|
Veterans Set for a Big Benefits Upgrade in
2009
The Post- 9/11 Veterans Educational Assistance Act, which
will become effective in August 2008, will position returning
U.S. veterans for one of the biggest upgrades in post-military
education benefits since the G.I. Bill was signed in 1944.
The act, signed by President Bush in June, pays up to the
full cost of tuition and fees at the most expensive public
school in the state in which a veteran enrolls. Some can get a
free education if they qualify for the full amount, and it not
only extends to the main four branches of the military, but also
activated members of the National Guard and the Reserves. Best
of all, the new program will allow returning servicemen and
women with qualifying service to transfer their benefits to
spouses or children if they already have a degree.
The current G.I. Bill pays only 70 percent of the cost of a
public education and almost a third of the cost of a
private-school education, and it currently costs vets $1,200 to
enroll in the program.
Returning veterans might consider this benefits upgrade as
part of an overall look at their financial status. A financial
planning professional with expertise in military benefits can be
a good first stop to re-start civilian life.
To qualify for the new benefits, veterans need to have served
at least three months of active duty since 9/11, after which
benefits are pro-rated according to months served, up to 36. For
veterans who have served at least three years of active duty,
they'll qualify for 36 months worth of in-state tuition and
fees, or four academic years. For those who serve 24 months,
they'll qualify for 80 percent of in-state tuition, plus 80
percent of the costs of books and housing. For those who leave
the military due to a service-related disability and served at
least 30 days of continuous active duty qualify for the maximum
benefit. The program will cover in-state tuition and fees and
give veterans a housing stipend pegged to area housing prices.
It will also pay $1,000 a year toward books and up to $1,200
toward tutoring expenses as long as it's for an in-state school.
Out-of-state students will need to make up the difference
between in-state and out-of-state costs.
There's also the Yellow Ribbon G.I. Education Enhancement
Program, where the federal government matches institutional
grants offered by participating schools to vets who qualify for
the maximum benefit.
Other things returning vets should remember:
Getting back to retirement planning. Military service
counts toward vesting for all civilian retirement plans. And
thanks to the Heroes Earned Retirement Opportunities (HERO) Act
enacted in 2006, military and their families can actually put
more money into their traditional or Roth IRA accounts. The act
allows tax-free combat pay to be considered as earned income for
determining the contribution amount for traditional and Roth
IRAs. Before, a military person who earned only combat pay
wasn't allowed to contribute to either form of IRA.
Plan proper use of accumulated pay. For returning
military receiving accumulated military pay or compensation from
civilian employment, it's tempting to take the money and blow
it. It makes sense to sit down with a financial and tax adviser
before a dime gets spent.
Understand tax issues. Activated and deployed military
personnel receive special tax breaks at the federal and
sometimes state level. Military income earned by soldiers in
combat zones is tax-free and they don't have to file taxes until
180 days after their return. Activated military personnel also
are entitled to an extension on the period of time allowed for a
tax break on the profits from the sale of a home. They're also
entitled to tax breaks on childcare assistance and certain
travel. Nontaxable combat pay can also be considered for the
Earned Income Credit.
Know your rights if problems occur. The Servicemembers
Civil Relief Act of 2003 provides a variety of financial
protections for active duty personnel. The act provides stays on
civil litigation including bankruptcy and divorce and prevents
wage attachments while military personnel are away. Coverage
requires active duty confirmation from a commanding officer but
expires 90 days after that status has been terminated. The law
also makes it tougher — but not impossible — for landlords to
evict military families for nonpayment of rent.
October 2008 — This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
|
