In honor of Veteran’s Day, we are happy to share with our readers the top 10 financial benefits for military families from Kiplinger:
1. Low cost retirement savings plan. Members of the military can park their retirement savings in a Thrift Savings Plan (TSP) that only charges an annual fee of 0.027% of assets (versus typical annual fees of between 1% and 2% for regular 401(k) plans). You also have access to a Roth TSP, which is like a Roth IRA without the income restrictions.
2. Guaranteed return on savings of 10%. Servicemembers can invest up to $10,000 in the Savings Deposit Program each time you are deployed. You receive 10% annual interest, compounded quarterly, up to three months after your return.
3. Tax-free Roth deposits. For servicemembers who are receiving tax-free combat-zone pay, you can put your money into a Roth IRA tax-free and your contributions as well as your earnings are also tax-free whenever you make a withdrawal.
4. Free college for you or a spouse or a child. The Post 9/11 GI Bill covers full in-state tuition and fees for undergraduate or graduate programs at public colleges for up to 36 months (four academic years), or up to $18,077 per year for private colleges or foreign schools. You also receive a housing stipend and money for books and tutoring. Vocational and trade schools are also eligible.
5. Cheap life insurance. Servicemembers’ Group Life Insurance costs only 6.5 cents per $1,000 of life insurance coverage, or $312 per year for the maximum benefit of $400,000. You can be covered regardless of your age, health or likelihood of being deployed. Spouses under the age of 35 can get $100,000 of coverage for about $60/year.
6. State tax breaks. If your legal residence is in a state that has no income tax and you have to move to another state while on active duty, you can maintain your domicile in the no-tax state for income tax purposes.
7. Special legal benefits. Thanks for the Servicemembers Civil Relief Act, you can get a 6% cap on any loans you took out before you were called to active duty. You also have the right to terminate an apartment lease without penalty if you are deployed to a new location for over 90 days.
8. No-down mortgages. VA loans are now one of the only ways to get a mortgage with no money down.
9. Tax-free housing allowance. Servicemembers are eligible for a tax-free housing allowance, which is a monthly subsidy that covers all or part of your monthly rent or mortgage payment as long as you are in the military.
10. Low-interest loans. Every branch of the military has a fund that offers servicemembers low-interest small loans for emergencies.
To current and former members of our nation’s armed forces, we thank you for your service. If we can ever be of service to you, please contact our Orange County law firm.