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The Survivor Benefit Plan 2023 Active Duty/Line of Duty Optional Annuity for Dependent Children Elimination/Annuity Reversion to Surviving Spouses


The National Defense Authorization Act for Fiscal Year 2020 repealed the authority for the Optional Annuity for Dependent Children for Active Duty/Line of Duty survivors as of January 1, 2023.

This means for the surviving spouse of an Active Duty/Line of Duty member who requested to have the Survivor Benefit Plan (SBP) annuity paid directly to an eligible dependent child or children, the annuity will revert to the surviving spouse in 2023 (if she or he submits documentation and is eligible) .


Join us for a an SBP Webinar Courtesy of Military OneSource: 2023 Changes to the Survivor Benefit Plan
Thursday, Dec. 8, 2022, 1-2 p.m. ET
There are changes coming for some Survivor Benefit Plan annuitants in 2023. Find out how the changes may affect you if you are a surviving spouse and you receive Dependency and Indemnity Compensation (DIC) from the Department of Veterans Affairs or if you requested the SBP Optional Annuity for Dependent Children because your military loved one was a service member who died in the line of duty.
Register for the Dec. 8, 2022 webinar online: https://attendee.gotowebinar.com/register/4892987699316838926


**Check Out Our New Quick Reference Guide to the SBP 2023 Optional Child Annuity Reversion** (right click and choose “Save Link As” or long-press to download the packet to your computer or device)

We developed this special webpage to provide news and information regarding the repeal of the optional child annuity and the transition. We will post updates on this webpage, so please plan to check it for news and information.

Please note: The Optional Annuity for Dependent Children is only allowed when the service member died on active or inactive duty, in the line of duty, after October 7, 2001.


Surviving Spouses

If you are the surviving spouse of an Active Duty/Line of Duty member who requested to have the Survivor Benefit Plan (SBP) annuity paid directly to an eligible dependent child or children, click here to jump directly to the surviving spouse information or scroll down to the Surviving Spouse sections.

Surviving Children Currently Receiving SBP Optional Child Annuity Payments


If you are the surviving child (or the parent or guardian of a surviving child) of an Active Duty/Line of Duty member whose surviving spouse requested to have the Survivor Benefit Plan (SBP) annuity paid directly to you, here is what you need to know:

If you are currently receiving the Survivor Benefit Plan annuity payment, we have started sending letters to provide you with information on what you can expect after January 1, 2023. The letters outline what a surviving child currently receiving the SBP payment because of the Optional Annuity for Dependent Children can expect in three different situations. 

Letter A – The Surviving Spouse is Documented as Eligible
In this situation, we have received documentation that the surviving spouse is eligible for the SBP annuity. This means the surviving child’s last SBP annuity payment will be made on January 3, 2023 (for the December entitlement). Beginning with January 2023 entitlement paid on February 1, 2023, the SBP annuity payments will be made to the surviving spouse. 

Letter B – The Surviving Spouse is Documented as Not Eligible
In this situation, we have received documentation that the surviving spouse is NOT eligible for the SBP annuity. This means the surviving child can continue to receive the SBP annuity payment (even after January 1, 2023) as long as the child remains eligible. 

Letter C – DFAS Has Not Received Documentation for the Surviving Spouse
In this situation, we have NOT received documentation any documentation from the surviving spouse. This means the SBP annuity must be suspended and the surviving child's last SBP annuity payment will be made on January 3, 2023 (for the December entitlement). Beginning with January 2023 entitlement paid on February 1, 2023, the SBP annuity payments will be suspended until we receive documentation regarding the surviving spouse’s eligibility. 

There are three situations where an eligible SBP child annuitant can continue to receive the SBP monthly payment after the elimination of the Optional Annuity for Dependent Children in 2023:

  1-If DFAS receives documentation that the service member was not married at the time of death.
  2-If DFAS receives documentation that the surviving spouse is deceased.
  3-If DFAS receives documentation that the surviving spouse remarried prior to age 55.

If DFAS does not receive the documentation in the above situations, the SBP annuity will be suspended beginning with the January 2023 entitlement until documentation is received.

Please note: the documentation needed for a deceased spouse is a copy of the certified death certificate, along with the full name, daytime phone number, and mailing address for the person submitting the documentation.

The death certificate must be certified by the government agency issuing the document. DFAS cannot accept a funeral notice or funeral booklet. It must be the government-certified death certificate or statement and that certification must be evident on the document.

