Is your survivor benefit plan (SBP) offset by the VA dependency indemnity compensation (DIC)?
A message from DFAS Regarding SBP DIC (Widows Tax) phase out.
January 1, 2021 begins the first phase of the "Phase-Out of Reduction of Survivor Benefit Plan Survivor Annuities by Amount of Dependency and Indemnity Compensation," as directed by the National Defense Authorization Act (NDAA) for Fiscal Year 2020.
Based on the NDAA, Spouse SBP annuitants who are subject to the DIC offset may see the first change in the SBP annuity payment they receive on February 1, 2021.
Letters will be mailed to recipients in early December.
In 2021, surviving spouse SBP annuity payments issued by the Defense Finance and Accounting Service will be reduced (offset) by no more than two-thirds of the amount of DIC (issued by the VA) rather than by the entire amount of DIC, even though eligible surviving spouses will continue to receive the full amount of DIC from the Department of Veterans Affairs.
Please check our SBP-DIC News webpage for additional information and frequently asked questions.