To amend title 10, United States Code, to repeal the offset from surviving spouse annuities under the military Survivor Benefit Plan for amounts paid by the Secretary of Veterans Affairs as dependency and indemnity compensation, to repeal the optional annuity authority for the dependent children of a member when there is an eligible surviving spouse, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Military Surviving Spouses Equity 
Act''.

SEC. 2. REPEAL OF DEPENDENCY AND INDEMNITY COMPENSATION OFFSET FROM 
              SURVIVOR BENEFIT PLAN SURVIVING SPOUSE ANNUITIES AND 
              OPTIONAL ANNUITY AUTHORITY.

    (a) Repeal.--Subsections (c), (e), and (k) of section 1450 of title 
10, United States Code, and subsection (c)(2) of section 1451 of such 
title are repealed.
    (b) Recoupment of Certain Amounts Previously Refunded to SPB 
Recipients.--
            (1) Repayment required.--A surviving spouse who is in 
        receipt of an SBP annuity that is in effect before the 
        effective date of the amendments made by subsection (a) and 
        that is adjusted by reason of such amendments and who had 
        previously received an SBP retired pay refund shall repay an 
        amount determined under paragraph (2). Any such repayment shall 
        be made in the same manner as a repayment under subsection 
        (k)(2) of section 1450 of title 10, United States Code, as in 
        effect on the day before the effective date of such amendments.
            (2) Amount of repayment.--The amount of a repayment under 
        paragraph (1) shall be the amount that bears the same ratio to 
        the amount of that refund as the surviving spouse's life 
        expectancy (determined in accordance with standard actuarial 
        practices) bears to the anticipated total duration of the 
        annuity (determined as the sum of such life expectancy and the 
        duration of the annuity already received)
            (3) Waiver of repayment.--The Secretary of Defense may 
        waive the requirement that a surviving spouse make a repayment 
        under paragraph (1) if the Secretary determines that--
                    (A) hardship or other circumstances make repayment 
                unwarranted; or
                    (B) requiring repayment would otherwise not be in 
                the best interests of the United States.
            (4) Definitions.--In this subsection:
                    (A) The term ``SBP annuity'' means an annuity under 
                the program established under subchapter II of chapter 
                73 of title 10, United States Code.
                    (B) The term ``SBP retired pay refund'' means a 
                refund under subsection (e) of section 1450 of title 
                10, United States Code, as in effect before the 
                effective date of the amendments made by subsection 
                (a).
    (c) Repeal of Optional Annuity Authority.--Subsection (d) of 
section 1448 of title 10, United States Code, is amended--
            (1) in paragraph (1), by striking ``Except as provided in 
        paragraph (2)(B), the Secretary'' and inserting ``The 
        Secretary''; and
            (2) by striking paragraph (2) and inserting the following 
        new paragraph:
            ``(2) Payment of annuity to dependent children when no 
        eligible surviving spouse.--In the case of a member described 
        in paragraph (1), the Secretary concerned shall pay an annuity 
        under this subchapter to the member's dependent children under 
        section 1450(a)(2) of this title when there is no eligible 
        surviving spouse.''.
    (d) Restoration of Eligibility for Previously Eligible Surviving 
Spouses.--
            (1) Restoration.--The Secretary of Defense shall restore 
        eligibility for an annuity under subchapter II of chapter 73 of 
        title 10, United States Code, to any eligible surviving spouse 
        who, before the effective date of the amendments made by 
        subsection (c), agreed to transfer payment of such annuity to a 
        surviving child or children of a member of the Armed Forces 
        under section 1448(d)(2)(B) of such title, as in effect before 
        such effective date. Such eligibility shall be restored whether 
        or not payment to such child or children subsequently was 
        terminated due to loss of dependent status or death.
            (2) Definition.--In this subsection, the term ``eligible 
        surviving spouse'' includes a person who was previously 
        eligible for payment of such annuity as the spouse of a member 
        of the Armed Forces and is unremarried after the death of the 
        member, is remarried after having attained age 55, or whose 
        second or subsequent marriage has been terminated by death, 
        divorce, or annulment.
    (e) Effective Date and Application of Amendments.--
            (1) Effective date.--The amendments made by this section 
        shall take effect on the later of--
                    (A) October 1, 2007; and
                    (B) the date of the enactment of this Act.
            (2) Applicability.--The amendments made by subsections (a) 
        and (c) shall apply with respect to payment of annuities under 
        subchapter II of chapter 73 of title 10, United States Code, 
        for months beginning on or after the effective date of such 
        amendments under paragraph (1).

Summary: Military Surviving Spouses Equity Act - Repeals, as of the later of October 1, 2007, or the date of enactment of this Act, certain provisions which require the offset of amounts paid in dependency and indemnity compensation from Survivor Benefit Plan (SBP) annuities for the surviving spouses of former military personnel who are entitled to military pay or who would be entitled to retired pay except for being under 60 years of age. Provides for the recoupment of certain amounts previously paid to SBP recipients in the form of a retired pay refund. Authorizes the Secretary of Defense to waive the recoupment requirement in certain cases. Repeals the optional authority of the Secretary of the military department concerned to pay an annuity to a member's dependent children when there is no eligible surviving spouse. Directs the Secretary to restore annuity eligibility to a surviving spouse who earlier agreed to transfer such eligibility to a surviving child or children of a member.