Preparing and Adjusting Awards in Military Retired Pay (MRP) Cases

Overview

In This Section

This section contains the following topics:

Scroll sideways to see the full table.

1. General Information on Identifying MRP Cases in the Corporate Record

Introduction

This topic contains general information on identifying MRP cases in the corporate record, including

• identifying an award requiring a waiver of MRP
• confirming the retired pay indicator is active
• instructions for activating the retired pay indicator in the corporate record
• removing the retired pay indicator when entitlement to MRP is terminated
• ensuring the Veteran’s branch of service and Social Security number (SSN) are recorded in the corporate record, and
• data VA provides to military RPCs.

Change Date

June 5, 2025

VI.ii.4.B.1.a. Identifying an Award Requiring a Waiver of MRP

The retired pay indicator in the corporate record identifies a compensation or Section 306 Pension award of a Veteran who

• must waive military retired pay (MRP) in order to receive compensation or pension, or
• has waived MRP for the purpose of computation of civil service annuity, which is payable concurrently with Department of Veterans Affairs (VA) benefits.

Important:

• Do not activate the retired pay indicator for a Veteran in receipt of current-law pension, per M21-1, Part VI, Subpart ii, 4.A.4.a.
• When MRP has been waived for civil service annuity, MRP changes will continue to populate in the Veterans Information Solution (VIS) and the Beneficiary Identification and Records Locator Subsystem (BIRLS). However, do not withhold compensation for MRP after the date shown in VIS that MRP stopped.

References: For more information on

• elections and waivers in MRP cases, see M21-1, Part VI, Subpart ii, 4.A
• activating the retired pay indicator in the corporate record, see M21-1, Part VI, Subpart ii, 4.B.1.c, and
• using VIS, see the VIS User Guide.

VI.ii.4.B.1.b. Confirming the Retired Pay Indicator Is Active

When processing an award to a Veteran whose service department awarded or will award MRP, confirm that the retired pay indicator is active by selecting the RETIRED PAY tab on the MILITARY PAYMENT INFORMATION screen in the award-processing system.

• If data regarding the Veteran’s MRP is displayed on the RETIRED PAY tab, and at least one entry under the RETIRED PAY TYPE field is other than DMDC, the retired pay indicator is active.
• If no MRP data is displayed on the RETIRED PAY tab, activate the indicator by following the instructions in M21-1, Part VI, Subpart ii, 4.B.1.c.

Note: Once the retired pay indicator is activated, a banner reflecting receipt of retired pay will be displayed in the Veterans Benefits Management System – Awards (VBMS-A).

Reference: For information on using VBMS-A, see the VBMS Awards User Guide.

VI.ii.4.B.1.c. Instructions for Activating the Retired Pay Indicator in the Corporate Record

Follow the instructions in the table below to activate the retired pay indicator in the corporate record.

Important: Activate the retired pay indicator even if VA is not withholding or will not withhold benefits based on the Veteran’s receipt of MRP.

Scroll sideways to see the full table.

References: For more information on

• updating the RETIRED PAY tab in VBMS-A, see the VBMS Awards User Guide, and
• using
• VIS, see the VIS User Guide
• DPRIS, see the DPRIS User Guide, and
• RCPS, see the Hunt User’s Guide.

VI.ii.4.B.1.d. Removing the Retired Pay Indicator When Entitlement to MRP Is Terminated

The retired pay indicator must be deactivated if a service department discontinues the payment of MRP to a Veteran because entitlement to MRP has terminated, for example, removal of the Veteran from the Temporary Disability Retirement List (TDRL). Deactivate the retired pay indicator by

• selecting the RETIRED PAY tab on the MILITARY PAYMENT INFORMATION screen
• clicking the ADD button
• entering the type of MRP that was terminated in the RETIRED PAY TYPE field
• entering the date payment of MRP ended in the EFFECTIVE DATE field, and
• entering 0.00 in the GROSS AMOUNT field.

Important: If a service department awards a Veteran discharge pay after discontinuing MRP, it will be necessary to update the fields on the DISCHARGE PAY tab, as well.

References: For more information on

• taking the actions described in this block, see the VBMS Awards User Guide, and
• removal of a Veteran from the TDRL, see M21-1, Part VI, Subpart ii, 4.B.6.

