B-169528, JUNE 1, 1970, 49 COMP. GEN. 824

B-169528, JUNE 1, 1970, 49 COMP. GEN. 824

PAY -- RETIRED -- ANNUITY ELECTIONS FOR DEPENDENTS -- WITHDRAWAL FROM PARTICIPATION -- ATTEMPT AFTER RETIREMENT TO CHANGE ELECTION A MEMBER OF THE UNIFORMED SERVICES WHO HAD ELECTED OPTION 3 AT ONE HALF REDUCED RETIRED PAY UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN ON MAY 9, 1967, FOR WIFE AND CHILDREN, AND WHO SHORTLY AFTER THE ELECTION LOST HIS WIFE AND REMARRIED, MAY NOT HAVE HIS REQUEST FOR REVOCATION OF HIS ELECTION MADE BEFORE HIS TRANSFER TO THE FLEET RESERVE ON JULY 7, 1969, CONSIDERED AS THE REQUESTED CHANGE DOES NOT "REFLECT" THE CHANGED STATUS IN MARITAL OR DEPENDENCY STATUS CONTEMPLATED BY THE 1968 AMENDMENT TO THE PLAN, NOR MAY HIS ALTERNATIVE REQUEST MADE AFTER HIS TRANSFER TO PROVIDE ONLY FOR HIS CHILDREN BE CONSIDERED AS IT WAS NOT RECEIVED WITHIN 2 YEARS OF THE DATE OF HIS WIFE'S DEATH. HOWEVER, THE MEMBER MAY ON THE BASIS OF THE APPLICATION MADE AFTER TRANSFER WITHDRAW FROM THE PLAN UNDER 10 U.S.C. 1436(B), EFFECTIVE ON THE FIRST DAY OF THE SEVENTH MONTH AFTER THE MONTH IN WHICH THE APPLICATION WAS RECEIVED. PAY -- RETIRED -- ANNUITY ELECTIONS FOR DEPENDENTS -- REVISION OF PLAN -- STATUS CHANGES THE ELECTION OF OPTION 3, AT ONE-FOURTH REDUCED RETIRED PAY, COMBINED WITH OPTION 4, UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN BY A NAVY OFFICER WHO PRIOR TO HIS PLACEMENT ON THE RETIRED LIST PURSUANT TO 10 U.S.C. 6323, MARRIED AND ACQUIRED A CHILD, MAY NOT BE CHANGED TO OPTION 2, AT ONE-HALF RETIRED PAY WITH OPTION 4, AS THE OFFICER'S INITIAL ELECTION BECAME EFFECTIVE WHEN HE ACQUIRED ELIGIBLE BENEFICIARIES AND, THEREFORE, THE CHANGE IS NOT THE STATUS CHANGE CONTEMPLATED BY THE 1968 AMENDMENT TO THE PLAN. MOREOVER, EVEN IF THE CHANGE MET THE REQUIREMENTS OF THE 1968 ACT, THE CHANGE INVOLVING AN INCREASE IN ANNUITY FROM ONE-FOURTH TO ONE- HALF OF THE OFFICER'S REDUCED RETIRED PAY WOULD BE PRECLUDED BY 10 U.S.C. 1431(C), WHICH PERMITS AN OTHERWISE PROPER CHANGE OF ELECTION ONLY IF SUCH "CHANGE DOES NOT INCREASE THE AMOUNT OF THE ANNUITY."

TO LIEUTENANT H. F. BEERMAN, DEPARTMENT OF THE NAVY, JUNE 1, 1970:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 25, 1970, YOUR FILE XO: JMS: MLO 7220/224 33 90, 470 735, REQUESTING AN ADVANCE DECISION AS TO WHETHER REVOCATION AND MODIFICATION OF ELECTIONS OF OPTIONS UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN, 10 U.S.C. 1431-1446, SUBMITTED BY THOMAS M. ALLISON, BMCS, USNFR, AND LIEUTENANT COMMANDER HARRY F. SNYDER, USNR (RETIRED), RESPECTIVELY, MAY BE CONSIDERED CHANGES IN MARITAL OR DEPENDENCY STATUS UNDER 10 U.S.C. 1431(C). YOUR REQUEST WAS FORWARDED TO THIS OFFICE BY SECOND ENDORSEMENT OF THE DIRECTOR, NAVY MILITARY PAY SYSTEM AND HAS BEEN ASSIGNED NUMBER DO-N-1075 BY THE DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE.

