VA Repayment of Recouped Separation Pay after Earning Retirement

PolloxTroy08

PolloxTroy08

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I'm going to be able to retire from active duty after previously being separated from active duty, receiving separation pay, and having that pay recouped by the VA after receiving disability. However, now that I'm retiring, I am going to have to pay back that separation pay as I cannot get it and my retirement pay. I would presume the VA would then have to repay me the recoupment they originally took as, in a sense, it's like I never received that original separation pay. Does anyone have any helpful information on this process?
 
PolloxTroy08 said:
I'm going to be able to retire from active duty after previously being separated from active duty, receiving separation pay, and having that pay recouped by the VA after receiving disability. However, now that I'm retiring, I am going to have to pay back that separation pay as I cannot get it and my retirement pay. I would presume the VA would then have to repay me the recoupment they originally took as, in a sense, it's like I never received that original separation pay. Does anyone have any helpful information on this process?
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I do not have direct experience with this situation. However, it would make sense simply to produce evidence that you had the separation pay recouped by the VA and submit that evidence to dfas. The basic premise is the government already collected it back. Maybe give Dfas a call and ask them if that will suffice.

If you would definitely report back here after so people will know the right path.
 
PolloxTroy08 said:
I'm going to be able to retire from active duty after previously being separated from active duty, receiving separation pay, and having that pay recouped by the VA after receiving disability. However, now that I'm retiring, I am going to have to pay back that separation pay as I cannot get it and my retirement pay. I would presume the VA would then have to repay me the recoupment they originally took as, in a sense, it's like I never received that original separation pay. Does anyone have any helpful information on this process?
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Hello,

There are several different categories of separation pay, including readjustment pay, severance pay, and more.
Which type did you receive? All of them have recoupment features but there are nuances.

Recoupment of separation pay is discussed at
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_04.pdf#page5 <—-LINK

Thank you,
Ron
Edited to add:
The laws requiring recoupment can be located at 10 U.S.C. §§ 1174, 1174a.
 
I received Involuntary Separation Pay from the 2014 RIF. DFAS states the information below. Do you think they just won't recoup the separation pay since it's already been recouped or, because it's likely different buckets of money, will DoD have to recoup for the VA to pay back?


When someone who has previously received separation payment retires, the law requires the gross amount of the separation payment to be recouped through a reduction in military retired pay. The required gross recoupment includes the amount paid to you plus the amount withheld for taxes and paid to the IRS on your behalf. The separation payment recoupment reduces your retired pay before taxes are computed on your current retired pay. As a result, your overall taxable retired pay income is reduced by the amount of your monthly recoupment.

Laws and Regulations

The laws requiring recoupment can be located at 10 U.S.C. §§ 1174, 1174a. The Department of Defense (DoD) Financial Management Regulation (FMR), Volume 7B, Chapter 4 further explains the law and the requirement to recoup gross amount of Special Separation Bonus (SSB) as well as the required rate of recoupment
 
Ref:
"I'm going to be able to retire from active duty after previously being separated from active duty, receiving separation pay, and having that pay recouped by the VA after receiving disability. However, now that I'm retiring, I am going to have to pay back that separation pay as I cannot get it and my retirement pay. I would presume the VA would then have to repay me the recoupment they originally took as, in a sense, it's like I never received that original separation pay. Does anyone have any helpful information on this process? "

You will probably have to provide evidence to DFAS of the VA's previous actions to recoup the separation pay. I don't think they send a monthly statement. I know a couple of VA raters who might be able to provide instructions. I will contact them this evening.

Members who receive separation pay, but later rejoin the military and earn a retirement (Active, Guard, or Reserves) would also have part of their retirement pay withheld until the amount of their separation pay had been recouped. If the veteran is also a disabled veteran, then DFAS and the VA would coordinate the recoupment of the separation pay.

Just for info that might be useful later:

Recoupment Of Separation Benefits (U.S. Department Of Veterans Affairs) <---Link
M21-1

Ron
 
General Information:

This is from the VA procedures manual, M21-1. This might prove helpful in gathering info from the VA. Ron

VI.ii.2.1.d.Determining Whether VA Has Already Recouped Separation Benefits a Veteran Received​

Before establishing a withholding to recoup a Veteran’s separation benefit, check the corporate record (by clicking on the MILITARY button in Share and selecting the MILITARY PAYMENTS tab) to ensure VA has not already completed recoupment.

If the corporate record shows recoupment is complete, claims processors must ensure the amount of benefits VA recouped matches the amount of the separation benefit the Veteran received. If they do not match, treat the separation benefit currently at issue as unrecouped.

Exception: If VA completed its recoupment of a Veteran’s separation benefit in the Benefits Delivery Network (BDN) (prior to conversion to VETSNET), such recoupment will not be evident in Share.

If a Veteran had a master record in BDN, claims processors may view data from the record by clicking on the PRECONVSN MASTER RCD button in Share. Claims processors may not rely on data displayed on the STATUS (M11) screen, however, to determine whether VA finished recouping a Veteran’s separation benefit. Instead, claims processors must review entries in the Offset – Recoupment section of BDN award prints in the claims folder to make this determination.

Notes:
  • If VA began recoupment of a Veteran’s separation benefit in BDN and continued recoupment after conversion to VETSNET, the balance of the separation benefit that was pending recoupment at the time of conversionwill appear in the ORIGINAL BALANCE field on the
    • SEPARATION PAY tab, or
    • DISABILITY PAY tab (if the separation benefit is disability severance pay).
  • The SEPARATION PAY tab and DISABILITY PAY tab are located on the AWARD ADJUSTMENTS screen in VBMS-A.
Important: If a determination cannot be made as to whether VA has recouped a separation benefit, ask the local finance activity to assist in making the determination by performing a financial audit.
 
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