**Check Out Our New Quick Reference Guide to the SBP 2023 Optional Child Annuity Reversion** (right click and choose “Save Link As” or long-press to download the packet to your computer or device)


The January 1, 2023 Change in the Active Duty/Line of Duty Optional Annuity for Dependent Children is Approaching - What Will Happen in 2023


SBP annuities that were directed to a child rather than a surviving spouse will revert to the surviving spouse (if she or he submits documentation and is eligible) as of January 1, 2023.

Keep in mind that 2023 is the third and final phase of the SBP-DIC Offset Phased Elimination. Beginning January 1 of 2023, the offset is eliminated, so spouses will receive their full DIC payment from the VA and the full SBP payment issued by DFAS (see our SBP-DIC News webpage)
If you are the surviving spouse and you have already submitted your eligibility documents: 

In some cases, it may take us some time to do additional research and notify you regarding your eligibility. We appreciate your patience. Once we complete work on your documents, we will send you a postal letter with the eligibility determination and additional information. 

Reminders
•    January 2023 benefits will be paid on February 1, 2023. SBP benefits are paid on the first business day of the following month.
•    Please remember to update us if your mailing address, direct deposit, or marital status changes between the time you send in your documents and February 1, 2023.    
•    SBP payments are subject to federal taxes. State and local taxes vary. We are not able to withhold state or local taxes from SBP payments.  



What You to Do If You Are a Surviving Spouse Who Requested the Optional Child Annuity and You Have NOT Sent Your Completed Eligibility Packet: Download, Fill Out and Send Us Your Eligibility Packet As Soon As Possible!

We mailed eligibility packets in mid-November 2021 and again in early June of 2022 to spouses who did not respond in 2021. This packet includes the documents we need you to fill out and return. The documents will help us determine your eligibility for SBP annuity payments and set up your account to begin your payments (if you are eligible) when the changes take effect on January 1, 2023.

If you did not receive an eligibility packet in the mail, you can download the eligibility packet from this webpage. The packet includes a copy of the letter, instructions, and the forms we need you to complete and return. 

***Click here to download a blank eligibility packet (right click and choose “Save Link As” or long-press to download the packet to your computer or device)***


Sending Your Documents

Upload a PDF of your completed/signed documents via the online upload tool (this link is case-sensitive): https://go.usa.gov/xMF3V

Although the effective date of this change is not until 2023, we are reaching out early with the documents we need from you to assess your eligibility. If we receive the documents with the information we need from you early, we can provide you with the assessment of your future SBP eligibility well in advance of 2023.
 
Remarriage

If you remarried after the death of the member (before age 55), you may not be eligible for the SBP annuity. We need to receive a reply from you, even if you believe you may not be eligible due to remarriage.

If we have the documentation to make a determination that you are not eligible, we can continue to pay the annuity to an eligible child, even after January of 2023. However, if we do not receive documentation allowing us to confirm you are not eligible, the child annuity payments must be suspended as of January 2023 until we receive the documentation. See the information below on which documents we need. 

Surviving spouses maintain their eligibility for SBP until death, as long as they do not remarry before the age of 55. If the annuitant remarries before age 55, annuity payments will stop. However, if the annuitant's marriage later ends for any reason the annuity payment will restart, once DFAS is notified. See more information at: www.dfas.mil/managesbp

Tips for Completing and Submitting the Eligibility Documents
 
Click here - If you are the surviving spouse of a service member who died on active duty or on inactive duty in the line of duty and you previously requested the Optional Annuity for Dependent Children
 
Click here - If you are the surviving spouse of a service member who died on active duty or on inactive duty in the line of duty and you previously requested the Optional Annuity for Dependent Children, and you believe you may not be eligible for the SBP annuity payments because you remarried after the death of the member and before age 55
 
Click here - If you are not the surviving spouse, and the surviving spouse has passed away
 
Click here - If you are not the surviving spouse, and the surviving spouse is not capable of managing their financial affairs
 
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If you are the surviving spouse of a service member who died on active duty or on inactive duty in the line of duty and you previously requested the Optional Annuity for Dependent Children, you may be eligible to begin receiving SBP annuity payments directly (without offset) beginning January 2023. We need the following documents to determine your eligibility.
 
***Click here to download a blank eligibility packet (right click and choose “Save Link As” or long-press to download the packet to your computer or device)***
 
Please fill out, sign and return the following four documents as soon as possible:
(1) 2656-7 Verification for Survivor Annuity form (please note: you can disregard sections 4, 5 and 6 on the 2656-7 form, so they have been removed from the special version in the eligibility packet); and
(2) Certificate of Eligibility (COE) for Surviving Spouse; and
(3) Direct Deposit form 1059; and
(4) IRS W-4P Withholding Certificate for Pension or Annuity Payments.
 