VI.ii.4.B.1.e. Ensuring the Veteran’s Branch of Service and SSN Are Recorded in the Corporate Record

A Veteran’s branch of service and Social Security number (SSN) must be recorded in the corporate record to ensure the proper exchange of information between VA and retired pay centers (RPCs).

Ensure the branch of service in the corporate record is the same as the branch that is paying MRP.

Reference: For more information on making entries and updates to the corporate record, see the Share Online Help.

VI.ii.4.B.1.f. Data VA Provides to Military RPCs

The data VA provides to RPCs includes data pertaining to all original and reopened awards and any supplemental award actions if all of the following criteria are met:

• the entitlement type is disability compensation or Dependency and Indemnity Compensation
• authorization of an award (including automated cost-of-living adjustments), and
• the Veteran’s SSN is recorded in the corporate record.

2. Adjusting an Award Affected by MRP

Introduction

This topic contains information on adjusting awards that are affected by MRP, including

• processing an award to a Veteran in receipt of MRP
• determining the effective date of entitlement and the effective date of payment
• deadline for authorizing awards
• RPC action when the rate of compensation exceeds the rate of MRP
• processing an award when the rate of compensation exceeds the rate of MRP
• determining the effective date for a reduced award, and
• tax exemption of MRP and notifying the Veteran of eligibility.

Change Date

January 26, 2026

VI.ii.4.B.2.a. Processing an Award to a Veteran in Receipt of MRP

Withhold benefits to prevent the concurrent payment of VA benefits and MRP when concurrent payment is prohibited.

To calculate the amount of benefits to withhold, use the Retired Pay Withholding Calculator, which is accessible on the Military Pay webpage.

Exceptions: Do not withhold for MRP when

• processing the initial compensable disability rating and the Veteran meets full Concurrent Retirement and Disability Pay (CRDP) requirements described in M21-1, Part VI, Subpart ii, 4.A.2.f (claims processors must upload the documentation described in the first row of the table in M21-1, Part VI, Subpart ii, 4.A.2.g), or
• restoring benefits VA previously reduced (e.g., restoring the payment of additional compensation for dependents that were removed for failure to return VA Form 21-0538, Mandatory Verification of Dependents), and written correspondence is obtained from the RPC certifying no retroactive adjustments to MRP were completed to account for the reduction of VA benefits. Certification from the RPC may not be obtained from RCPS or by telephone.

Notes:

• For the purposes of this block, the term initial compensable disability rating means the first rating decision that VA
• grants entitlement to special monthly compensation (SMC), and/or
• assigns a service-connected (SC) evaluation of 10 percent or higher.
• When restoring benefits VA previously reduced and withholding for MRP is required, in the decision notice, invite the Veteran to submit proof from the respective RPC, showing no retroactive adjustments to MRP were completed to account for the reduction of VA benefits for the time period of the reduction. If the Veteran submits the evidence requested, adjust the withholding of compensation for MRP accordingly.

References: For more information on

• the circumstances under which concurrent payment of VA benefits and MRP is prohibited, see M21-1, Part VI, Subpart ii, 4.A.1.a
• the manual calculation of MRP withholdings, see the Guide to Calculating Military Retired Pay Withholdings Following the Rescission of Fast Letter 07-01
• making award adjustments, based on a Veteran’s receipt of MRP, in VBMS-A, see the VBMS Awards User Guide
• CRDP, see
• M21-1, Part VI, Subpart ii, 4.A.6
• 38 CFR 3.750, and
• 10 U.S.C. 1414
• SMC, see M21-1 Part VIII, Subpart iv, 4.A, and
• failure to return VA Form 21-0538, see M21-1, Part VII, Subpart i, 1.B.4.

VI.ii.4.B.2.b. Determining the Effective Date of Entitlement and the Effective Date of Payment

Apply the provisions of

• 38 CFR 3.400 when determining the effective date of entitlement to a benefit, and
• 38 CFR 3.31 when determining the effective date of payment of a benefit.

Reference: For an explanation of the difference between the effective date of payment and effective date of entitlement, see M21-1, Part VI, Subpart i, 1.A.2.b.

VI.ii.4.B.2.c. Deadline for Authorizing Awards

On Compensation Service’s online calendar, the following entry will appear monthly, usually around the middle of each month:

Stop retired pay withholding effective [month/day/year], if award authorized before [cutoff time]. Awards with a retired pay withholding shall not be authorized from [cutoff time] to [one hour following cutoff time] on [month/day/year]. On or after [one hour following cutoff time] on [month/day/year] stop retired pay withholding with a [month/day/year] effective date.

