IRA and Retirement Plan Distributions

IRA and Retirement Plan Distributions

Presented by Jared Daniel of Wealth Guardian Group

What is it?

IRAs and employer-sponsored retirement plans (e.g., 401(k) and profit-sharing plans) play a central role in retirement planning. After all, the tax benefits are hard to beat. With traditional IRAs and most employer-sponsored retirement plans, pretax money is contributed and grows tax deferred. It's not until you take funds out of the account that you pay income tax on the distributions. With Roth IRAs and Roth 401(k)/403(b)/457(b)s, the money that you contribute comes from after-tax dollars, and qualifying distributions are completely income tax free.

But to get the tax advantages of IRAs and retirement plans, you need to be familiar with the complicated distribution restrictions, requirements, and tax rules that apply to these retirement investments. At their most basic level, the IRS rules try to discourage you from receiving retirement funds too early or from leaving the funds in a tax-deferred plan or account for too long.

Options for taking distributions from employer-sponsored retirement plans and IRAs

Employer-sponsored retirement plans

In general, the Internal Revenue Code and IRS regulations determine the distribution options that are available under employer-sponsored retirement plans. However, employers are not required to offer all of the available distribution options in their plans. Therefore, it is important that you review the specific terms of your plan to see which options are available to you. These provisions normally include a lump-sum distribution of your entire balance under certain conditions, an annuity payout after separation from service, and a rollover to an IRA or another employer's plan. Other distribution options may also be available upon your termination of employment, upon your death, or even while you are still employed.

Whether taxes are due on distributions depends on whether pretax or after-tax contributions have been made. Where funds have not been previously taxed, they are generally taxed upon distribution.

Employer contributions, employee pretax contributions, and earnings are generally taxed as income when withdrawn from the plan (subject to certain exceptions, such as tax-free rollovers). An additional 10 percent premature distribution penalty may also be assessed on taxable portion of distributions taken from the plan prior to age 59½ (subject to certain exceptions).

Special rules apply to after-tax Roth 401(k)/403(b)/457(b) contributions. These contributions are free from federal income tax when paid to you from the plan and, if certain conditions are met (a "qualified distribution") all investment earnings on these contributions are also tax free and penalty free when paid to you.

IRAs

IRA distributions can be made purely at the IRA owner's discretion. The taxation of distributions from IRAs depends on the type of IRA (traditional or Roth), the source of the contributions (pretax or after-tax), and whether all tax requirements have been met.

With traditional IRAs, distributions taken from the account may or may not be taxable income. Distributions of contributions are generally taxable only if they were tax deductible at the time you made them. Amounts you contributed that weren't eligible for a tax deduction (after-tax contributions) can generally be withdrawn income tax free (because tax has already been paid on those dollars). By contrast, distributions of investment earnings from these accounts are always taxable.

Your age is also a key factor in terms of the tax consequences and advisability of withdrawing IRA funds. That's because a 10 percent premature distribution tax applies to the taxable portion of IRA distributions taken prior to age 59½ (subject to certain exceptions).

Roth IRAs are subject to special rules. Your Roth IRA contributions are free from federal income tax when paid to you from your account and, if certain conditions are met (a "qualified distribution") all investment earnings on these contributions are also tax free and penalty free when paid to you.

Designating a beneficiary for your IRA or retirement plan

If you have a traditional IRA or participate in an employer-sponsored retirement plan, carefully consider your choice of beneficiary. Your beneficiary will receive the money in your IRA or plan when you die. Your choice of beneficiary can determine (1) the tax deferral and distribution timing options available to your beneficiary and (2) whether the funds will be taxed in your estate for death tax purposes.

Caution:         Because Roth IRAs are unique, the considerations regarding beneficiary designations for Roth IRAs are unique as well.

Inherited IRAs and employer-sponsored retirement plans

If you have inherited an IRA or retirement plan account, you need to be aware of the available options for taking or deferring distributions. With traditional IRAs and retirement plans, you usually have to pay income tax on the funds that you receive. Rather than simply taking all of the money from the IRA or plan at once (and paying tax on the lump-sum distribution), you may be able to defer and delay distributions from an inherited account (or plan) for a period of time, letting the dollars continue to grow tax deferred. The terms of the IRA or retirement plan will govern the distribution options available to you.

Jared Daniel may be reached at www.WealthGuardianGroup.com or our Facebook page.

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.

Social Security Retirement Benefits

Social Security Retirement Benefits

Presented by Jared Daniel of Wealth Guardian Group

What is it?