Note: If you do NOT bank with a U.S. Bank, please see the information on International Direct Deposit below 
 
Note: If you are a nonresident alien, please also fill out and return the following document: IRS Form W8-BEN 
If you do not have a Social Security Number, we need a TIN. 

Please submit your documents no later than August 31, 2022.
 
We have a helpful how-to checklist, and options for submitting your documents online. See the Helpful Tools and Tips below 
 
International Direct Deposit
If you do not bank with a U.S. bank, International Direct Deposit (IDD) is available to annuitants living in eligible locations overseas. IDD electronically deposits funds on the first business day of the month.
Complete the form for International Direct Deposit Enrollment (SF 1199-I) INSTEAD OF the Direct Deposit form 1059 and submit it with your eligibility documents. Make sure the form is accurately completed and signed.
To see the list of countries, go to: https://www.dfas.mil/RetiredMilitary/manage/idd/
Nations chosen for IDD eligibility have met the requirements of the Federal Reserve Bank. Simply put, the banks and other financial institutions in those countries provide secure and trustworthy services and have systems compatible with transferring funds from the U. S. to your account. In many ways, IDD is much more secure than receiving your pay by paper check. Mailed checks can be subject to loss, misrouting or theft. Funds transferred through IDD are sent encrypted and arrive safely at your bank.
 
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If you are the surviving spouse of a service member who died on active duty or on inactive duty in the line of duty and you previously requested the Optional Annuity for Dependent Children, and you believe you may not be eligible for the SBP annuity payments because you remarried after the death of the member and before age 55, we DO need the following documents to determine your eligibility.

***Click here to download a blank eligibility packet (right click and choose “Save Link As” or long-press to download the packet to your computer or device)***

Please fill out, sign and return the following two documents as soon as possible, along with supporting documents referred to on the COE. You do not need to fill out and return the W4P or the Direct Deposit form 1059 at this time.
 
(1) 2656-7 Verification for Survivor Annuity form (please note: you can disregard sections 4, 5 and 6 on the 2656-7 form, so they have been removed from the special version in the eligibility packet); and
(2) Certificate of Eligibility (COE) for Surviving Spouse
 
Please submit your documents no later than August 31, 2022. If your marital status changes, please notify us promptly, so we can re-determine your eligibility at that time.

We have a helpful how-to checklist, and options for submitting your documents online. See the Helpful Tools and Tips below

If you remarried after the death of the member (before age 55), you may not be eligible for the SBP annuity. We need to receive a reply from you, even if you believe you may not be eligible due to remarriage.

If we have the documentation to make a determination that you are not eligible, we can continue to pay the annuity to an eligible child, even after January of 2023. However, if we do not receive documentation allowing us to confirm you are not eligible, the child annuity payments must be suspended as of January 2023 until we receive the documentation.
 
Surviving spouses maintain their eligibility for SBP until death, as long as they do not remarry before the age of 55. If the annuitant remarries before age 55, annuity payments will stop. However, if the annuitant's marriage later ends for any reason the annuity payment will restart from the date the marriage ends, once DFAS is notified. See more information at: www.dfas.mil/managesbp
 
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If you are not the surviving spouse, and the surviving spouse has passed away:

To document a surviving spouse as deceased, we need a photocopy of the death certificate showing the cause of death. Please write the deceased member’s Social Security Number on the top of the photocopy of the spouse’s death certificate and include a note with your full name and phone number.
 
Documents can be either mailed, faxed or uploaded online as PDFs via the askDFAS online upload tool on our website. See the Helpful Tools and Tips below.
 
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If you are not the surviving spouse, and the surviving spouse is not capable of managing their financial affairs:

DFAS has several avenues for allowing a loved one or trusted individual to help with an annuitant's account. These avenues are called “third-party representation” and they fall into two categories, either non-pay-related or pay-related representation.   
Please see our “Powers of Attorney/Third Party Representatives for Annuitants“ webpage for additional documents you need to include with your submission of the eligibility documents
 
Note: If the surviving spouse does NOT bank with a U.S. Bank, please see the information on International Direct Deposit above.
 
Note: If the surviving spouse is a nonresident alien, please also fill out and return the following document: IRS Form W8-BEN. Also, if the spouse does not have a Social Security Number, we will need a TIN or EIN. 

