Reserve Component Survivor Benefit Plan (RCSBP)
The Reserve Component Survivor Benefit Plan (RCSBP) is a military life insurance program for qualifying military families. According to the Defense Accounting and Finance Office official site, “The Reserve Component Survivor Benefit Plan enables members who served in Reserve Components, and qualify for retired pay, to leave their spouse and/or dependent children with an ongoing monthly benefit called an annuity.”
RCSBP is similar to the Survivor Benefit Plan for active duty retirees. However, the pricing and other features may not be the same as those offered to active duty service members.
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Who Qualifies for RCSBP?
Eligibility for RCSBP depends on an RC member completing 20 years of qualifying service for non-regular retirement. This milestone typically coincides with receiving a Notice of Eligibility (NOE) Letter, also known as the “20-year letter.” After receiving this letter, members have a critical 90-day election period to make their RCSBP decision.
How does death in the line of duty affect RCSBP eligibility?
For Reserve and National Guard members who die on Federal Active Duty or during Inactive Duty for Training (IDT) in the line of duty, their survivors may be eligible for SBP benefits. These benefits are calculated as if the member retired with 100% disability. If death is not in the line of duty, but the member was eligible for non-regular retirement, an existing RCSBP election (Options B or C) dictates coverage.
RCSBP election options
RCSBP offers three primary election options, each with distinct implications for when benefits begin and their associated costs:
- Option A Decline Election Until Retirement. You defer the decision to enroll in SBP until you receive retired pay (typically at age 60, or earlier for reduced age retirement). No annuity will be payable to beneficiaries if you die before non-regular retirement. Spousal concurrence, which must be notarized, is required if you are married.
- Option B Deferred Annuity. This option provides coverage, but survivor annuity payments will not begin until the date you would have reached age 60, or the day after your death, whichever is later. This option may be generally less expensive than Option C because benefit payments are delayed. Spousal concurrence is required.
- Option C Immediate Annuity. This option provides the most comprehensive coverage, as the survivor annuity begins immediately upon your death, regardless of your age at the time of death. This option is generally the most expensive. At non-regular retirement, an Option C election automatically becomes your SBP election, and you will pay both RCSBP and SBP premiums.
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Can my spouse prevent me from choosing RCSBP options?
If you are married and select Option A or Option B without your spouse’s notarized concurrence, or if you select Option C with reduced spouse or no spouse coverage without notarized spouse concurrence, you may be automatically enrolled in Option C, Spouse RCSBP at the maximum level. This ensures your spouse is protected unless they explicitly agree to a different election.
Who can be an RCSBP Beneficiary?
- Spouse Only: The spouse receives a monthly annuity for life, provided they do not remarry before age 55.
- Spouse and Child(ren): The spouse is the primary beneficiary, and children are contingent beneficiaries.
- Child(ren) Only: Eligible children receive the annuity directly. Children are generally eligible until age 18 (or 22 if a full-time student).
- Former Spouse: An annuity can be paid to a former spouse if elected, often due to a court order.
- Former Spouse and Child(ren): This option is similar to the spouse and child option, but for a former spouse and children of that marriage.
- Insurable Interest Person: This option is available only if unmarried and without eligible children. This person is someone who would suffer a financial loss upon your death.
How much will my beneficiaries receive as an annuity?
The maximum annuity paid is typically 55% of the elected “base amount.” The base amount can be between a statutory minimum and your full retired pay. The monthly annuity payments are adjusted annually for cost-of-living adjustments (COLA), which helps the benefit keep pace with inflation.
What are the costs and premiums associated with RCSBP?
RCSBP coverage is not free; premiums are deducted from your retired pay once you receive it. The cost includes the standard SBP and an additional “Reserve Component (RC) add-on cost.” This add-on premium varies based on:
- The type of beneficiary elected.
- The annuity type elected (Immediate or Deferred).
- The age difference between you and your spouse or former spouse.
When do RCSBP premiums begin?
If you have eligible beneficiaries, your RCSBP premium typically starts on the first day of the month after you meet the age and service requirements for non-regular retirement. For child-only coverage, the add-on portion of the RCSBP premium also begins on the first day of the month after you meet these requirements.
Can I discontinue my RCSBP participation?
According to the Defense Department, “Section 641, Public Law 105-85 provides a one-time option for you to discontinue your participation in Survivor Benefit Plan. A Survivor Benefit Plan Termination Request (DD Form 2656-2) must be completed and mailed to the Defense Finance and Accounting Service in Cleveland.”
The one-year window opens on the second anniversary of receipt of retired pay and ends on the ends on the third anniversary.
“Once participation is discontinued under this provision, there will be no refunds of past premiums paid, nor will any benefits be paid in conjunction with your previous participation.”
What form do I use to elect RCSBP?
The RCSBP election process typically begins with your NOE letter. You will use DD Form 2656-5, Reserve Component Survivor Benefit Plan (RCSBP) Election Certificate, to decide within the 90-day election period.
Are there opportunities to enroll in RCSBP outside the initial 90-day window?
Yes, specific “Open Season” periods may periodically allow for enrollment. For instance, the NDAA 2023 SBP Open Season allowed Army Reserve/National Guard Soldiers and Gray Area Retired Soldiers not participating in RCSBP to elect coverage they would have previously been eligible for but declined or failed to elect.
Is an RCSBP election irreversible?
The initial RCSBP election made within the 90-day window is generally irrevocable. However, specific life events, such as marriage, divorce, or the death of a spouse or child, can trigger opportunities to change or establish RCSBP coverage within a one-year window of the event.
How does RCSBP compare to traditional life insurance?
While life insurance provides a lump sum, RCSBP offers an inflation-adjusted monthly income that a beneficiary cannot outlive. Unlike life insurance, RCSBP premiums do not consider age or health. The benefit includes COLA increases, which protect against inflation. Replicating the long-term, inflation-protected income provided by RCSBP/SBP may require more life insurance than some expect. Additionally, the federal government subsidizes RCSBP/SBP costs, making it a cost-effective option.
Are RCSBP premiums tax-deductible?
Depending on the tax laws in the current filing year, RCSBP premiums may be deductible, but you’ll need to check with a tax professional to learn what’s possible in that year.
Premiums are withheld from your gross retired pay, meaning they are not considered taxable income for you. This pre-tax deduction effectively lowers your out-of-pocket cost and reduces your taxable income. However, the annuity payments the beneficiary receives are taxable income when disbursed.
Learn more about the Reserve Component Survivor Benefit Plan.
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About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
