Military Family recently received a question from a reader about the Survivor Benefit Plan (SBP).  The question involved the duration of SBP payments.  The reader wanted to know how long her husband, an Air Force Retiree, would pay SBP premiums.  Her husband is 78 years old and retired from the USAF 25 years ago.

The short answer to the question is that her husband will pay SBP premiums for approximately 5 more years.  Here is why:

• The 1999 NDAA established a “paid-up” point for SBP.  The legislation didn’t go into effect until 2008 though
• The legislation established that SBP would be paid up after the retiree reached age 70 AND paid 360 premiums which is 30 years (unfortunately for those who reached the requirements between 1999 and 2008 they didn’t get any money paid back)

So, in the case above, the retiree will stop paying premiums when he is approximately 83 years old.  The premiums will stop automatically.  No action is required from the retiree.

To get the exact number of months remaining a retiree should reference their most current Retiree Account Statement (RAS) from DFAS.  On the bottom of the page the retiree will find a statement that says, “You have paid XX months towards your 360 months…”

Premiums that do end are definitely an advantage that SBP has in relation to some other income replacement products.

Curt Sheldon is a Fee-Only Financial Planner based in Northern Virginia.  He can be contacted at (703)542-4000, (800)928-1820 or Curt@CLSheldon.com

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication

The information contained in this blog is for general financial education and should not be construed as individual financial advice.  Please consult your own financial, tax or legal advisor prior to applying any principles discussed here to your own financial situation.