VA Benefits

Military Retirement Pay: CRDP, CRSC, TSP and SBP

This guide is for service members nearing retirement, new retirees, medically retired veterans, and Guard and Reserve retirees. It explains how retired pay is figured under High-3 and the Blended Retirement System, why VA disability pay reduces it, when CRDP or CRSC gives some or all of it back, what your Thrift Savings Plan options are after you leave, how the Survivor Benefit Plan works, and who to call when your pay looks wrong.

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VA Benefits · Updated October 2026 · 16 min read

Before you rely on this

This guide is general information, current as of October 2026. It is not legal, tax or financial advice, and only DFAS, your branch, VA or the TSP can decide your own case.

Some figures change on a schedule. Retired pay and SBP annuities get a cost-of-living adjustment each year; the 2.8% COLA for most retirees took effect December 1, 2025, and a new one will follow. DFAS sets the CRDP and CRSC open season dates each year, and the dates here are from the 2026 open season. TSP limits and required minimum distribution ages can change with new tax laws.

Some things are still moving. The services and DFAS are still working through CRSC back pay corrections after the Supreme Court's Soto decision, and the Major Richard Star Act is pending in Congress. Check Congress.gov and your branch's CRSC office for current status.

Free help is available from accredited Veterans Service Organization representatives, your County Veterans Service Officer, your installation's retirement services officer and SBP counselor, a military legal assistance office if you are eligible, and Military OneSource. VA's benefits line is 800-827-1000. Before anyone helps with a VA claim, confirm accreditation in VA's Office of General Counsel accreditation search.

Check your own case: your retirement law (longevity, Reserve or Chapter 61), your creditable years, your VA rating and which conditions your branch accepted as combat-related, your SBP election and any court order involving a former spouse. Your Retiree Account Statement and DFAS letters show what DFAS has on file.

This guide follows DFAS procedures. If you retired from the Coast Guard, your retired pay office is the Coast Guard Pay and Personnel Center, so forms, phone numbers and online tools differ.

Retirement systems in plain words

Most active duty retirees with 20 or more years are paid under one of two formulas. Under High-3 (officially High-36), each year of service is worth 2.5% of the average of your highest 36 months of basic pay, so 20 years pays 50% of that average. High-3 covers members who first entered service on or after September 8, 1980, and before January 1, 2018, unless they opted into the newer system or took the Career Status Bonus (REDUX). The Blended Retirement System (BRS) covers everyone who first entered on or after January 1, 2018; its multiplier is 2.0%, so 20 years pays 40%.

Guard and Reserve members earn retired pay after 20 good years, meaning at least 50 retirement points in each year, and usually start drawing it at age 60. Each 90-day block of qualifying active duty served after January 28, 2008 moves that start three months earlier, but not below age 50. Retired pay does not start on its own: apply to your branch about 9 to 12 months before it should begin.

Military retired pay gets an annual cost-of-living adjustment (COLA). The most recent was 2.8% for most retirees, effective December 1, 2025. REDUX retirees normally get one percentage point less.

BRS pairs the smaller pension with these extras:

Automatic contribution: the government deposits 1% of your basic pay in your Thrift Savings Plan (TSP) account after your first 60 days of service, even if you contribute nothing yourself.
Matching: from the start of your third year, it matches your own contributions, up to an extra 4% when you put in 5%, through the end of your 26th year of service.
Continuation pay: a one-time cash payment between 7 and 12 years of service for agreeing to serve at least three more years, worth at least two and a half months of basic pay for active component members and half a month's for reservists.
Lump sum option: eligible members can take a discounted lump sum of 25% or 50% of their estimated retired pay, in exchange for monthly retired pay cut by that share until full Social Security retirement age (67, per Military OneSource). It must be elected at least 90 days before retiring, and Chapter 61 (medical) retirees cannot take it. Federal law also has VA recover the lump sum from disability compensation, with exceptions tied to CRDP and CRSC.