All awards that increase a Veteran’s compensation effective the first day of the current month, based on a corresponding reduction in the Veteran’s MRP, must be authorized by the cutoff time on the date referenced in the above paragraph.

If authorization is not accomplished by the cutoff time on the referenced date, the award must be regenerated to reflect the increase in compensation (and reduction in MRP) from the first day of the following month.

Rationale: If the award is authorized after the cutoff time on the referenced date without regenerating the award as described, the Veteran’s RPC will not have sufficient time to reduce the Veteran’s MRP from the first day of the current month. The one-hour moratorium allows the Hines Information Technology Center time to start the file that is used by the RPCs for this purpose.

Note: For quality review purposes, the timestamp on award prints is shown as Eastern Standard Time (or Eastern Daylight Time, when in effect).

VI.ii.4.B.2.d. RPC Action When the Rate of Compensation Exceeds the Rate of MRP

Any time RPCs receive data showing a Veteran’s monthly rate of compensation exceeds the monthly rate of MRP, the RPC automatically releases to the station of origination (SOO)

• a certification of the gross MRP, and
• the effective dates of any rate changes in the Veteran’s MRP for the previous two years.

Upon receipt of the notice described above from an RPC, the SOO must

• review the military payment history, and
• initiate payment of any previously withheld compensation that exceeds the amount of MRP for the same period.

Note: If the information referenced in this block does not exist in the claims folder but is relevant to award processing, it may be obtained

• through RCPS (for Air Force, Army, Navy, Space Force, and Marine Corps retirees only)
• by calling CGRASB at 1-866-772-8724, or
• through VIS.

Reference: For more information on using

• RCPS, see the HUNT User’s Guide, and
• VIS, see the VIS User Guide.

VI.ii.4.B.2.e. Processing an Award When the Rate of Compensation Exceeds the Rate of MRP

When processing an award and the monthly rate of compensation exceeds the monthly rate of MRP,

• begin the award effective the earliest date that entitlement is established, as determined under the basic rules of 38 CFR 3.400 and 38 CFR 3.31, and
• pay the difference between the rate of compensation and the rate of MRP from the start of the award until the date that the payment of compensation at the full rate may be authorized, as determined by M21-1, Part VI, Subpart ii, 4.B.2.c.

For the periods authorizing the differential rate,

• show the amount not paid because of receipt of MRP as a retired pay withholding, and
• zero out the MRP withholding on the award line that reflects payment of compensation at the full rate.

Reference: For more information on making award adjustments involving MRP in VBMS-A, see the VBMS Awards User Guide.

VI.ii.4.B.2.f. Determining the Effective Date for a Reduced Award

Retroactively reduce benefits in accordance with existing laws and regulations (38 CFR 3.501).

VI.ii.4.B.2.g. Tax Exemption of MRP and Notifying the Veteran of Eligibility

Anytime VA pays a Veteran less than the full rate of disability compensation because the Veteran was in receipt of MRP, VA must notify the Veteran that MRP in an amount equal to the amount of compensation VA withheld (because of the Veteran’s receipt of MRP) is tax exempt. Include the following text in the corresponding decision notice to notify the Veteran of the tax exemption:

Include the following text in the corresponding decision notice to notify the Veteran of the tax exemption:

Because VA compensation is not taxable, you may be entitled to a tax exemption during the period VA withheld your compensation; the amount of the exemption would be the amount of compensation VA withheld based on your receipt of military retired pay.

Subsequent changes in the amount of compensation VA withholds based on your receipt of military retired pay may affect the tax exemption. Please contact the Internal Revenue Service with questions about your tax liability.

3. Handling Cases in Which a Service Department Has Not Yet Calculated the Amount of MRP It Will Pay a Veteran

Introduction

This topic contains instructions for handling cases in which a service department has not yet calculated the amount of MRP it will pay a Veteran, including

• actions to take prior to authorization when the amount of a Veteran’s MRP is unknown
• updating the award-processing system based on data displayed in RCPS
• awarding benefits after determining the amount of a Veteran’s MRP has not yet been calculated
• review and processing of
• end product (EP) 290, and
• EPs 290 that involve a Veteran who retired from the Coast Guard, National Oceanic and Atmospheric Administration (NOAA), or U.S. Public Health Service (PHS)
• handling cases in which the date of retirement or separation falls on the 31 st day of a month, and
• adjusting a running award of disability compensation when the amount of a Veteran’s MRP was previously unknown.