IN YOUR LETTER IT IS STATED THAT MR. ALLISON WAS TRANSFERRED TO THE FLEET RESERVE ON JULY 7, 1969, PURSUANT TO 10 U.S.C. 6330, AND THAT ON MAY 9, 1967, HE MADE A VALID ELECTION OF OPTION 3 AT ONE-HALF REDUCED RETIRED PAY UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN. THE BENEFICIARIES LISTED WERE HIS WIFE JOAN AND HIS FIVE CHILDREN. HIS WIFE DIED ON JUNE 24, 1967, AND ON AUGUST 17, 1968, HE MARRIED MARY F. O'MALLEY. ON APRIL 10, 1969, A REQUEST FOR REVOCATION OF HIS ELECTION OF OPTIONS OF MAY 9, 1967, WAS RECEIVED IN THE NAVY FAMILY ALLOWANCE ACTIVITY. MR. ALLISON STATED THAT HIS REASON FOR REVOCATION WAS THE DEATH OF HIS WIFE AND FINANCIAL HARDSHIP. BY LETTER DATED JULY 17, 1969, HE STATED THAT IF REVOCATION WAS NOT POSSIBLE HE WISHED TO PROVIDE PROTECTION FOR HIS CHILDREN ONLY.

IT IS REPORTED THAT LIEUTENANT COMMANDER SNYDER WAS PLACED ON THE RETIRED LIST ON JULY 1, 1969, PURSUANT TO 10 U.S.C. 6323, AND THAT ON SEPTEMBER 11, 1959, HE EXECUTED A VALID ELECTION OF OPTION 3 AT ONE FOURTH REDUCED RETIRED PAY, COMBINED WITH OPTION 4, UNDER THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN. AT THE TIME OF THIS ELECTION HE WAS NOT MARRIED. OCTOBER 8, 1966, HE MARRIED BETTY LOU RUBLE AND A CHILD WAS BORN OF THIS MARRIAGE ON NOVEMBER 26, 1967. THE FIRST NOTIFICATION OF HIS MARRIAGE AND THE BIRTH OF THE CHILD WAS ON THE DATE OF RECEIPT OF AN ELECTION OF OPTIONS FORM DATED JUNE 3, 1969, REQUESTING A CHANGE IN THE PRIOR ELECTION TO OPTION 2 AT ONE-HALF RETIRED PAY, COMBINED WITH OPTION 4.

PUBLIC LAW 90-485, AUGUST 13, 1968, 82 STAT. 751, WAS ENACTED TO AMEND THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN, 10 U.S.C. 1431 1446. THE PURPOSE OF THIS AMENDMENT WAS TO ENCOURAGE GREATER PARTICIPATION IN THE PLAN THROUGH THE LIBERALIZATION OF CERTAIN PROVISIONS OF THE LAW. REPT. NO. 951, 90TH CONG., 1ST SESS., PAGES 9-10, ON THE PROPOSED AMENDMENT (H.R. 12323) CONTAINS THE FOLLOWING PERTINENT STATEMENT:

TO OVERCOME THE WIDESPREAD CRITICISM THAT PARTICIPANTS CANNOT REVOKE OR MODIFY AN ELECTION WITHIN THE PREELECTION PERIOD (3 YEARS PRECEDING RETIREMENT, UNDER CURRENT LAW; 2 YEARS, UNDER THE PRESENT PROPOSAL), THIS PROPOSAL WOULD PERMIT, IN THE EVENT OF DEATH OF THE SPOUSE, DIVORCE, OR REMARRIAGE AND THE ACQUISITION OF A CHILD OR CHILDREN, A CHANGE OR REVOCATION SO LONG AS THE AMOUNT OF THE ANNUITY DOES NOT EXCEED THAT OF THE ORIGINAL ELECTION. AS PRESENTLY CONSTITUTED, WITHIN THE PREELECTION PERIOD, WITH OPTION 1 (WIFE ONLY), SHOULD THE WIFE DIE OR BE DIVORCED, THE CHILDREN OF THE MARRIAGE MAY NOT RECEIVE AN ANNUITY UNLESS THE ELECTION OPTION 2 WAS ALSO IN EFFECT. SHOULD THE MEMBER WITH OPTION 2 (CHILDREN ONLY) REMARRY, HE CANNOT MODIFY HIS SURVIVOR PROTECTION PLAN TO PROVIDE FOR THE NEW SPOUSE. THE NEED TO LIBERALIZE THIS ASPECT OF THE "PREELECTION RULE" HAS LONG BEEN CONTENDED BY THE PARTICIPANTS, AND THEIR ATTITUDE IS REFLECTED IN THE CONTINUING LOW RATE OF PARTICIPATION.

