Military Death Gratuity: $100,000 Tax-Free Payment to Survivors

The military death gratuity is a $100,000 tax-free lump-sum payment made to designated survivors of a service member who dies on active duty or in certain training statuses.¹ It is meant to reach the family within days, covering immediate expenses long before life insurance proceeds or survivor annuities arrive.

Who Qualifies

The gratuity covers members who die while on active duty, during active duty for training, or during inactive duty training such as weekend drills and authorized reserve exercises.²

There is also a window after service ends. If a former member dies within 120 days of discharge from active duty or active duty for training, survivors can still receive the gratuity if the Secretary of Veterans Affairs determines the death resulted from an injury or disease incurred or worsened during that service.³ A dishonorable discharge disqualifies survivors from this extended benefit.

Who Gets the Money

The service member decides. DD Form 93, the Record of Emergency Data, is where the member names one or more beneficiaries and splits the $100,000 in 10-percent increments.⁴⁵ A member could send 50 percent to a spouse, 30 percent to a parent, and 20 percent to a sibling. The beneficiary does not have to be a family member. If a member designates someone other than the spouse, the Secretary of the relevant military department must notify the spouse of that designation, though the spouse cannot override it.

Default Order When No Beneficiary Is Named

If DD Form 93 is blank or covers only part of the payment, federal law directs the remainder through this order:⁵

Surviving spouse receives the full undesignated amount.
If no spouse, the payment splits equally among the member’s children and the descendants of any deceased children.
If no spouse or children, the surviving parents split it equally.
If no parents survive, the payment goes to the duly-appointed executor or administrator of the estate.
If there is no executor, the remaining next of kin inherit under the laws of the member’s home state.

Siblings are not a separate tier. They fall under “other next of kin” at the bottom.

Keep DD Form 93 Current

The DD Form 93 designation controls the payment regardless of what a will or divorce decree says. Divorce does not automatically revoke the designation, so an ex-spouse who is still on the form still receives the money. The Department of Defense recommends updating the form at every major life event: marriage, divorce, birth or adoption, a new duty station, and before every deployment.⁶

Filing the Claim and Getting Paid

Survivors file DD Form 397, the Claim Certification and Voucher for Death Gratuity Payment.⁷ A Casualty Assistance Officer assigned to the family handles the paperwork, walks the survivor through each field, and transmits the completed form to the Defense Finance and Accounting Service. If the process stalls, the CAO is the first person to push.²

Payment is fast. Navy regulations direct finance offices to pay within 24 hours if possible, and across the services the gratuity typically arrives within 72 hours of the claim being processed.⁶ Most survivors receive funds by direct deposit; a manual check can be issued if electronic transfer isn’t available. Having a voided check or bank statement ready when the Casualty Assistance Officer arrives helps avoid delay.

The most common cause of a slow payment is incomplete or outdated information on DD Form 93. When the named beneficiary’s contact details are wrong, or when the member never completed the form, the finance office has to trace the correct recipient through the statutory order.

Tax Treatment

The entire $100,000 is exempt from federal income tax. The IRS confirms the death gratuity paid to survivors of armed forces members is not taxable, effective for deaths occurring after September 10, 2001.⁸ The exclusion sits in 26 U.S.C. § 134, which treats the death gratuity as a qualified military benefit excluded from gross income.⁹ Because the payment is not gross income, it won’t push a survivor into a higher tax bracket or reduce eligibility for income-based assistance. Survivors do not report it on their federal return.

Rolling the Payment Into a Roth IRA or Coverdell

Survivors have a rarely-mentioned option that can be worth far more than the payment itself. Under 26 U.S.C. § 408A, a survivor who receives the death gratuity can roll part or all of it into a Roth IRA without being subject to the normal annual contribution limits.¹⁰ A surviving spouse could contribute the full $100,000 in a single year, far above the usual cap. The money grows tax-free and comes out tax-free in retirement.

Survivors can also roll the payment into a Coverdell Education Savings Account for a child. Any amount put into a Coverdell reduces the Roth IRA rollover room dollar-for-dollar. The deadline for both options is 12 months from the date the survivor receives the payment. Miss that window and the opportunity is gone.

The same rollover rules apply to Servicemembers’ Group Life Insurance proceeds, so a surviving spouse who receives both can potentially shelter a much larger sum. Ask the Casualty Assistance Officer or a financial counselor about this early, ideally within the first few weeks.

Death Gratuity vs. SGLI

These are two separate benefits, and most families receive both. The death gratuity is an automatic $100,000 payment that requires no enrollment and no premiums. SGLI is a life insurance policy the member elects into, with coverage up to $500,000 and a monthly premium deducted from pay.¹¹

The death gratuity follows DD Form 93. SGLI proceeds follow a completely separate document, the SGLV 8286 election form. The two forms can name different people, and both designations stand. This trips up families when, for instance, an ex-spouse remains on the SGLI form after a divorce while a new spouse is on DD Form 93. The death gratuity is built for speed and immediate expenses; SGLI is the larger benefit for longer-term financial security and generally takes longer to pay because it runs through the Office of Servicemembers’ Group Life Insurance rather than DFAS.

1
Office of the Law Revision Counsel. 10 USC 1478 – Amount of Death Gratuity
2
Office of the Law Revision Counsel. 10 USC 1475 – Death Gratuity: Death of Members on Active Duty or Inactive Duty Training and of Certain Other Persons
3
eCFR. 38 CFR 3.806 – Death Gratuity; Certification
4
Washington Headquarters Services. DD Form 93 – Record of Emergency Data
5
Office of the Law Revision Counsel. 10 USC 1477 – Death Gratuity: Eligible Survivors
6
Military OneSource. Military Community and Family Policy Fact Sheet – Death Gratuity
7
Department of Defense. DD Form 397 – Claim Certification and Voucher for Death Gratuity Payment
8
Internal Revenue Service. Military Family Tax Benefits
9
Office of the Law Revision Counsel. 26 USC 134 – Certain Military Benefits
10
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
11
Military Compensation and Financial Readiness. Death Gratuity