Change Date

June 5, 2025

VI.ii.4.B.3.a. Actions to Take Prior to Authorization When the Amount of a Veteran’s MRP Is Unknown

Follow the instructions in the table below immediately prior to authorization of an award to a Veteran when the amount of MRP to which the Veteran is entitled is unknown.

Scroll sideways to see the full table.

Notes:

• In order to gain access to RCPS, users must navigate to the Military Pay webpage and follow the access request instructions found in the How to Register for an AMPS Account – External User Only.
• Upon completion, the access request is automatically routed to the following individuals/destinations, in sequential order:
• the user’s immediate supervisor
• the information security officer or human resource (HR) office, and
• DFAS.
• User guides for supervisors and information security/HR officers are also available on the Military Pay webpage.
• When necessary, users may
• reset RCPS by pressing the Pause/Break key on the keyboard, or
• unlock a frozen RCPS screen by pressing the Esc key on the keyboard.
• Do not log out of the DISA MIAP in order to maintain access throughout the day.
• Claims processors may also obtain RCPS data by contacting DFAS via telephone at 1-866-622-4602.

References: For more information on using

• RCPS, see the Hunt User’s Guide, and
• DPRIS, see the DPRIS User Guide.

VI.ii.4.B.3.b. Updating the Award-Processing System Based on Data Displayed in RCPS

The table below contains instructions for updating the RETIRED PAY tab on the MILITARY PAYMENT INFORMATION screen in the award-processing-system based on data displayed on the SELECTED ENTITLEMENT DATA screen in RCPS.

Scroll sideways to see the full table.

Reference: For more information on using VBMS-A, see the VBMS Awards User Guide.

VI.ii.4.B.3.c. Awarding Benefits After Determining the Amount of a Veteran’s MRP Has Not Yet Been Calculated

Withhold all disability compensation when a withholding for MRP is required in accordance with the instructions in M21-1, Part VI, Subpart ii, 4.B.2.a - c, and fewer than six months have passed since the Veteran retired without the service department calculating the amount of MRP.

When a withholding for MRP is required, establish end product (EP) 290 after authorizing the award by

• using the current date as the date of claim and the claim label
• IDES Retired Pay Waiver/Election when processing an Integrated Disability Evaluation System (IDES) case, or
• BDD Retired Pay Waiver/Election when processing any other type of case
• entering Awaiting MRP Information as an associated contention, and
• adding the appropriate tracked item as identified in M21-4 Appendix D, with a suspense date that is 10 days from the current date.

Exception: Do not withhold all disability compensation if a Veteran is already receiving disability compensation on the date of retirement. Under such circumstances, withhold only the amount of any increase in compensation to which the Veteran is entitled.

Important: Do not withhold for MRP if

• six or more months have passed since the Veteran retired and the Veteran’s service department has not yet calculated MRP, or
• the effective date and authorization of the award is before the corresponding retired pay cutoff date/time, as described in M21-1, Part VI, Subpart ii, 4.B.2.c.

VI.ii.4.B.3.d. Review and Processing of EPs 290

Follow the instructions in the table below for every EP 290 that was established in accordance with the instructions in M21-1, Part VI, Subpart ii, 4.B.3.c.

Scroll sideways to see the full table.

VI.ii.4.B.3.e. Review and Processing of EPs 290 That Involve a Veteran Who Retired From the Coast Guard, NOAA, or PHS

Follow the instructions in the table below for every EP 290 that

• was established in accordance with the instructions in M21-1, Part VI, Subpart ii, 4.B.3.c, and
• involves a Veteran who retired from the
• Coast Guard
• NOAA, or
• PHS.

Scroll sideways to see the full table.

VI.ii.4.B.3.f. Handling Cases In Which the Date of Retirement or Separation Falls on the 31 st Day of a Month

If the date of a Veteran’s retirement (the day following the date of separation) falls on the 31 st day of a month, enter the first day of the month that follows the date of retirement in the EFFECTIVE DATE field on the RETIRED PAY tab of the MILITARY PAYMENT INFORMATION screen in the award-processing system.

