VA Loan Updates

Several key financial benefits enjoyed by service members on active duty, such as the ability to make penalty-free withdrawals from retirement plans, are set to expire at the end of the year.

Two House subcommittees met Wednesday to consider whether to make those benefits permanent and to set into law other tax-related measures, some of which would benefit military families who lose a service member in the wars in Iraq and Afghanistan.

One such provision would allow recipients of military death benefit payments to roll over the money, tax-free, to a Roth individual retirement account or an Education Savings Account.

Judging from legislators’ comments at the hearing, the proposals, like those being considered separately to improve and streamline veterans’ disability benefits, appear to have strong bipartisan backing.

“The brave men and women serving in our armed forces deserve nothing less than our respect and full support,” said Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means subcommittee on income security and family support.

“The last thing they need or deserve is to be hit with unfair taxes or reductions in federal benefits during their time of need,” McDermott said. “They earn every benefit that is available to them, many times over.”

“We need to ensure that our veterans have the benefits they deserve,” added Rep. Thomas Reynolds, R-N.Y. “At a minimum, our veterans and their families deserve a square deal, and this legislation helps provide one part of that deal.”

The chairman of the House Ways and Means subcommittee on select revenue measures, Rep. Richard Neal, D-Mass., said the strong hearing turnout among lawmakers, and their apparent interest in the issues, bodes well for passage of a strong compromise bill.

The “Heroes Earnings Assistance and Relief Tax Act” would:

*Make permanent a provision that lets National Guard and Reserve members make penalty-free withdrawals from retirement plans when they are called up for extended service.

* Make permanent and modify qualified mortgage bonds used to finance residences for veterans.

* Make permanent the ability to include combat pay as earned income for purposes of the Earned Income Tax Credit.

* Extend the time limit for filing tax refund claims resulting from Department of Veterans Affairs disability determinations.

* Make permanent the authority of the Social Security Administration to disclose tax return information to VA for the purpose of determining eligibility for certain veterans’ programs.

* Allow recipients of military death benefits to roll over the amounts received, tax-free, to a Roth IRA or an Education Savings Account.

* Permit an employer to make certain contributions to a qualified plan on behalf of an employee who is killed in combat.

* For purposes of meeting the requirements of the Uniformed Services Employment and Reemployment Rights Act, treat the day prior to the date of death as the date the employee returned to work, in order to trigger payment of survivor benefits (or other beneficiary payments) under a qualified plan.

* Treat differential wage payments made by an employer to an employee who goes on active duty as wages for retirement plan purposes.

* Provide equitable treatment of most military cash allowances, beyond basic pay, for the purpose of determining eligibility and benefit amounts for military families.

* Exclude certain annuity payments paid specifically to blind veterans for the purpose of determining income eligibility for the Supplemental Security Income program.

Found here.

Bookmark to:

Hide Sites