Providing retirement benefits was a key provision of the Social Security Act of 1935. Older Americans were especially financially vulnerable during the Great Depression, and Social Security was enacted partly to provide them with some continuing income after retirement. Today, although the scope of the program has been widened through amendments to include survivor, disability, and medical insurance benefits, Social Security remains synonymous with retirement benefits.

Meeting the eligibility criteria for retirement benefits

Test your knowledge. Pick the two people you believe may be eligible for Social Security retirement benefits:

1. A 64-year-old married secretary
2. A 62-year-old male neurosurgeon
3. A 65-year-old divorced violinist
4. A 70-year-old unemployed machinist

If you picked 1 and 4, you were right. On the other hand, if you picked 2 and 3, you were also right. All of these individuals could be eligible for Social Security retirement benefits. No matter what your occupation, gender, or income level, you are eligible for Social Security retirement benefits if you are:

·         Age 62 or older and a fully insured worker (you have earned 40 Social Security credits) or

o    

o   A qualified family member of a fully insured worker: A spouse of a retired worker (spouse must be age 62 or older unless caring for the worker's dependent child) or

o   The divorced spouse of a fully insured worker who is eligible for retirement (spouse must be retirement age unless caring for dependent child) or

o   A dependent or disabled child of the retired worker

Worker's retirement benefit

Your Social Security retirement benefit is a main source of retirement income. When you begin receiving benefits will affect how much you receive every month.

When can you start receiving retirement benefits?

Deciding when to retire and begin receiving Social Security retirement benefits is a personal decision. It can be an easy one ("I'm tired of being a sales manager; I'd rather join the Senior PGA Tour.") or a difficult one ("My kids are in college; I want to retire, but Harvard is expensive!"). When making this decision, consider the following age requirements that will affect the amount of your Social Security benefit check:

Normal retirement--If you retire at normal retirement age, you will be eligible for full Social Security benefits based on 100 percent of your primary insurance amount (PIA), provided that you are fully insured. Your normal retirement age depends upon the year in which you were born:

Birth date	Normal retirement age will be
1943-1954	66 years
1955	66 years, 2 months
1956	66 years, 4 months
1957	66 years, 6 months
1958	66 years, 8 months
1959	66 years, 10 months
1960 and later	67 years

Note: If you were born on January 1st of any year, the normal retirement age for the previous year applies.

Early retirement--The minimum age at which you can retire and receive Social Security retirement benefits is currently 62. If you retire at age 62, you will be eligible for reduced retirement benefits based on a percentage of your primary insurance amount (PIA) entitlement, provided that you are fully insured. Your retirement benefit will be reduced by 5/9ths of 1 percent (or.55556 percent) for every month between your retirement date and normal retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. This reduction is permanent; when you reach normal retirement age, you will not be eligible for a benefit increase.

Delayed retirement-- You will increase your retirement benefit for each month that you delay receiving Social Security retirement benefits past normal retirement age. Your benefit will increase by a predetermined percentage for each month you delay retirement up to the maximum age of 70. For anyone born in 1943 or later, the monthly percentage is 5/12 of 1%, and the annual percentage is 8%.

The delayed retirement credit does not affect your PIA. Even if you elect to delay receiving Social Security retirement benefits, you can still receive Medicare benefits at age 65. Remember to file an application for Medicare, even if you don't file one for Social Security retirement benefits until later.

Retirement benefits for qualified family members

Certain family members of a fully insured worker may be eligible for retirement benefits based on the worker's record. Retirement benefits are generally paid to family members who relied upon the worker's income for support. Benefits paid to family members are based upon the retired worker's PIA and paid in addition to the benefit paid to the worker. The following table outlines who these family members are, what benefits they are entitled to receive, and the basic conditions they must meet in order to be eligible for those benefits:

Beneficiary	Minimum Age	Insured status	Conditions	Amount of Benefit
Spouse of retired worker	62 or earlier if caring for a dependent child (under 16 or disabled) who is eligible for child's benefits	Worker must be fully insured. Spouse does not have to be insured	Worker must have filed for retirement benefits before spouse is eligible	50% of the worker's PIA, subject to early retirement reduction, if applicable
Divorced spouse of worker	62 or earlier if caring for a dependent child (under 16 or disabled) who is eligible for child's benefits	Marriage must have lasted at least 10 years before final divorce date. Remarriage may affect benefit	Worker does not have to be receiving retirement benefits but must be age 62 or older	Usually 50% of the worker's PIA, subject to early retirement reduction, if applicable
Child of retired worker	No minimum age, but must be under 18 or under 19 (in school). Disabled child can be over 18 if disability began before 22	Worker must be fully insured	Worker must be receiving retirement benefits before child is eligible. Child in school must be a full-time student and unmarried	Each child receives 50% of worker's PIA. Family maximum, however, may limit this benefit

Family benefits end when the retired worker dies. However, at that time, family members may be eligible to receive Social Security survivor's benefits.