THE FOREGOING STATEMENT POINTS OUT WHY ADJUSTMENTS WERE NEEDED AND INDICATES THE TYPE OF PROBLEM WHICH WAS INTENDED TO BE REMEDIED BY THE ENACTMENT OF THE AMENDMENT OF SECTION 1431(C). THE PERTINENT PROVISIONS OF THAT SECTION ARE:

*** THE ELECTOR MAY, HOWEVER, BEFORE THE FIRST DAY FOR WHICH RETIRED OR RETAINER PAY IS GRANTED, CHANGE OR REVOKE HIS ELECTION (PROVIDED THE CHANGE DOES NOT INCREASE THE AMOUNT OF THE ANNUITY ELECTED) TO REFLECT A CHANGE IN THE MARITAL OR DEPENDENCY STATUS OF THE MEMBER OF HIS FAMILY THAT IS CAUSED BY DEATH, DIVORCE, ANNULMENT, REMARRIAGE, OR ACQUISITION OF A CHILD, IF SUCH CHANGE OR REVOCATION OF ELECTION IS MADE WITHIN TWO YEARS OF SUCH CHANGE IN MARITAL OR DEPENDENCY STATUS.

IT APPEARS THAT THE CONGRESS DID NOT INTEND THAT SECTION 1431(C) SHOULD PROVIDE A MEANS OF RELEASING A MEMBER FROM THE COMMITMENT OF A PRIOR ELECTION SIMPLY ON THE OCCURRENCE OF A CHANGE IN THE MARITAL OR DEPENDENCY STATUS OF THE ELECTOR OR HIS FAMILY CAUSED BY ONE OR MORE OF THE LISTED FACTORS, BUT RATHER, THAT SUCH SECTION WAS DESIGNED TO ALLOW HIM TO MAKE A CHANGE OR REVOCATION WHEN THE CHANGE IN HIS FAMILY'S STATUS RENDERS HIS PRIOR ELECTION INAPPROPRIATE.

CERTAIN CHANGES IN MARITAL OR DEPENDENCY STATUS DO NOT WARRANT A CHANGE IN ELECTION. FOR EXAMPLE, A MEMBER WITH OPTION 3 (FAMILY OPTION) HAS A WIFE AND THREE CHILDREN AND ONE OF THE CHILDREN DIES. IF THE SECTION WERE INTERPRETED IN SUCH A MANNER AS TO PERMIT A CHANGE OR REVOCATION BECAUSE OF THE DEATH OF HIS CHILD, WE THINK THIS WOULD BE CONTRARY TO THE INTENT OF THE CONGRESS. THAT INTENT IS EXPRESSED BY THE USE OF THE WORDS "TO REFLECT." IN OUR VIEW THOSE WORDS REQUIRE A READING OF SECTION 1431(C) SO AS TO PERMIT A CHANGE OR REVOCATION INDICATIVE OF OR BEARING A CLOSE RELATIONSHIP TO THE ACTUAL CHANGE IN THE MARITAL OR DEPENDENCY STATUS OF THE ELECTOR OR HIS FAMILY.

MR. ALLISON HAS IN FACT HAD TWO CHANGES IN HIS MARITAL AND DEPENDENCY STATUS. THE FIRST OCCURRING ON THE DEATH OF HIS WIFE JOAN, THE SECOND OCCURRING ON HIS REMARRIAGE TO MARY. ALTHOUGH HE, BY VIRTUE OF HIS REMARRIAGE, HAD A WIFE AND CHILDREN AT THE TIME OF HIS TRANSFER TO THE FLEET RESERVE, SECTION 1431(C) PERMITS, WITHIN 2 YEARS FROM A CHANGE IN MARITAL OR DEPENDENCY STATUS, A CHANGE OF AN ELECTION TO REFLECT THAT CHANGE IN STATUS. THUS, MR. ALLISON HAD 2 YEARS FROM THE DATE OF JOAN'S DEATH TO CHANGE HIS ELECTION TO INDICATE THAT SHE HAD DIED. HE HAD PROVIDED AN ANNUITY FOR HIS WIFE JOAN AND ON HER DEATH OR REMARRIAGE FOR HIS CHILDREN. A REVOCATION OF THAT ELECTION WOULD GO FAR BEYOND REFLECTING HER DEATH IN HIS ELECTION OF OPTIONS.

