U.S. Military (Ret.): Know rules, limitations of Survivor Benefit Plan - Military Retirement - Navy Times

U.S. Military (Ret.): Know rules, limitations of Survivor Benefit Plan

Q. Who can I designate as beneficiary for my Survivor Benefit Plan? Also, if I designate my wife, what happens if we are later divorced?

A. I’ve been getting a lot of emails about the SBP lately. Generally, a military retiree can designate a spouse, children or a combination of spouse and children. You can even voluntarily name a former spouse as beneficiary for up to one year after the divorce. There are other categories of eligible potential beneficiaries, as well.

It’s important to know that if you are divorced, state courts can order retirees to name a former spouse as SBP beneficiary, just as they can order that you pay a former spouse a portion of your military retirement pay.

SBP participation is voluntary, but if you are married and decline to cover your spouse, you must get the spouse’s notarized signature to show that he or she is aware you’re declining coverage.

Any change in your personal situation that may require a change in your SBP beneficiary designation — divorce, remarriage, the death of your spouse, the birth of children — needs to be reported to the Defense Finance and Accounting Service as quickly as possible. You’ll have to provide copies of official documents, as well, such as a marriage license, divorce decree or birth certificate.

The SBP program has fairly rigid rules. You enroll when you retire and make your beneficiary designations and choose your level of coverage at that time, after which monthly premiums are deducted from your military retirement check.

Contrary to what many retirees think, if you don’t enroll in SBP at the time of retirement, there is no guarantee you will be ever able to enroll — only a handful of “open seasons” have been held in the program’s nearly four-decade history, usually in conjunction with major legislative changes.

The most recent open season in 2005-2006 required applicants to fully “buy in” — they had to pay an amount equal to the total of all monthly premiums they would have paid had they enrolled when they first were eligible. For those who had been retired for a number of years, that buy-in could have been steep.

DFAS has an “SBP overview” website with a ton of information on how to manage your beneficiary designations, as well as discussions of costs, the pluses and minuses of enrolling, how the annuities work for your beneficiaries after you die, and more. You can find it by clicking here.