The VA waiver: why retired pay drops when VA pay starts

The general rule is that a military retiree cannot collect full retired pay and full VA disability compensation at the same time. To receive VA compensation, you waive an equal amount of retired pay, dollar for dollar. The rule comes from 38 U.S.C. 5304 and 5305, and your Retiree Account Statement shows the reduction on a line labeled VA Waiver.

The waiver costs less than it looks. VA disability compensation is not taxable, while retired pay earned by age or length of service is. Each dollar that shifts from retired pay to VA pay becomes a tax-free dollar, so take-home pay can rise even when the gross total stays the same. Without CRDP, if your VA payment is larger than your retired pay, DFAS pays you no retired pay at all.

VA shares award information with DFAS, which adjusts your retired pay and, when a rating changes, audits past months to see what you are owed.

Tax note for longevity retirees: if VA grants a rating that reaches back into years you already filed, the retired pay you received for those months is tax-free up to the VA amount. You can claim a refund on Form 1040-X with a copy of the VA decision letter, within three years of filing or one year from the VA decision, whichever is later, but not for tax years that began more than five years before that decision.

CRDP: restoring retired pay at 50% or higher

Concurrent Retirement and Disability Pay (CRDP) lets eligible retirees receive full retired pay on top of full VA compensation. DFAS now calls it concurrent receipt. It is not a new payment: it shrinks or removes your VA waiver so more of your gross retired pay reaches you.

CRDP is usually automatic. Because VA shares rating data with DFAS, most retirees never file anything, but Guard and Reserve members retired for disability before their retired pay age need their branch to send DFAS their retirement orders. If you believe you qualify and it has not started, send DFAS a DD Form 827 by mail, fax or the askDFAS upload tool. Back pay can go as far back as January 1, 2004, limited by your retirement date and the date your rating reached 50%.

Because CRDP is restored retired pay, it is taxed the way your retired pay is taxed, and a court order can divide it with a former spouse like other retired pay. Here is who qualifies:

Eligible: retirees who did not retire for disability, such as 20-year active duty retirees, with a VA rating of 50% or higher.
Eligible: Guard and Reserve retirees rated 50% or higher, once their retired pay starts (normally at 60).
Partly eligible: Chapter 61 (medical) retirees with 20 or more years of service and a 50% or higher rating, but only up to the amount they would have received for their years of service.
Not eligible: anyone rated 40% or less, and Chapter 61 retirees with fewer than 20 years.

CRSC: tax-free pay for combat-related disabilities

Combat-Related Special Compensation (CRSC) is a separate, tax-free monthly payment for retirees whose VA-rated conditions are combat-related. It is not retired pay. The amount is the VA compensation you would receive for your combat-related conditions alone, and it can never exceed the retired pay you waived.

To qualify, you must be entitled to military retired pay, have a VA rating of at least 10%, have your retired pay reduced by the VA waiver, and apply to your branch. Unlike CRDP, CRSC has no 50% rating floor and is open to Chapter 61 retirees with fewer than 20 years. Guard and Reserve retirees can qualify once they are entitled to retired pay. A condition counts as combat-related if it comes from an injury for which you were awarded the Purple Heart, or if it was incurred as a direct result of armed conflict, while engaged in hazardous service, in duty under conditions simulating war, or through an instrumentality of war.

CRSC back pay can reach as far back as June 1, 2003, or January 1, 2008 for disability retirees with fewer than 20 years. A six-year cutoff under a federal claims law called the Barring Act used to apply as well, but on June 12, 2025, the Supreme Court ruled in Soto v. United States that it does not apply to CRSC. The Army says a May 2026 memo withdrew earlier guidance that did not match the ruling; it will move effective dates back to each retiree's earliest eligibility and update affected awards automatically, and DFAS will audit each one for added back pay over several months. The Department of the Navy, which handles Navy and Marine Corps claims, is reviewing affected claims and will notify those who qualify. Neither asks retirees to take action.