WHILE MR. ALLISON'S SECOND ATTEMPTED CHANGE, COVERAGE FOR HIS CHILDREN ONLY, WOULD SEEM TO MEET THE REQUIREMENTS OF SECTION 1431(C) IN THAT IT APPROPRIATELY REFLECTS HIS CHANGE IN FAMILY STATUS, IT PRESENTS A QUESTION AS TO THE TIMELINESS OF THE CHANGE. HIS WIFE JOAN DIED ON JUNE 24, 1967. WHILE THE ATTEMPTED REVOCATION OF OPTION 3 DATED APRIL 7, 1969, WAS TIMELY MADE, THE ALTERNATIVE PROPOSAL, TO PROVIDE FOR HIS CHILDREN ONLY, WAS DATED JULY 17, 1969. IN THE LIGHT OF THE PRECEDING DISCUSSION RELATING TO SECTION 1431(C), IT APPEARS THAT MR. ALLISON'S ATTEMPTED REVOCATION WAS AN ACTION NOT OPEN TO HIM, ONE NOT AUTHORIZED BY LAW, AND HENCE MUST BE DISREGARDED IN DETERMINING THE QUESTION OF WHETHER A CHANGE WAS MADE WITHIN THE PERIOD OF TIME SPECIFIED IN THE STATUTE. HIS ALTERNATIVE OF COVERAGE FOR HIS CHILDREN ONLY CLEARLY IS A NEW AND DIFFERENT CHANGE. SUCH ALTERNATIVE WAS NOT RECEIVED BY THE PROPER AUTHORITIES WITHIN 2 YEARS OF THE DATE OF HIS WIFE'S DEATH, AND THEREFORE CANNOT BE CONSIDERED EFFECTIVE. CF. 34 COMP. GEN. 555 (1955).

SECTION 303 OF THE REGULATIONS FOR THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN PROVIDES THAT:

A MEMBER MAY HAVE A DIFFERENT LAWFUL SPOUSE AT THE TIME OF RETIREMENT FROM THE LAWFUL SPOUSE HE HAD AT THE TIME OF ELECTION. THE LAWFUL SPOUSE AT THE TIME OF RETIREMENT IS THE SPOUSE ELIGIBLE FOR AN ANNUITY AT THE TIME OF THE MEMBER'S DEATH. *** IT THUS APPEARS THAT MR. ALLISON DID HAVE AN ELIGIBLE SPOUSE AND CHILDREN ON THE DATE OF HIS TRANSFER TO THE FLEET RESERVE AND THAT HIS ELECTION OF OPTION 3 OF MAY 9, 1967, WAS STILL IN EFFECT AT THAT TIME.

THE PROVISIONS OF 10 U.S.C. 1436(B) MAY BE FOR APPLICATION IN THIS CASE. THAT SECTION PROVIDES:

(B) UNDER REGULATIONS PRESCRIBED UNDER SECTION 1444(A) OF THIS TITLE, THE SECRETARY CONCERNED MAY, UPON APPLICATION BY THE RETIRED MEMBER, ALLOW THE MEMBER--

(1) TO REDUCE THE AMOUNT OF THE ANNUITY SPECIFIED BY HIM UNDER SECTION 1434(A) AND 1434(B) OF THIS TITLE BUT TO NOT LESS THAN THE PRESCRIBED MINIMUM; OR

(2) TO WITHDRAW FROM PARTICIPATION IN AN ANNUITY PROGRAM UNDER THIS TITLE;

* * * * * A RETIRED MEMBER MAY NOT REDUCE AN ANNUITY UNDER CLAUSE (1) OF THIS SUBSECTION, EARLIER THAN THE FIRST DAY OF THE SEVENTH CALENDAR MONTH BEGINNING AFTER HE APPLIES FOR REDUCTION OR WITHDRAWAL. *** .

