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Thank you for the information and your question. A felony conviction alone would not effect your VA disability compensation. However, a felony conviction with incarceration of more than 60 days would reduce your payments. Please see the excerpt below from the VA, which explains the reduction.
VA disability compensation payments are reduced if a Veteran is convicted of a felony and imprisoned for more than 60 days. Veterans rated 20 percent or more are limited to the 10 percent disability rate. For a Veteran whose disability rating is 10 percent, the payment is reduced by one-half. Once a Veteran is released from prison, compensation payments may be reinstated based upon the severity of the service connected disability(ies) at that time. Payments are not reduced for recipients participating in work release programs, residing in halfway houses (also known as "residential re-entry centers"), or under community control. The amount of any increased compensation awarded to an incarcerated Veteran that results from other than a statutory rate increase may be subject to reduction due to incarceration.
As far as retirement pay goes, Military retirement pay is not automatically stopped because of a felony conviction or for incarceration if a former servicemember is already receiving retirement pay. In accordance with the Hiss Act, as amended in 1961, only convictions (after retirement) for "crimes of national security" would result in the loss of retirement pay. Therefore, retirement pay could continue.
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