not received your check, you should write a letter to DFAS. You letter should include your name, Social Security Number, address, missing payment type (VA Retro), the amount of the check and date. You may fax the letter to 1-216-522-5898, or mail it to the following address:
Attn: Non-Receipt Department
P.O. Box 998005
Cleveland , OH 44199
I received more than one VA Retro payment. Is this correct?
Yes, this is correct. You may receive more than one payment if your retroactive period of increased award includes entitlement to CRSC and CRDP. In this case, separate payments will be issued for the CRSC (non-taxable) and CRDP (taxable) payment. Another reason for multiple payments is that you are due monies from both DFAS and DVA. Each agency is responsible for issuing payment of their portion of the VA Retro entitlement. Lastly, DVA may have made a subsequent determination regarding your disability and/or unemployability rating which entitles you to additional monies.
What should I do if I disagree with my disability rating?
Disability ratings and percentages are not determined by DFAS. Such determinations are the responsibility of the DVA. Disagreements with your disability percentage or rating should be directed to the DVA at its toll free number 1-800-827-1000.
I am rated by the DVA at 100% due to individual unemployability. Am I eligible for a retroactive payment?
You will be entitled to a VA Retro payment if the DVA retroactively awards you a 100% unemployability rating.
Is the VA Retro payment taxable?
The taxability of a VA Retro payment depends upon the type of payment and who issues the payment. Only payments made by DFAS for CRDP are taxable. CRDP payments are taxable according to the taxability of your retired pay. CRSC is a non-taxable entitlement; therefore, DFAS will not withhold taxes on CRSC payments. Normally, any monies paid by the DVA are non-taxable. Any questions regarding the taxability of payments issued by the DVA should be directed to its toll free telephone number, 1-800-827-1000.
Will a separate 1099R be issued for the VA Retro payment?
You will not receive a separate 1099R for the VA Retro payment. DFAS is responsible for withholding and reporting taxes on an IRS Form 1099R for any taxable payment. If your payment was issued by DFAS and is based on an increase in CRDP resulting from a retroactive DVA award, the taxable portion and any taxes withheld will be included in your annual retired pay 1099R. DFAS is not responsible for tax reporting on any payment issued by the DVA.
Is the VA Retro payment subject to a court-order division of pay that is payable to a former spouse?
CRSC entitlement is not retired pay. CRSC is considered special compensation and not subject to the rules and regulations governing military retired pay. Court-ordered division of pay under Title 10, United States Code, Section 1408, does not apply to retroactive CRSC awards. CRDP entitlement is restored retired pay and subject to all the laws, rules and regulations governing military retired pay; therefore, court-ordered division of pay does apply to CRDP awards.
Is the VA Retro payment subject to garnishment?
CRSC and CRDP entitlements are subject to garnishment action for alimony or child support.
What happens if the VA Retro payment is not issued prior to a retiree’s death?
Deceased retirees may not receive CRSC or CRDP past the date of death. However, the deceased retiree’s designated beneficiary is entitled to any unpaid pay due at the time of death. Retroactive increases made prior to the retiree’s death and during the period in which CRSC/CRDP were paid provides for entitlement to VA Retro payments. These payments will be made to the beneficiary of the deceased.