The Reserve Component Survivor Benefit Plan

The Survivor Benefit Plan is designed to provide survivors of deceased military retirees with a portion of the retiree’s pension. For members of the Reserve and National Guard, a similar program called the Reserve Component Survivor Benefit Plan (RCSBP) offers comparable protections with some key differences that reflect the unique nature of reserve service.

This guide covers everything you need to know about the RCSBP, including eligibility, coverage options, costs, and how it compares to the standard Survivor Benefit Plan. Whether you are currently serving in a Reserve Component or approaching retirement, understanding the RCSBP is an important part of planning for your family’s financial future.

What is the Reserve Component Survivor Benefit Plan?

The Reserve Component Survivor Benefit Plan (RCSBP) enables people who served in the Reserve Components to leave their heirs a benefit called an annuity.

An annuity is a monthly payment that continues to your beneficiary for the rest of their life after you pass away. The monthly payment is a percentage of your retired pay and depends on the election you make when you enroll in RCSBP.

The SBP was enacted by Congress in 1972, and the Reserve Component SBP was added in 1978. The RCSBP sells insurance to Reserves/Guards who have applied for retirement but are not yet age 60 (“gray area”). Once they reach age 60, their RCSBP is the same program as the SBP, but with slightly different premiums to cover a portion of the costs incurred in the years before age 60. Congress pays about 40% of the program, and the rest is covered by the retirees’ premiums paid to the SBP and the RCSBP.

Although only about 75% of active duty retirees buy the SBP annuity, over 90% of retiring Reserve/Guard members enroll in the RCSBP. The difference appears to be the inexpensive insurance coverage during the “gray area” years before age 60, and the fact that premiums aren’t due until age 60.

The Reserve Component Survivor Benefit Plan (RCSBP) is like the Survivor Benefit Plan (SBP) annuity, covering non-reserve components of the armed services. However, there are several differences in eligibility between the RCSBP and SBP, including coverage and costs, that reflect the unique nature of reserve service.

RCSBP is another incentive offered by the Department of Defense to encourage Reserve/Guard to retire, awaiting pay instead of resigning pending retirement. When Reserve/Guard members reach 20 years of qualifying service, they can either apply for retirement (awaiting pension at age 60) or resign from the Reserve/Guard until their pension starts (at age 60).

For the DoD, the difference is that “retired awaiting pay” means the member can be recalled in the event of a full mobilization of the armed forces. (Even though recalling a retiree is highly unlikely.) There are several financial reasons to retire rather than resign, and an additional reason is that Reserve/Guard members who have “retired awaiting pay” can buy SBP coverage for their beneficiaries.

Another reason to buy RCSBP coverage is that it starts as soon as the Reserve/Guard member retires, rather than at age 60. It’s possible to reach 20 years of qualifying service in your late 30s and wait over two decades before drawing the pension at age 60. If SBP is elected at the time of applying for retirement, then the Reserve/Guard member has SBP coverage for that entire time before age 60. By law, upon retirement, the member is automatically enrolled in full coverage. The decision to reduce or decline coverage is actually made by the spouse.

If the retiree dies prematurely, then one of their survivor’s options would be to receive up to 55% of their pension immediately instead of waiting until they would have been age 60. The Reserve/Guard member doesn’t actually have to pay the SBP premiums for that coverage until their pension starts. In other words, Reserve/Guard members who have “retired awaiting pay” can have over two decades of “free” insurance coverage before they even start drawing their pension.

Better still, at age 62 (after paying two years of SBP premiums) they can either continue their SBP coverage or cancel it.

The RCSBP has three options:

• A: Decline coverage until age 60 and revisit the decision then.
• B: Deferred Coverage – If you die before age 60, an RCSBP annuity begins paying out on what would have been your 60th birthday.
• C: Immediate Coverage – The RCSBP annuity would begin on the day after your death, even before age 60. This is the default option.

The annuity is based on the retirement pay earned by you. Your retirement pay cannot continue after your death; only you may draw the retirement pay you earned. Under the RCSBP, if you have 20 qualifying years of service, you can designate to whom you want the annuity to be paid.

Who Can Be Named as an RCSBP Beneficiary?