Rationale: The 31 st day of a month is not a pay date for MRP purposes. Therefore, when the retirement date falls on this day, MRP starts on the first day of the following month.

VI.ii.4.B.3.g. Adjusting a Running Award of Disability Compensation When the Amount of a Veteran’s MRP Was Previously Unknown

The table below contains instructions that are unique to the adjustment of a running award of disability compensation when the amount of a Veteran’s MRP was unknown on the most recent award.

Important:

• Before taking the actions described in the table below, follow the instructions in M21-1, Part VI, Subpart ii, 4.B.3.a, to ensure the amount of MRP to which the Veteran is entitled remains unknown.
• If six months have passed since the Veteran retired, and the Veteran’s service department has not yet calculated MRP, it is unnecessary to establish a withholding for MRP.

Scroll sideways to see the full table.

4. VA, Service Department, and RPC Responsibility for Avoiding and Collecting Overpayments

Introduction

This topic contains information on VA’s, the service departments’, and the RPCs’ responsibility for

• avoiding overpayments, and
• collecting an overpayment.

Change Date

April 26, 2021

VI.ii.4.B.4.a. Responsibility for Avoiding Overpayments

To avoid the creation of an overpayment in a Veteran’s account,

• VA is responsible for processing awards that use effective dates determined in accordance with M21-1, Part VI, Subpart ii, 4.B.2
• the service department is responsible for contacting VA to inquire whether or not a Veteran eligible for MRP is already in receipt of VA benefits, and
• the RPCs are responsible for the timely processing of waivers based on VA awards.

VI.ii.4.B.4.b. Responsibility for Collecting an Overpayment

Use the table below to determine who is responsible for collecting an overpayment.

Scroll sideways to see the full table.

Note: A General Counsel memorandum for file, dated September 18, 1972, determined that 38 U.S.C. 3104(a) (now 38 U.S.C. 5304(a)), prohibiting concurrent payment of VA benefits and MRP, does not preclude the application of 38 U.S.C. 3012(b)(10) (now 38 U.S.C. 5112(b)(10)), which permits a reduction of VA benefits effective the date last paid (the date in the LAST PAID DATE field on the CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS) if the previous payment was solely VA error. That General Counsel memorandum was found to be consistent with the decision in VAOPGCPREC 2-1990.

5. Handling an Election of VA Benefits, a Reelection of VA Benefits, and an Election of MRP

Introduction

This topic contains instructions for handling an election of VA benefits, a reelection of VA benefits, and an election of MRP, including

• handling an election of MRP from a Veteran in receipt of 306 Pension
• determining whether a Veteran may reelect Section 306 Pension after waiving the benefit
• handling
• an election of MRP from a Veteran in receipt of disability compensation, and
• a reelection of disability compensation
• determining the effective date of an award when VA denied the prior claim because the Veteran elected MRP
• special consideration of Veterans hospitalized for an SC disability, and
• awarding benefits when VA Form 21-651 is timely received from a Veteran in a VA or service hospital.

Change Date

January 26, 2026

VI.ii.4.B.5.a. Handling an Election of MRP From a Veteran in Receipt of Section 306 Pension

A Veteran receiving Section 306 Pension may elect to receive MRP.

An election of MRP does not bar subsequent election of other benefits administered by VA.

Note: The effective date of reelection of VA benefits is governed by 38 CFR 3.401(e)(3).

Reference: For more information on a Veteran’s right to elect MRP and reelect VA benefits, see 38 CFR 3.750.

VI.ii.4.B.5.b. Determining Whether a Veteran May Reelect Section 306 Pension After Waiving the Benefit

Although a Veteran may waive Section 306 Pension in order to receive MRP, VA might not allow the Veteran to reelect the same VA benefit at a later date.

Entitlement to Section 306 Pension is not protected under 38 CFR 3.960 if the disability or annual income did not continuously meet protected pension eligibility criteria from the date pension was waived through the date of receipt of the reelection.

Before paying Section 306 Pension to a Veteran who waived pension to receive MRP, request evidence to determine if the Veteran would have been continuously entitled to Section 306 Pension for the entire period that the pension payments were waived.

Absent evidence of continuous entitlement, the Veteran can no longer receive Section 306 Pension. If entitlement to current-law pension exists, VA may pay this benefit to the Veteran.