SECTION 406 OF THE REGULATIONS FOR THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN PROVIDES IN PART:

A RETIRED MEMBER WHO IS PARTICIPATING IN THE PLAN MAY REVOKE HIS ELECTION AND WITHDRAW FROM PARTICIPATION, OR HE MAY REDUCE THE AMOUNT OF THE SURVIVOR ANNUITY; HOWEVER, AN APPROVED WITHDRAWAL OR REDUCTION WILL NOT BE EFFECTIVE EARLIER THAN THE FIRST DAY OF THE SEVENTH MONTH BEGINNING AFTER THE DATE HIS APPLICATION IS RECEIVED BY THE FINANCE CENTER CONTROLLING HIS PAY RECORD. *** NO AMOUNTS BY WHICH A MEMBER'S RETIRED PAY IS REDUCED MAY BE REFUNDED TO, OR CREDITED ON BEHALF OF, THE MEMBER BY VIRTUE OF AN APPLICATION MADE BY HIM UNDER THIS SECTION.

UNDER THE FOREGOING PROVISIONS OF LAW AND REGULATIONS WE THINK MR. ALLISON MAY WITHDRAW FROM THE PLAN. ALTHOUGH AT THE TIME OF HIS ATTEMPTED REVOCATION HE WAS NOT ENTITLED TO RETAINER PAY, WE SEE NO REASON WHY HIS APPLICATION DATED JULY 17, 1969, MAY NOT BE CONSIDERED AS AN APPLICATION FOR WITHDRAWAL UNDER 10 U.S.C. 1436(B), IF HE SO DESIRES. IN THAT EVENT HIS APPLICATION WOULD BE EFFECTIVE ON THE FIRST DAY OF THE SEVENTH MONTH AFTER THE MONTH IN WHICH SUCH APPLICATION WAS RECEIVED.

LIEUTENANT COMMANDER SNYDER BY HIS ELECTION OF OPTION 3 (FAMILY PLAN) ON SEPTEMBER 11, 1959, MADE PROVISION FOR THE POSSIBILITY THAT HE WOULD MARRY AND ACQUIRE CHILDREN BEFORE HIS RETIREMENT. SECTION 301A OF THE REGULATIONS FOR THE RETIRED SERVICEMAN'S FAMILY PROTECTION PLAN PROVIDES:

ALL LEGAL BENEFICAIRIES DESCRIBED IN SECTION 102 MUST BE NAMED AT THE DATE OF RETIREMENT PURSUANT TO THE OPTION ELECTED. ALTHOUGH A MEMBER WITHOUT DEPENDENTS MAY MAKE AN ELECTION, IT WILL NOT BE EFFECTIVE UNLESS HE HAS ELIGIBLE DEPENDENTS AT THE TIME OF HIS RETIREMENT.

THUS, LIEUTENANT COMMANDER SNYDER BY VIRTUE OF HIS MARRIAGE AND THE BIRTH OF HIS CHILD BEFORE HIS RETIREMENT ACQUIRED THE ELIGIBLE BENEFICIARIES TO MAKE HIS 1959 ELECTION OF OPTION 3 EFFECTIVE. THE BIRTH OF THE CHILD ON NOVEMBER 26, 1967, DOES NOT APPEAR TO BE A CHANGE IN THE MARITAL OR DEPENDENCY STATUS OF THE ELECTOR OR HIS FAMILY WHICH COULD BE REFLECTED BY A CHANGE OF HIS ELECTION OF OPTION 3 TO OPTION 2, FOR THE REASON THAT THE CHANGE IN HIS MARITAL OR DEPENDENCY STATUS HAD ALREADY BEEN PROVIDED FOR BY HIS INITIAL ELECTION.

ALSO FOR CONSIDERATION IN THIS MATTER IS THE LANGUAGE OF SECTION 1431(C) WHICH PERMITS AN OTHERWISE PROPER CHANGE OF ELECTION ONLY IF SUCH "CHANGE DOES NOT INCREASE THE AMOUNT OF THE ANNUITY." LIEUTENANT COMMANDER SNYDER'S PROPOSED CHANGE OF ELECTION WOULD HAVE INVOLVED AN INCREASE IN THE ANNUITY FROM ONE-FOURTH TO ONE-HALF OF HIS REDUCED RETIRED PAY.