The designee(s) may be your:

• Spouse – The widow or widower of the deceased service member who was married to the service member at the time of his or her death and who:
  • Was married to the service member for at least one year prior to the service member’s death
  • Was married to the service member at the time of RCSBP
  • Is the parent of a child born after the RCSBP election was made.
• Former spouse – The service member may elect former spouse SBP coverage within one year of the divorce if the service member previously covered that person as Spouse.
• Children – The child of the deceased service member is eligible for coverage when he/she is
  • Single and under the age of 18, or
  • Between the ages of 18 and 22, and enrolled in a full-time course of study or training in a recognized educational institution, or
  • Incapable of self-support due to mental or physical disability that existed before the child’s 18th birthday or was incurred before age 22 while the child was engaged in a full-time course of study or training.
• Person with an insurable interest in the service member – A person who has a logical and/or lawful reason to expect financial benefit from the continued life of the service member. The expectation is founded on the relationship between the parties (financial, blood, marriage, or mutual affection).

NOTE: If you have received a 15-year letter authorizing early retirement at age 60, you are also offered this benefit.

Spouses can elect the full amount of coverage (55% of the Reserve/Guard pension) or smaller amounts. The decision should be based on the survivor’s projected spending or to ensure the ability to pay off a large expense, such as a mortgage.

Which Reserve Components Are Eligible for the RCSBP?

The RCSBP is available to members of the following retired Reserve Components:

• The Army National Guard of the United States
• The Army Reserve
• The Navy Reserve
• The Marine Corps Reserve
• The Air National Guard of the United States
• The Air Force Reserve

How to Enroll in the RCSBP

Enrollment in the RCSBP is triggered when you receive your 20-Year Letter, the official notice of eligibility for retirement pay at age 60. You must make your RCSBP election within 90 days of receiving this letter. If you do not make an election within that window, you will be automatically enrolled in Option C, which provides immediate coverage for your beneficiaries.

Your election is made on DD Form 2656-5, the Reserve Component Survivor Benefit Plan Election Certificate. Once your election is made, it is generally irrevocable, so it is important to carefully consider your options before submitting the form. If you are married at the time of your election, your spouse must also sign the form acknowledging the coverage decision.

How Much Does the RCSBP Cost?

You pay the cost of participation in the RCSBP when you begin receiving retired pay at age 60. Upon your death, the RC cost is transferred to the annuitant. Once you make an election, you may not cancel your participation in RCSBP.

Costs to participate vary and are based on your age and your annuitant’s age at the time of the election, the option you select, the base amount you select, and your retired pay.

Here’s how you can approximate your RCSBP costs.

Compute your retired pay using the retired pay formula:

[(Your total retirement points / 360) x 0.025] x monthly active duty pay for your rank and years of service = your monthly gross retired pay

RCSBP is comprised of two costs: the base SBP premium cost that all active and reserve service members pay (called the BASE cost); and the RC cost which is the cost for carrying your annuity without payment until you reach age 60.

Your BASE cost is: 2.5% of the first $1,056 (threshold amount) of your retired pay ($26.40), plus 10% of all remaining retired pay over $1,056, if your projected retired pay will be $2,262.86 or less per month.

If your retirement pay is projected to exceed $2,262.86 per month, the BASE cost will be 6.5% of that amount. For example, if you project that your monthly retirement pay will be $3,000, then your monthly BASE cost would be $3,000 x 0.065 = $195.00

The second part of the RCSBP cost is based on your monthly retired pay, your age, and the age(s) of your annuitant(s) at the time you make the election. Refer to the SBP Fact Sheet provided with your Notification of Eligibility (20-Year Letter) for Retired Pay at Age 60 for more information.

It is also worth noting that RCSBP premiums are not required indefinitely. Once you have paid premiums for 30 years and have reached age 70, your coverage becomes paid-up, meaning premiums stop, but your beneficiary’s coverage continues for life. This paid-up provision is one of the most significant long-term advantages of the RCSBP over private insurance alternatives.

How Much Does the RCSBP Pay?

RCSBP pays designated annuitants 55 percent of their retired pay. Several variables apply to your specific situation and affect the amount you receive. The SBP cost factors displayed are based on spouse-only coverage.

It is also worth noting that as of January 1, 2023, the SBP-DIC offset has been fully eliminated. Surviving spouses who qualify for both SBP and VA Dependency and Indemnity Compensation (DIC) now receive full payments from both programs.