Documents can be either mailed, faxed or uploaded online as PDFs via the askDFAS online upload tool on our website. See the Helpful Tools and Tips below.
 
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HELPFUL TOOLS AND TIPS

Helpful Tools Tips
  • You can disregard sections 4, 5 and 6 on the 2656-7 form (they have been removed from the special version in the eligibility packet). They are not applicable in this situation.
  • Remember to sign and date your documents! We are unable to process documents without a signature and date.
  • Keep a copy of your completed/signed documents.
  • Please submit your documents as soon as possible. If your marital status changes, please notify us promptly, so we can re-determine your eligibility at that time.
Submitting Your Documents
Send your completed documents (keep a copy of your completed/signed documents):
 
Online upload:
Upload a PDF of your completed/signed documents via the askDFAS online upload tool on DFAS.mil (this link is case-sensitive): https://go.usa.gov/xMF3V
 
Or mail to:
Defense Finance and Accounting Service
U.S. Military Annuitant Pay
8899 E 56th Street
Indianapolis, IN 46249-1300
 
Or fax toll-free to: 1-800-982-8459

Additional Reminders
 
  • Please remember to update us if your mailing address, direct deposit, or marital status changes between the time you send in your documents and January 1, 2023.
  • January 2023 benefits will be paid on February 1, 2023. SBP benefits are paid on the first business day of the following month.

SBP payments are subject to federal taxes. State and local taxes vary. We are not able to withhold state or local taxes from SBP payments.     

**Check Out Our New Quick Reference Guide to the SBP 2023 Optional Child Annuity Reversion** (right click and choose “Save Link As” or long-press to download the packet to your computer or device)
 
What is the “Optional Child Annuity?”

The Department of Defense Survivor Benefit Plan (SBP) provides financial support to military spouses and/or children when a military member dies on active duty or inactive duty in the line of duty. The Survivor Benefit Plan (SBP) provides eligible beneficiaries with a monthly payment known as an annuity. The recipient of an SBP annuity is referred to as the annuitant. The annuitant may be a surviving spouse or surviving child (but not both).
 
When a service member dies on active or inactive duty in the line of duty, the surviving spouse can request to have the SBP annuity paid directly to an eligible dependent child or children. This is called the “Optional Annuity for Dependent Children” but often referred to as “the optional child annuity.”
 
The option is available because until recently, there was a requirement for a spouse’s SBP payments to be offset (reduced) by the full amount of the spouse’s Dependency and Indemnity Compensation (DIC) payment from the Department of Veterans Affairs (VA). Payments to the surviving child were often considered a more favorable option because SBP paid to a child is not required to be offset (reduced) by the DIC payment.
 
The Optional Annuity for Dependent Children is only allowed when the service member died on active or inactive duty, in the line of duty, after October 7, 2001.

The National Defense Authorization Act (NDAA) for Fiscal Year 2020 modified the law that requires an offset (reduction) of SBP payments for surviving spouses who are also entitled to DIC payments from the VA. It directed a phase-out period that will eventually eliminate the entire offset (reduction). Beginning on January 1, 2023, surviving spouses can receive full SBP payments from DoD/DFAS in addition to their full DIC payments from the VA.  
 
The NDAA for Fiscal Year 2020 also directed that as of January 1, 2023, the “Optional Annuity for Dependent Children” will be eliminated and the SBP annuity payment must revert to the surviving spouse (if the surviving spouse submits documentation confirming eligibility).

What Will Happen in 2023

SBP annuities that were directed to a child rather than a surviving spouse will revert to the surviving spouse (if she or he submits documentation and is eligible) as of January 1, 2023.

Keep in mind that 2023 is the third and final phase of the SBP-DIC Offset Phased Elimination. Beginning January 1 of 2023, the offset is eliminated, so spouses will receive their full DIC payment from the VA and the full SBP payment issued by DFAS (see our SBP-DIC News webpage).

If you remarried after the death of the member (before age 55), you may not be eligible for the SBP annuity. We must receive documentation from you, even if you believe you may not be eligible due to remarriage. If we have the documentation to make a determination that you are not eligible, we can continue to pay the annuity to an eligible child, even after January of 2023. However, if we do not receive documentation allowing us to confirm you are not eligible, the child annuity payments must be suspended as of January 2023 until we receive the documentation. Please see the information above about what documents we need. 
 