Spouse's benefits

Spouse's benefits are payable to the spouse of a retired worker. To be eligible, the spouse must meet one of the following conditions:

·         The spouse must have been married to the worker for at least one year before applying for benefits, or

·         The spouse must be the natural parent of the worker's child, or

·         The spouse must have been entitled or potentially entitled in the month before marriage to benefits from a previous spouse, surviving spouse, or parent

In addition, the spouse must be:

·         Age 62 or older and eligible for a greater retirement benefit based on the spouse's PIA than on his or her own PIA, or

·         Caring for a child who is under age 16 or disabled

Once your spouse begins receiving retirement benefits, you may be eligible for a spousal retirement benefit provided that you are of minimum retirement age (currently 62). To be eligible for spouse's benefits, you do not have to be insured for Social Security benefits based on your own earnings record. Even if you have never worked outside your home or in a job covered by Social Security, you may be eligible for spousal benefits. However, if you have worked and are eligible for benefits based on your own PIA, then you can't elect to receive the spouse's benefit unless it would be greater than the benefit provided by your own PIA. The amount of your spousal retirement benefit will be determined by your spouse's PIA and your age at retirement (not your spouse's age at retirement). If you are of normal retirement age you will receive full spousal benefits. This benefit amount is 50 percent of your spouse's PIA. If you are less than normal retirement age, you will receive a reduced spouse's benefit amount. Your benefit will be reduced by 25/36 of 1 percent (.69 percent) for each month that you are under normal retirement age.

Example(s):   Josephine retires at normal retirement age from her job as a plumber. Her husband, Mike, decides to retire early. Mike is not fully insured for retirement benefits, so he decides to apply for a spouse's retirement benefit based on Josephine's PIA. Since Mike is 36 months away from his normal retirement age, his spouse's benefit will be 25 percent less than his benefit would have been had he waited until normal retirement age to receive spouse's benefits (36 x.69). Thus, his retirement benefit will be 37.5 percent of Josephine's PIA.

You may be eligible for the spouse's retirement benefit if you are less than age 62 if you are caring for the natural child of your retired spouse and the child is under the age of 16 or disabled. Your benefit will equal 50 percent of the worker's PIA. However, if the child's status changes (the child becomes older than 16 or is no longer disabled), then you will no longer be eligible to receive the retirement benefit until you reach age 62.

Divorced spouse's benefit

If you are a divorced spouse of a fully insured worker, you are eligible to receive the same spousal retirement benefit as a married spouse provided that you were:

·         Married to the worker for at least 10 years before the divorce became final (unless you were already age 62 when the divorce became final), or

·         Divorced for at least two years if the worker is not yet receiving retirement benefits

You must meet the same age and eligibility requirements as a married spouse with one exception: Your ex-spouse does not have to be retired in order for you to receive benefits as long as you are of minimum retirement age and you have been divorced for at least two years. However, your ex-spouse must be eligible to receive benefits even if he or she has not yet elected to begin receiving them. Benefits for a divorced spouse are calculated independently from those of a current spouse. This means that if your ex-spouse has remarried, your benefits won't be affected. However, if you remarry, then your benefits may be affected. Like a current spouse's benefits, your benefit will be reduced if you retire at less than normal retirement age.

Child's benefit

Children of a retired worker are entitled to Social Security retirement benefits if:

·         The parent is receiving Social Security retirement benefits.

·         The child is dependent upon the parent for support.

·         The child is enrolled full-time in elementary or high school and is under age 18 or between the ages of 18 and 19. A child who is disabled is eligible past age 18 if the disability began before age 22.

·         The child is unmarried.

The amount of child's benefit payable to each eligible child is 50 percent of his or her retired parent's PIA. However, a child's benefit will often be subject to the family maximum. If the total amount of benefits paid to eligible family members based on an individual's PIA exceeds the family maximum benefit, each child's benefit will be reduced accordingly.

Questions & Answers

When should you file an application to receive Social Security retirement benefits?

The Social Security Administration suggests that you apply three months before the date you want your benefits to start.

Can Social Security retirement benefits be paid retroactively?

Benefits can be paid up to six months retroactively, beginning with the first month in the retroactive period in which you met entitlement requirements (other than filing an application).

