In honor of Military Appreciation Month, we recognize those in the military as well as their families. Military members and their families face one-of-a-kind challenges, such as deployment to conflict zones, overseas assignments and the constancy of change - all of which make dedicating time to personal finance a challenge. Luckily, there are special tax breaks and other benefits unique to service members. Follow these five tips to take advantage of potential benefits and simplify your military family’s personal finances.
Tip #1: Focus on Retirement Savings
The Thrift Savings Plan is one way to save for retirement that's specific for military members. You may also have access to a Roth TSP, which acts similarly to a Roth IRA but without income restrictions. By contributing to a Roth TSP, you don't lower your taxable income now, but you will be able to withdraw the money tax-free when you enter retirement.
Tip #2: Save with High Interest
The Savings Deposit Program allows eligible personnel serving in designated combat zones to deposit up to $10,000 and earn up to 10 percent in annual interest.1 This can be an effective way to get a boost on your savings for the future. By comparison, it's not uncommon to find savings accounts at various banking institutions that offer less than one percent in annual interest rates.
Tip #3: Tax-Free In, Tax-Free Out
Saving in a Roth IRA may be a good idea if you receive tax-free combat-zone pay. This allows you to deposit tax-free income and take tax-free qualified withdrawals in retirement. You can also withdraw contributions to a Roth IRA at any time, without the income taxes or penalties.
Tip #4: Take Advantage of Your Education Benefits
The Post-9/11 GI Bill covers the full cost of in-state tuition, up to 36 months, plus housing fees and $1,000 a year to use for books and supplies.2 You can even transfer these benefits to your spouse or children if you don’t plan on using them yourself.
Tip #5: Low-Cost Life Insurance
Backed by the Department of Veterans Affairs, the Servicemembers’ Group Life Insurance protects your family with low-cost term life insurance coverage. If you are an eligible service member, you may be automatically enrolled in this program.3 Depending on your status or branch, you may have other life insurance options available to you as well. If you haven’t already, you’ll want to review your options and determine whether or not your coverage is up-to-date.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.