What Happens Between Now and 2023

If your child or children are the designated SBP beneficiaries because you selected the Optional Annuity for Dependent Children, they will continue to receive the SBP payments (if they are eligible) until the SBP-DIC offset is fully eliminated in January of 2023.

If your child or children lose eligibility because they marry or reach age 18 (or age 22 if a full-time student) prior to January 1, 2023, the annuity will be suspended until January 1, 2023, at which time it will revert to you (if you are eligible and submit documentation).
 
Additional Information
 
The repeal of the Optional Annuity for Dependent Children , and the reversion of the annuity to the surviving spouse is mandated by the law, so it is not voluntary.

Frequently Asked Questions

Q1. The National Defense Authorization Act for Fiscal Year 2020 repealed the authority for optional annuities for dependent children.  What does this mean?
A1. When a currently-serving member dies in the line of duty on active or inactive duty, the surviving spouse has the option, in consultation with the Secretary of the Military Department, to choose to have the Survivor Benefit Plan (SBP) annuity paid directly to a dependent child rather than to receive the benefit for him or herself.  This allows the surviving spouse to receive Dependency and Indemnity Compensation (DIC) from the Department of VA in full without it affecting the SBP payments.  SBP paid to the child or children of the deceased service member is not offset by DIC.  This provision is only allowed in situations in which the member died on active or inactive duty, in the line of duty, after October 7, 2001.  While it remains in effect for now, on January 1, 2023, this option will go away in accordance with Section 622 of the National Defense Authorization Act for Fiscal Year 2020.  Further, those annuities that were directed to a child rather than a surviving spouse will revert to the surviving spouse, if he or she is still eligible, on January 1, 2023.

Q2: I chose the Survivor Benefit Plan (SBP) optional child annuity when my spouse died on active duty.  Will I now receive the SBP benefit?
A2: Not yet, but you will eventually.  If your child is the designated SBP beneficiary, he or she will continue receiving the SBP payments until the SBP-DIC offset is fully eliminated in 2023.  As long as you did not remarry prior to age 55, the annuity will revert to you as the surviving spouse on January 1, 2023.  If your child or children lose eligibility because he or she reaches age 18 (or age 22 if a full-time student) prior to January 1, 2023, the annuity will be suspended until January 1, 2023, at which time it will revert to you.  See question 4.3 if your child or children has already lost SBP eligibility.

Q3: I gave the Survivor Benefit Plan (SBP) to my child when my spouse died in the line of duty while still in military service, but she is no longer eligible because she is too old.  What happens now?
A3:  The annuity remains suspended until January 1, 2023, at which point it will revert to you (if you are eligible and submit documentation). 

Q4: I previously chose the Survivor Benefit Plan (SBP) child annuity when my spouse died on active duty.  What do I need to do to ensure the payment comes back to me instead of my child?
A4: Please see “What You Need to Do – Watch Your Mailbox for an Eligibility Packet” above.

Q5: When my spouse retired from the military, he elected child-only Survivor Benefit Plan (SBP).  Does this mean I will now get the SBP instead of my child?
A5: No, the child remains the designated beneficiary for SBP.  Section 622 of the National Defense Authorization Act for Fiscal Year 2020 does not impact SBP Child-Only or Special Needs Trust (SNT) elections made by retirees and their spouses at retirement.  Spouse eligibility is not restored because the election of child-only or SNT coverage at retirement was irrevocable.  The section of the National Defense Authorization Act for Fiscal Year 2020 that discusses restoring eligibility to spouses refers only to certain situations in which the surviving spouses chose to transfer the benefit to a child following the death of a military member on active or inactive duty, in the line of duty, after October 7, 2001. 

Q6: I am a retiree who elected spouse and child Survivor Benefit Plan (SBP) coverage? How will this change in the law affect that coverage?
A6: This change in the law does not affect spouse and child SBP elections made by retirees.  If the elected coverage was for spouse and child, the child (if under age 18 or age 22 if a full-time student) will only become eligible for SBP if the spouse loses eligibility, for example a surviving spouse remarries before age 55 or the spouse passes away.

Q7: I would like to learn more, where can I go? 
A:7 The Defense Finance and Accounting Service (DFAS) has created this webpage to share information about the elimination of the Optional Child Annuity and reversion of the SBP annuity to the surviving spouse.  Additionally, you can contact Military One Source at 800-342-9647 or find other counseling options through the Military One Source website




*Note: The information on this website is provided to explain typical situations regarding retiree and annuitant benefits. For details and exceptions, please see applicable laws, financial management regulations, and instructions.
Page Updated Dec 6 2022