When will Social Security retirement benefits end?

Your retirement benefits will end when you die. However, your spouse, children, or dependent parents may be eligible for survivor's benefits based on your earnings record.

Jared Daniel may be reached www.WealthGuardianGroup.com or our Facebook page.

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.

Planning for Travel

Planning for Travel

Presented by Jared Daniel of Wealth Guardian Group

What is it?

Whether you want to take a dream trip around the world or simply want to visit your cousin in Indianapolis for a few days, you can benefit from some pretrip planning. If you plan far enough in advance of your departure, you'll usually get better rates on airline fares, lodging, and packages than if you wait until the last minute, particularly if your travel plans are flexible. If you're traveling to a foreign country, you may need time to obtain a passport or a visa or to research your itinerary. In addition, you'll reduce the inevitable stress that accompanies traveling by preparing yourself as thoroughly as possible.

Tip:     If you believe a great trip is a spontaneous one, look into last-minute travel deals offered by some airlines, travel agents, and travel websites. You usually can book them only a few days in advance of your departure, and your choice of destinations is limited. However, these last-minute trips are usually a bargain, because airlines, hotels, and tour groups are trying to sell their unreserved spaces.

Financial considerations for travelers

Paying for your trip with cash vs. paying with a credit card

The main advantage to paying for your trip with cash is that you'll be less likely to overspend, because you can clearly see how much you're spending, and you won't have to pay your trip off little by little, long after your vacation has ended. Even if you pay for most of your travel arrangements with cash, make sure that you don't carry large amounts of cash with you on your trip. It's safer to take traveler's checks or use an ATM card.

One advantage to paying for a trip with a credit card is that you're better protected if something goes wrong. If you use a credit card to pay for refundable airline tickets, the airline must forward a credit to your credit card company within seven days of receiving your application for a refund. You can also use a credit card to guarantee a hotel reservation, which can be useful if you plan on arriving late. The hotel will hold your reservation until midnight instead of canceling it if you don't arrive by late afternoon or early evening. However, you must cancel your reservation if you decide not to come at all; otherwise, the hotel may bill your credit card for one night's stay and cancel the rest of your reservation, if any. If you pay for your trip with a credit card, you may also receive free travel insurance, such as travel assistance, baggage protection, and/or travel accident insurance.

Tip:     Even if you use a credit card to pay for much of your trip, you'll want to carry some cash with you. For instance, in Europe, credit cards are not as widely accepted as they are here, so you may find that some restaurants, stores, and hotels don't accept them at all. Even if you take the bulk of your money in traveler's checks, you should take with you a small amount of foreign currency for each country you plan on visiting. You may want to pay for a cab, a phone call, or a meal before you have a chance to find an open bank or exchange desk.

Tip:     If you do decide to carry a large amount of money with you (including traveler's checks), be aware that if you leave or enter the United States with more than $10,000, you must file a report with United States customs or else be subject to civil and criminal proceedings.

Getting your money back when you can't travel

Before making travel arrangements, find out what will happen if you have to cancel your trip. In most cases, you'll pay some penalty if you cancel. For instance, if you purchase nonrefundable airline tickets (many tickets issued at a low fare are nonrefundable), you can't get a refund if you cancel your trip. But you can rebook your trip later (usually within one year), although you'll generally have to pay a fee to do so. If you have to cancel a group tour or cruise, expect to pay part or all of the cost of the trip, depending on how early you cancel. Since the cancellation policies vary widely, make sure you understand how and when you will be charged if you cancel. Some companies offer optional trip-cancellation insurance that costs approximately 5 to 7 percent of the cost of the trip. These policies reimburse you if you have paid for a trip and then can't go due to illness, natural disaster, or accident or for another reason out of your control (e.g., the tour operator went out of business, or you are called to serve on a jury).

Preparing a daily budget

Have you ever returned from a trip happy because you spent less than you anticipated? If you're like most travelers, the answer is no. You usually return from trips feeling overextended or even guilty because you spent more money than you wanted to. If you want to avoid this, plan a daily budget before you leave on your trip. This can mean simply deciding how much you want to spend each day, or it can mean breaking down how much you want to spend on certain items on your trip.

Budgeting is particularly important if you are traveling overseas. You may underestimate how much you will spend overseas because food, gas, and other items often cost more than you are used to paying in the United States. If you're on a group tour or have purchased an all-inclusive package, you may be better protected than someone traveling solo. However, you need to make sure you understand what your tour or package covers and what it does not. In addition, it's a good idea to use a guidebook as a reference or talk to a travel agent about how much you can expect to spend for necessary items overseas. This will ensure that you aren't skipping meals or running up huge debts on your credit card that you didn't anticipate.