VI.ii.4.B.5.c. Handling an Election of MRP From a Veteran in Receipt of Disability Compensation

Follow the steps in the table below when a Veteran in receipt of disability compensation checks a box on an application for VA benefits (such as the box in Block 26 of VA Form 21-526EZ, Application for Disability Compensation and Related Compensation Benefits) rejecting receipt of VA compensation in lieu of MRP.

Exceptions:

• As stated in M21-1, Part VI, Subpart ii, 4.A.2.a, a waiver of MRP is not required when a Veteran is eligible for full Concurrent Retirement and Disability Pay.
• If a Veteran who is not eligible for MRP checks the box referenced in the preceding paragraph,
• disregard the steps in the table below, and
• notify the Veteran that VA cannot act on the election because there is no eligibility for MRP.

Scroll sideways to see the full table.

Important:

• Treat VA Form 21 -526EZ or a signed statement (referenced in M21-1, Part VI, Subpart ii, 4.A.2.e) as a completed VA Form 21-651 when submitted at any point in the process described in the table above.
• Before treating VA Form 21 -526EZ as a completed VA Form 21-651, ensure the Veteran did not check the box on the form that indicates
• a desire to receive MRP instead of VA compensation, or
• rejection of receipt of VA compensation in lieu of MRP.

References:

• M21-1, Part XI, Subpart ii, 3.A.3, contains instructions for handling an election that is pending when a Veteran dies.
• Follow the instructions in M21-1, Part VI, Subpart ii, 4.A.3.a, if a Veteran to whom VA has not yet awarded disability compensation files a claim for this benefit but elects MRP.

VI.ii.4.B.5.d. Handling Reelection of Disability Compensation

When a Veteran, whose disability compensation VA discontinued because the Veteran elected MRP, later reelects disability compensation,

• resume the payment of disability compensation, effective the date of receipt of the election, and
• establish a withholding for the MRP according to the instructions in M21-1, Part VI, Subpart ii, 4.B.2.a.

Reference: M21-1, Part XI, Subpart ii, 3.A.3, contains instructions for handling an election that is pending when a Veteran dies.

VI.ii.4.B.5.e. Determining the Effective Date of an Award When VA Denied the Prior Claim Because the Veteran Elected MRP

Follow the instructions in the table below when

• VA denies a Veteran’s claim for disability compensation because the Veteran elected MRP, and
• the Veteran files a subsequent claim on a form that includes a waiver of MRP one year or more after VA notified the Veteran of the denial.

Note: Follow the instructions in the last sub-bullet in M21-1, Part VI, Subpart ii, 4.A.3.c, if VA receives the subsequent claim within one year of the date VA notified the Veteran of the denial.

Scroll sideways to see the full table.

Important:

• The policies described in the table above also apply if
• VA denies a Veteran’s claim for disability compensation because the Veteran elected MRP
• the Veteran files a subsequent claim on a form that does not include a waiver of MRP one year or more after VA notified the Veteran of the denial, and
• the Veteran waives MRP within one year of the decision notice regarding the subsequent claim.
• Payments of disability compensation may be subject to the withholding referenced in M21-1, Part VI, Subpart ii, 4.B.2.a, until the Veteran’s RPC makes corresponding adjustments to MRP.

VI.ii.4.B.5.f. Special Consideration of Veterans Hospitalized for an SC Disability

When all of the conditions listed below are met, notify the Veteran of the VA benefits that are payable and tell the Veteran that if a formal election is filed within one year of the date of the notice, eligibility for VA benefits will be established from the date of hospitalization:

• VA receives notice from a VA medical center or military treatment facility of a Veteran’s hospitalization for an SC disability
• a waiver of the Veteran’s MRP is not currently in effect, and
• it appears the VA benefits that are payable would be greater than the Veteran’s MRP.

Note: If a rating under 38 CFR 4.29 or 4.30 is involved, inform the Veteran of the temporary nature of the VA benefits.

Reference: For more information on the forms a Veteran may submit to waive MRP, see M21-1, Part VI, Subpart ii, 4.A.2.

VI.ii.4.B.5.g. Awarding Benefits When VA Form 21-651 Is Timely Received From a Veteran in a VA or Service Hospital

If, after receiving the notice discussed in M21-1, Part VI, Subpart ii, 4.B.5.f, a Veteran submits VA Form 21-651 within one year of the date of the notice, award benefits effective the date of hospitalization.