Apply to your own branch, not to DFAS or VA, using DD Form 2860. Your branch decides, notifies you in writing and sends approvals to DFAS. When VA rates a new condition, CRSC does not update itself; file a reconsideration with your branch. Send copies, not originals, of records that show the combat link, such as:

Retirement orders and your DD-214
VA rating decisions
Relevant VA or service medical records
Purple Heart citations
For reservists, the 20-year letter or statement of service

Eligible for both? The January open season

You can receive CRDP or CRSC, but not both. In your first year of eligibility for both, DFAS automatically pays whichever has the larger gross amount and sends an election form you can return within 45 days to switch. After that you can change only during the annual open season, which is usually held in January. DFAS mails eligible retirees a letter in late December showing both amounts. The 2026 open season ran January 1 to 31, and change requests had to be postmarked by January 31, 2026.

Return the form only if you want to change, and check the change box: a signed form with the box left blank is treated as unclear, and nothing happens. After the deadline you are locked in until the next open season, even if a VA or CRSC decision changes the numbers mid-year. Your VA payment is the same whichever you choose.

The larger gross amount is not always the better deal. Weigh these before you decide:

Taxes: CRSC is tax-free, while CRDP is taxed like retired pay.
Former spouse: CRSC is not divided under the Uniformed Services Former Spouse Protection Act, so choosing it can shrink or stop a court-ordered share of retired pay. CRSC can still be garnished for alimony and child support.
Allotments: they cannot come out of CRSC, so premiums such as TRICARE or dental may have to be paid directly.
Pending decisions: a pending VA claim or CRSC reconsideration can change which program pays more.

Medical (Chapter 61) retirement and the 20-year line

A medical retirement under Chapter 61 of Title 10 follows a finding that you are unfit for duty. With fewer than 20 years of service, a military (DoD) disability rating of 30% or higher means retirement; below 30% means separation, usually with one-time severance pay. With 20 or more years, you are retired whatever the rating. You may be placed on the temporary disability retired list (TDRL) or the permanent disability retired list (PDRL).

Your retired pay uses whichever calculation pays more: your DoD disability percentage, or your years of service times 2.5% (2.0% under BRS). The result is applied to your retired pay base and capped at 75%. The DoD rating comes from your service and the VA rating comes from VA; CRDP and CRSC depend on the VA rating.

The Major Richard Star Act would let veterans with combat-related disabilities, including those with fewer than 20 years, receive retired pay without reduction alongside VA compensation. As of October 2, 2026, Congress.gov shows the House bill, H.R. 2102, with the status Introduced, and the identical Senate bill, S. 1032, still at its March 13, 2025 committee referral. Neither has passed either chamber, so it is not law.

Until a change like that becomes law, here is where medical retirees with fewer than 20 years stand:

No CRDP: the full VA waiver applies, so each dollar of VA pay replaces a dollar of retired pay.
CRSC if some of your rated conditions are combat-related, capped so that CRSC plus your remaining retired pay cannot exceed what your years of service alone would earn (years times 2.5%, or 2.0% under BRS, times your retired pay base).

Your TSP after you leave

Your own TSP contributions and their earnings are always yours, and so are BRS matching contributions. The automatic 1% contributions vest once you complete two years of service; leave sooner and that money and its earnings are forfeited.

Money taken out before age 59 and a half may cost a 10% early withdrawal penalty tax on the taxable part, on top of income tax. The exceptions include payments after you separate from service during or after the year you turn 55, installments based on life expectancy, and total and permanent disability. Leave before that year and the age-55 exception does not apply. Contributions you made from tax-exempt combat zone pay are never taxed or penalized, though their earnings in a traditional balance are taxed.

Roth TSP money went in after tax, so your Roth contributions come out tax-free. Roth earnings are tax-free only when five years have passed since January 1 of the year of your first Roth TSP contribution and you are 59 and a half, permanently disabled or deceased. Required minimum distributions begin once you have left service and reached 73 (born before 1960) or 75 (born 1960 or later); the Roth balance in your own account is not subject to them.

