Google +LinkedInPinterestYouTubeInstagramTwitterFacebook
USAA is The American Legion's preferred provider of financial services. Offering a range of top-rated financial and insurance products and services. USAA welcomes honorably discharged U.S. military veterans, active-duty troops and qualified family members and descendants of those who have served. USAA contributes funds to American Legion programs when members join through a dedicated channel:
usaa.com/legion or by calling toll-free at 1-877-699-2654.

Financial Questions & Answers

Financial Questions & Answers

Question:

I am currently receiving Combat Related Special Compensation (CRSC). As of Oct. 1, I went from 60 percent to 80 percent service-disabled rating. Of the 80 percent, the first 60 percent was combat related. The new 20 percent doesn't qualify for CRSC. Defense Finances and Accounting Services (DFAS) is taking $1,602 out of my retirement pay. But CRSC is only giving me $1,102. So I am losing $500 a month. Looking at my taxable liability, I am better off going back to Concurrent Retirement and Disability Pay (CRDP). Is there an "open season" in CRSC that allows me to go back to CRSC? -Eugene

Answer:

Both Combat Related Special Compensation and Combat Related Disability Pay are programs designed to restore service-earned retirement pay that was waived in order to receive VA disability compensation. As you know, you can only receive one or the other. If you’re eligible for both, you should receive a letter from DFAS this month that shows both your CRDP and CRSC amounts and allows you to make your election.

By reviewing the election form, you should be able to determine which is most advantageous for you. Remember, that while CRSC generally pays more than CRDP, CRSC is limited to combat related disabilities, so it could be less than CRDP. Maybe enough less that taking CRDP, even though it is taxable while CRSC is not, makes more sense. From your question, it’s not clear to me how your CRSC amount compares to CRDP. Once you have those numbers, you can use a tax preparation program or an accountant to figure out which scenario is better: tax-exempt CRSC or taxable CRDP. The answer is going to be contingent on your overall tax situation.