Example(s):   Bridget took a tour of Europe, stopping in Germany, Czechoslovakia, and Denmark. She planned to spend $25 a day on food, $60 a night on lodging, and $15 a day on other items, such as transportation. She found that she was easily able to stick to her budget in Czechoslovakia, where food, lodging, and other items were much less than she expected. In Germany, however, she had to look hard to find lodging for $60 a night and was barely able to stay within her food budget. In Denmark, she was unable to find lodging for less than $80 a night, and she couldn't eat for less than $40 a day, unless she stuck to street vendor's fare. She was forced to pay for her hotel room with her credit card so that she would have enough money to eat three meals a day and travel around the country as she planned.

Tip:     If you're traveling overseas and plan on bringing your cell phone, plan ahead. International service charges are often very high, and service is not always available, so check with your carrier before you leave home. Consider purchasing an international calling plan, or look into mobile Internet calling or mobile applications that can help you save money.

Obtaining a passport or a visa

If you are traveling overseas, you'll need a passport, unless you are traveling between the United States and Mexico, Canada, and some Caribbean countries where other proof of U.S. citizenship may be adequate. Because it normally takes four weeks to receive a passport after you apply for one, you may want to apply for one when you begin contemplating your trip instead of waiting until the last minute. To apply for a passport for the first time, complete Form DS-11, Passport Application, and go to one of the U.S. post offices that accept passport applications or to a federal or state court or passport agency. Bring along proof of U.S. citizenship, such as a certified copy of your birth certificate, naturalization certificate, or a consular report of birth of a U.S. citizen if you were born overseas. You'll also need two recent identical photographs 2" by 2" (your head may take up most of the photograph, and the image size must be between 1" and 1 3/8") and proof of identity, such as a driver's license or government identification card. A passport is good for 10 years if obtained when you are 16 or older. For more information on passports, see the U.S. State Department website at www.state.gov.

Tip:     Before appearing in person to apply for a passport, contact the post office or agency you are going to for additional requirements. For instance, most accept personal checks, but some may not. To visit some countries, you'll also need a visa, which is an endorsement or stamp placed in your passport by a foreign government. The visa is for a specific purpose (e.g., tourism) and length of time (e.g., three months). Apply directly to the embassy or consulate of the country that you plan to visit. Depending on the country involved, this could be a lengthy process, so plan ahead.

Will your health insurance travel with you?

If you travel within the United States

Before traveling within the United States, check your health insurance policy to make sure it covers you away from home and, if so, under what conditions. For instance, if you have an HMO or PPO plan whereby service from an out-of-network provider costs more, you may want to take with you a list of network physicians and hospitals in the area in which you are traveling in case you need treatment. At the very least, carry your insurance card with you. It usually has a phone number you can call to check on health-care providers, and you may need it if you have to visit a physician or hospital.

If you travel outside the United States

If you are traveling overseas, your health insurance may not cover you at all. For instance, Medicare does not provide coverage for medical treatment outside the United States, although some supplemental policies will. Even if your policy does cover you overseas, it may not provide the same benefits overseas as it does in the United States. Check the limitations of your policy carefully, and call the claims department of your insurance company to ask. Some policies will cover personal travel but not business travel, while others cover you only if you stay overseas for a short period of time (e.g., one to six months). Some policies cover only emergency medical care, while others will reimburse you or the medical provider for only a percentage of the total cost of treatment.

If you find that your health insurance policy won't cover you adequately overseas, consider purchasing a short-term supplemental policy. These policies normally offer either accident or sickness coverage and usually pay, in part, the cost of medical evacuation back to the United States, which is something most basic health insurance policies won't cover. However, since coverage and terms vary from policy to policy, make sure you understand what's covered and what's not before purchasing a supplemental medical policy.

Tip:     When you're traveling, make sure that you carry your insurance card and a claim form in case an emergency arises. In addition, carry with you a letter from your physician explaining your medical condition and any prescription medication you are taking. If you take a prescription overseas, make sure you carry it in its original container to avoid trouble at customs.

Who to contact if the unexpected happens while you're traveling

Your road and travel plan

Before traveling, look into the benefits offered by your road and travel plan, or consider joining one if you aren't already a member. If your car breaks down, your road and travel plan customer service representative will send a mechanic out to help you and pay the cost of towing the car, if necessary. In addition, road and travel plans usually offer other benefits, such as emergency cash, bail bonds, and trip planning/routing services. You may also be able to get a discount at certain hotels or cash refunds for booking airline, train, and hotel reservations through the road and travel plan's travel agency.