If you are married and your balance is over $3,500, your spouse is entitled by law to a joint life annuity with a 50% survivor benefit unless your spouse signs consent to another choice. Requests cannot be reversed once processed. To move money to an IRA without tax withholding, ask for a direct rollover; if the TSP pays you first, it must withhold 20%. Once you separate, you can use one or more of these options:

Leave it in the TSP. Nothing forces a withdrawal unless your vested balance is under $200, which is paid out automatically, or you reach required minimum distribution age. You can keep changing your investments.
Roll money out to an IRA or a new employer's plan.
Take installments monthly, quarterly or annually, either a fixed amount of at least $25 or an amount based on life expectancy.
Take a partial withdrawal of at least $1,000, or your whole balance.
Buy a life annuity through the TSP's vendor with at least $3,500. Once bought, it cannot be changed or canceled.

The Survivor Benefit Plan

Military retired pay stops when you die. The Survivor Benefit Plan (SBP) pays an eligible survivor a monthly annuity that receives cost-of-living increases: 55% of the base amount you choose, which can be your full retired pay or a smaller amount. You elect it when you apply for retired pay, and that choice is very hard to change later.

The offset between SBP and VA Dependency and Indemnity Compensation (DIC) is gone. It was fully eliminated January 1, 2023, and since the February 1, 2023 payment, surviving spouses have received full SBP and full DIC. A spouse annuity stops if the survivor remarries before age 55 and can be restored if that marriage ends.

Guard and Reserve members choose Reserve Component SBP within 90 days of receiving the Notice of Eligibility, the 20-year letter. Option A declines coverage until age 60; Option B provides a deferred annuity that starts on what would have been your 60th birthday; Option C provides an immediate annuity at your death. If you make no choice, Option C applies, and anything less than full coverage needs your spouse's notarized consent.

Spouse coverage costs no more than 6.5% of the base amount, and premiums come out of retired pay before federal income tax. Child coverage costs extra, based on your age, your spouse's age and your youngest child's age. Premiums stop at paid-up status, once you have paid 360 monthly premiums and reached age 70. Other rules to know before you sign:

Spouse concurrence: if you are married, choosing less than full spouse coverage, child-only coverage or no coverage requires your spouse's notarized signature.
Children: unmarried children under 18 (under 22 if in school), plus children unable to support themselves because of a disability that began before 18, or before 22 while a full-time student.
Former spouse: if you are already retired, elect former spouse coverage within one year of the divorce decree. If a court ordered coverage, your former spouse can file a deemed election within one year of the order.
Dropping it: the general window to end coverage is the 25th through 36th month after retirement, and your spouse must agree. Retirees rated totally disabled by VA for 10 straight years, or for 5 years right after leaving active duty, can also withdraw with the beneficiary's written consent.
Adding later: with no eligible spouse or child at retirement, you have one year after a marriage or birth to add coverage. Declining a spouse at retirement means you cannot cover a later spouse, and open seasons from Congress are rare (the last was in 2023).
If VA pay wipes out your retired pay, premiums are still due: DFAS takes them from CRSC when retired pay falls short, or VA can deduct them if you file DD Form 2891. Otherwise DFAS bills you, and unpaid premiums build up interest and are taken from your survivor's annuity.

Taxes, myPay and who to call

For federal income tax, retired pay earned by age or length of service is taxable, and so is CRDP; VA compensation and CRSC are not, and SBP premiums come out before tax. Some Chapter 61 retired pay is also tax-free, for example pay received for a combat-related injury; IRS Publication 525 explains the rules.

State tax treatment of military retired pay varies, so check with your state's revenue department.

Watch for scams. DFAS does not make unsolicited calls about debts or pay record errors and never asks for payment over the phone. For VA claims, accredited Veterans Service Organization representatives help for free, and accredited attorneys and claims agents can charge only after VA decides your initial claim and a signed fee agreement is on file. Check anyone offering help in VA's Office of General Counsel accreditation search on VA.gov.