Notes:

• The award, in this case, is subject to a withholding for the MRP the Veteran received from the effective date of the award, as provided in M21-1, Part VI, Subpart ii, 4.B.2.a.
• Apply the provisions of 38 CFR 3.31 when determining the effective date of payment.

6. Removal of a Veteran From the TDRL

Introduction

This topic contains information on the effect of a Veteran’s removal from the TDRL, including

• general information on the removal of a Veteran from the TDRL
• removal from the TDRL of a Veteran
• in receipt of VA benefits, and
• who is not receiving VA benefits, and
• awarding of severance pay following removal of a Veteran from the TDRL.

Change Date

January 26, 2026

VI.ii.4.B.6.a. General Information on the Removal of a Veteran From the TDRL

VA may become aware of a Veteran’s removal from the TDRL through

• notification from an RPC
• notification from the Veteran, or
• routine review of the Veteran’s claims folder.

In any case,

• follow the procedures in
• M21-1, Part VI, Subpart ii, 4.B.6.b, if the Veteran is receiving VA benefits
• M21-1, Part VI, Subpart ii, 4.B.6.c, if the Veteran is not receiving VA benefits, or
• M21-1, Part VI, Subpart ii, 4.B.6.d, if the Veteran was awarded severance pay, and
• inform the Veteran of rights regarding the reinstatement of benefits.

VI.ii.4.B.6.b. Removal From the TDRL of a Veteran in Receipt of VA Benefits

If an RPC provides notice that a Veteran in receipt of compensation is no longer receiving MRP, follow the instructions in M21-1, Part VI, Subpart ii, 4.B.1.d for removing the retired pay indicator from the corporate record.

VI.ii.4.B.6.c. Removal From the TDRL of a Veteran Who Is Not Receiving VA Benefits

When a Veteran who never filed a claim for VA benefits or whose claim VA denied due to the Veteran’s receipt of MRP is removed from the TDRL, send a letter to the Veteran’s last known address of record that

Note: If VA received the notice of the Veteran’s removal from the TDRL from an RPC, the Veteran’s address will be displayed in the lower left-hand corner of the notice.

• acknowledges the Veteran’s removal from the TDRL
• encourages the Veteran to file a claim for VA disability benefits, even if the Veteran
• was placed on the permanent disability retired list, or
• received disability severance pay, and
• includes VA Form 21-526EZ.

VI.ii.4.B.6.d. Awarding of Severance Pay Following Removal of a Veteran From the TDRL

RPCs occasionally notify VA that a Veteran in receipt of compensation has been

• removed from the TDRL, and
• awarded severance pay.

In these cases, review the instructions unique to recoupment of disability severance pay, as discussed in M21-1, Part VI, Subpart ii, 2.3, and, if necessary, send the Veteran notice of proposed adverse action before adjusting benefits. Unless the Veteran submits evidence within 65 days that demonstrates VA should not take the proposed action, follow the instructions in the table below.

Scroll sideways to see the full table.

References: For more information on

• issuing notice of proposed adverse action, see M21-1, Part X, Subpart ii, 3.A
• preparing a decision notice, see M21-1, Part VI, Subpart i, 1.B, and
• withholding benefits to recoup severance pay in VBMS-A, see the VBMS Awards User Guide.

7. Effect of a Reduction of Benefits Under 38 CFR 3.551 on MRP

Change Date

April 26, 2021

VI.ii.4.B.7.a. Handling the Reduction of a Veteran’s Award Under 38 CFR 3.551

Unlike pension, MRP is not subject to reduction when a Veteran is hospitalized at VA expense.

If a Veteran is hospitalized and has waived a portion of MRP to receive Section 306 Pension,

• VA reduces the Veteran’s award under 38 CFR 3.551, and
• the Veteran’s RPC
• makes the appropriate adjustment to the Veteran’s MRP based on the award data VA transmits to the RPC, and
• notifies VA of changes in the Veteran’s hospitalization status if the RPC receives such information first.

Rationale: This reciprocal action ensures the Veteran receives full entitlement, but not in excess thereof, on each benefit, per 38 U.S.C. 5305.

Reference: For more information on reducing a Veteran’s award under 38 CFR 3.551, see M21-1, Part X, Subpart iii, 1.D.