A travel assistance company

Travel assistance companies provide a variety of services to travelers. They can refer you to a doctor or lawyer, arrange for medical evacuation, provide emergency cash, and arrange for a translator, among other services. You may have access to a travel assistance company as a service through your credit card company. Check your credit card literature, or call your credit card company for information before you travel.

A U.S. consulate

If you arrive in a country where you feel unsafe traveling due to civil unrest, natural disaster, or political threat, you may want to register with the U.S. embassy or consulate and keep the consulate informed of your whereabouts. In addition, embassies and consulates can give you advice and help you if you are in trouble. For instance, if you become sick, the nearest U.S. consulate or embassy can help you find a doctor or help you get money from the United States to pay for your care. Consular officers can also contact friends and relatives in the United States in an emergency and give you travel safety information. However, they cannot provide certain services. For instance, they cannot cash checks or exchange money for you, and they cannot act as travel agents, lawyers, or interpreters. They can, however, help you find assistance with these matters.

Tips to ensure your safety while traveling

Ensure the safety of your money

When traveling, avoid carrying large amounts of cash. Your best bet is to carry a small amount of cash, along with traveler's checks and/or an automatic teller machine (ATM) card and/or a credit card. Traveler's checks are easily redeemable throughout the world and, if stolen, can be replaced. Within the United States, you can find ATMs in most cities and small towns. ATMs are available in other parts of the world as well. You can withdraw cash only when you need it, and if you are in a foreign country, the cash you withdraw will be in the currency of the country you are visiting. In addition, the exchange rate you get at an ATM will often be better than at a hotel or airport exchange desk.

Tip:     Take a credit card with you, but leave all unnecessary credit cards at home. That way, if your wallet is stolen, you have less to lose.

Provide a friend or family member with a copy of your itinerary

In case an emergency arises at home or in the country or region you are visiting, make sure that you give a friend or family member a copy of your itinerary and an idea of how you can be reached. Perhaps you can arrange to call home once or twice a week to make sure that no emergency has arisen in your absence and to let someone back home know you're OK.

Make copies of your important documents

Before you go on your trip, copy all your important documents, including your driver's license, your medical card, your credit cards, and your passport. Give a copy to a friend at home in case your wallet or identification is stolen. Keep with you a copy of your passport (if any), your airline ticket number, and a log showing what traveler's check numbers you've used in case these get lost or stolen.

Contact the U.S. Department of State

The U.S. Department of State issues travel warnings and public announcements, recommending which countries Americans should avoid because of civil unrest, terrorist actions, or other dangerous conditions. The Department of State also publishes information sheets and pamphlets on many topics related to travel that can be useful to you when planning a state trip. To view many of these publications, contact the Department of State's website at www.state.gov. To hear information over the phone, call (888) 407-4747.

Jared Daniel may be reached at www.WealthGuardianGroup.com or our Facebook page.

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.

Military Benefits

Military Benefits

Presented by Jared Daniel of Wealth Guardian Group

What is it?

As a current member or veteran of the U.S. armed forces, you may be entitled to a number of military benefits. The term benefits, as used here, includes military pay as well as other programs set up to improve the lives of military personnel. Because the scope of military benefits is enormous and ever-changing, this is intended only to be a broad overview of the subject. Servicemembers and veterans seeking more specific information should consult the appropriate government source.

Who is eligible for military benefits?

Active duty servicemembers are eligible to receive many benefits from the military including base pay, special duty pay, allowances for housing costs and food, money for education, medical care, insurance, and a variety of other benefits. Members of the armed forces are eligible to voluntarily separate or retire after serving in the military for a certain number of years. Retirees receive retirement pay and often have access to military facilities and programs, including medical care, insurance benefits, and VA housing loans. Servicemembers who separate from the military may or may not receive separation pay and are eligible for limited, yet valuable benefits.

Some of the benefits available to servicemembers and veterans

Military pay

Military base pay received by active duty servicemembers is based on rank and the number of years of service the individual has completed. Pay may be supplemented by such allowances as the Basic Allowance for Housing (BAH), the Basic Allowance for Quarters (BAQ), the Basic Allowance for Subsistence (BAS), and Cost-of-Living Allowances (COLAs).