Steps that keep your account in order:

Use myPay to update direct deposit and your mailing address, change withholding and download tax statements.
Designate TSP beneficiaries in My Account on the TSP website and keep your address and bank details current there. The TSP cannot honor a will.
Call DFAS Retired and Annuitant Pay at 800-321-1080 (Monday to Friday, 8:30 a.m. to 4:30 p.m. Eastern), myPay help at 888-332-7411, VA at 800-827-1000, or the TSP ThriftLine at 1-877-968-3778. DFAS has no walk-in offices; for in-person help, contact your branch's retiree services office.
Before you leave the service, get financial counseling through Military OneSource (800-342-9647) or from a free personal financial counselor at your installation.

Sources

Every figure above is drawn from these sources. Figures and rules change, so check the current source before you act.

Questions

Common Questions

Can I get both military retired pay and VA disability compensation? +

Sometimes. The default is a dollar-for-dollar VA waiver: each dollar of VA compensation replaces a dollar of retired pay. Two programs restore it. CRDP pays both in full if you did not retire for disability and VA rates you 50% or higher, and it usually starts automatically. CRSC is a tax-free payment for combat-related disabilities rated at least 10%, and you apply to your branch for it. You can receive one, not both.

Do I have to apply for CRDP? +

Usually not. VA shares rating information with DFAS, so DFAS can start CRDP for eligible retirees without an application. You generally qualify if VA rates you 50% or higher and you either did not retire for disability or retired under Chapter 61 with at least 20 years. If you believe you qualify and it has not started, send DFAS a DD Form 827. Never pay anyone to enroll you.

Are CRSC and CRDP taxable? +

CRSC is not taxable. CRDP is restored retired pay, so it is taxed the same way your retired pay is, which for most longevity retirees means it is taxable. VA disability compensation is not taxable either way. Because CRSC is tax-free, a smaller CRSC payment can match a larger CRDP payment after tax, so compare take-home amounts when DFAS sends your open season letter.

When can I switch between CRSC and CRDP? +

In your first year of eligibility for both, DFAS pays whichever has the larger gross amount and sends an election form you can return within 45 days to switch. After that, you can switch only during the annual open season, usually in January; DFAS mails a letter in late December showing both amounts. For 2026, change requests had to be postmarked by January 31. Return the form only if you want to change.

I was medically retired with less than 20 years. Can I get CRDP? +

No. Under current law, Chapter 61 retirees with fewer than 20 years are subject to the full VA waiver. If any of your rated conditions are combat-related, you can apply to your branch for CRSC, which is capped at what your years of service alone would have earned. The Major Richard Star Act would change this for combat-related disabilities, but as of October 2, 2026 it has only been introduced (H.R. 2102 and S. 1032) and is not law.

What happens to my TSP if I leave the military before 20 years? +

It stays yours. Your own contributions, BRS matching contributions and their earnings are always vested. The automatic 1% contributions vest after two years of service; leave earlier and they are forfeited. You can keep the account if your vested balance is at least $200, roll it to an IRA or a new employer's plan, or withdraw it. Withdrawals before age 59 and a half may cost a 10% penalty tax on top of income tax.

Can I take money out of my TSP after I retire without the 10% penalty? +

Sometimes. The TSP lists exceptions that include payments after you separate from service during or after the year you turn 55, installments based on life expectancy, and total and permanent disability. If you stop or change life-expectancy installments within five years, or before age 59 and a half if that is later, the penalty can apply retroactively. Contributions from tax-exempt combat zone pay are never penalized.

How much does SBP cost, and does it ever stop? +

Spouse coverage costs no more than 6.5% of the base amount you choose, taken before federal income tax, and pays your survivor 55% of that base amount. Premiums end at paid-up status, after 360 monthly premiums and age 70. The general window to drop coverage is the 25th through 36th month after retirement, with your spouse's agreement.

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