Retirement pay

Military retirement pay is based on the servicemember's base pay (of the highest rank the servicemember held) and the number of years of service the servicemember completed. In general, no retirement annuity is payable unless the servicemember has completed 20 years of service. The longer an individual stays on active duty, the higher his or her retirement pay will be. Specific information on how retirement pay is calculated can be found at the Defense Finance and Accounting Service website, www.dfas.mil.

Pensions for low-income veterans

Pensions may be paid to low-income veterans who are discharged under conditions other than dishonorable and who meet certain eligibility requirements.  Eligible veterans must generally have had 90 days of service with at least one day occurring during a period of war.

Disability benefits

Veterans are entitled to disability compensation for service-connected health problems. Several programs are available; some are sponsored by the Department of Defense (DoD), others by the Department of Veterans Affairs (VA), formerly known as the Veterans Administration. Military-sponsored programs include disability retirement, temporary disability retirement, and disability severance pay. VA benefits include disability compensation, vocational rehabilitation, and pensions. The rules surrounding these benefits can be complex and change often; it's best to check with your military personnel office or local VA office if you have questions about any of these benefits.

Health-care benefits

All veterans who were discharged under conditions other than dishonorable are eligible for VA hospital and outpatient care, but some veterans may not have access to it. This is because the resources of the VA are strained and VA health care is dependent on congressional appropriations. To ensure that as many veterans as possible who need health care have access to it, a VA health-care eligibility reform was signed into law in October 1996. The law requires the VA to manage veterans' access to VA care. Under the law, veterans apply for enrollment and are assigned to one of eight priority groups. As many veterans as possible from each of the groups will be enrolled for VA health care. Veterans can apply for enrollment at any time. Veterans who enroll will have access to health care at approximately 1,500 service sites. For more information, veterans should contact the nearest VA health-care facility or access information via the Internet at the VA website, www.va.gov.

Active duty servicemembers, retired servicemembers, their qualified family members and certain survivors receive health-care coverage through TRICARE, the medical program for the U.S. military. Depending upon their status, availability of medical care at military facilities and the TRICARE option they choose, military members may receive care either through military or civilian providers. For more information see the TRICARE website, www.tricare.osd.mil.

Long-term care benefits

Veterans are eligible for inpatient care in VA nursing homes, private nursing homes subsidized by the VA, and other long-term-care facilities. Many outpatient care programs are also available. Veterans may receive home health care services, adult day care services, or other services that can help them remain in their homes for as long as possible.

Education and training

Servicemembers and veterans may be eligible for education benefits under several programs. The newest program, the Post-9/11 GI Bill, is available to active duty servicemembers and veterans who have served on active duty on or after September 11, 2001. Other benefit programs include the Montgomery GI Bill, the Reserve Educational Assistance Program (REAP), and the Veterans Educational Assistance Program (VEAP).

Many other programs are also available to help servicemembers and veterans pay educational costs. These include loan repayment and tuition assistance programs, scholarships, work-study programs, and tutorial assistance programs. For more information about education benefits, visit www.gibill.va.gov.

Vocational counseling

Servicemembers who are 180 days or less away from their planned discharge and veterans within one year after discharge are eligible for many educational and vocational counseling programs.

Home loan guarantees

The VA guarantees loans to servicemembers, veterans, and reservists who want to purchase a home, condominium, or manufactured home. The loan is issued by a financial institution but guaranteed by the federal government. The primary advantages of VA home loans are that they often require no down payment and, because the loan is partially guaranteed by the federal government, no mortgage insurance payments. For more information on VA loans, visit www.homeloans.va.gov.

Financial protection while on active duty

The Servicemembers Civil Relief Act (SCRA) protects servicemembers against certain civil actions that might be taken while the servicemember is on active duty. Under the SCRA, servicemembers may seek relief from certain financial obligations if they encounter difficulties because of their service commitments. For example, servicemembers are offered some protection from mortgage foreclosures, lease termination, and eviction proceedings, and may seek a cap on interest rates for some types of consumer debt.

Life, disability, and long-term care insurance

There are three major types of life insurance available to servicemembers and veterans. Active duty members of the military are eligible for coverage under Servicemembers Group Life Insurance (SGLI). Servicemembers are automatically insured for $400,000 but can elect a lesser amount or decline coverage. The amount they contribute to pay for their coverage depends upon the level of coverage they select. Spouses or next of kin must be notified if a servicemember elects not to be covered, to be covered in an amount less than the maximum available, or whenever the servicemember changes the amount of life insurance he or she has.

Veterans' Group Life Insurance (VGLI) is available to reservists and to individuals who have coverage under SGLI at the time they are released from active duty or from the reserves. Individuals with part-time SGLI coverage who become disabled or aggravate a pre-existing disability during a reserve period and who are uninsurable at standard premium rates are also eligible. Members of the Individual Ready Reserves or the Inactive National Guard are eligible for coverage as well. Under VGLI, eligible veterans can only be issued the same amount of SGLI they had in the service or less.

Service Disabled Veterans Insurance is available to veterans who have a service-connected disability. Veterans who left the service after April 24, 1951, are eligible for up to $10,000 in life insurance unless they are found to be totally disabled and eligible for waiver of premiums. In this case they can receive up to $20,000 of additional coverage (premiums for additional coverage are not waived).

Effective December 1, 2005, servicemembers who have SGLI also have disability coverage through the Traumatic Injury Protection Insurance Program (T-SGLI). T-SGLI is a rider that is attached to SGLI and provides disability insurance payments ranging from $25,000 to $100,000 to servicemembers who suffer traumatic injuries. Although T-SGLI coverage is automatic, servicemembers have the option of declining this coverage if they wish.

Finally, servicemembers, veterans, and family members can help protect themselves against the financial burden of long-term care by applying for coverage under the Federal Long-Term Care Insurance Program. This program helps covered individuals pay for the ongoing care they need due to an illness, injury, or cognitive disorder. For more information, visit www.ltcfeds.com or call 800-582-3337.

Burial benefits

Burial allowances are available to the survivors of servicemembers who die on active duty and to the survivors of some other veterans. The government also provides free markers and headstones to some veterans, as well as some final honors such as flags, presidential certificates, and an honor guard. In addition, almost all veterans are eligible for burial in a national cemetery.

Hiring preference

Some veterans receive preference over other candidates when they look for employment with the federal government. Qualified veterans who have honorable discharges receive an extra 5 points for any competitive examinations if they earned a campaign ribbon or spent time on active duty during certain periods. Qualified disabled veterans and certain spouses of disabled or deceased veterans  can receive an extra 10 points on examinations. This means that the hiring preference for veterans doesn't guarantee a job to the veteran; it just gives the veteran a slight advantage.

Other benefits

Servicemembers and veterans are eligible for benefits available to the general population as well, such as unemployment compensation and Social Security benefits. The Social Security Administration (SSA) publishes a special booklet for military personnel that explains how military service affects Social Security benefits. To receive this booklet, contact your local Social Security office (call (800) 772-1213 for the location nearest you), or view the information on-line at the SSA website (www.ssa.gov).

Some of the benefits available to survivors of servicemembers and veterans

Survivors of servicemembers and veterans are eligible for some of the same benefits available to their sponsor, such as VA home loan guarantees and educational assistance. In addition, they're eligible for the following benefits as well.

Survivor's Benefit Plan

The Survivor's Benefit Plan (SBP) provides a monthly lifetime annuity payment to qualified widows, widowers, dependent children, and some ex-spouses who are survivors of retired military servicemembers. Retired servicemembers pay premiums for SBP coverage from their gross retired pay. SBP benefits may be offset by Social Security benefits the survivor receives.

Dependency and Indemnity Compensation

Dependency and Indemnity Compensation (DIC) provides a monthly pension to widows, widowers, dependent children, and low-income parents of some deceased active duty servicemembers and some disabled veterans (if disability was service related). Beneficiaries receive a fixed monthly benefit that usually increases annually due to inflation.

Death pension

Available to qualified survivors of low-income veterans, the death pension provides a fixed monthly benefit that usually increases annually with inflation. The amount of monthly benefit a survivor receives depends upon the survivor's other income and whether other dependents reside with the survivor.

Health insurance

The spouse or dependent children of disabled veterans, veterans who died as a result of a service-connected disability, or veterans who died on active duty may purchase low-cost government-backed health insurance called CHAMPVA. Survivors and spouses and dependent children of active duty servicemembers and retirees may also receive health care through TRICARE, the medical program for the U.S. military.

Proving eligibility for benefits

While the active duty servicemember's identification card is his or her best friend, the veteran will rely upon his or her DD Form 214, or military discharge papers, to apply for benefits (if retired, he or she will also have an ID card). You will receive your DD Form 214 upon discharge, or you can apply for duplicates free of charge from VA offices and veterans organizations. When you apply for veterans benefits, you (or your surviving spouse) will be asked for a copy of your DD Form 214.

Jared Daniel may be reached at www.WealthGuardianGroup.com or our Facebook page.

IMPORTANT DISCLOSURESBroadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials.  The information in these materials may change at any time and without notice.