The Heroes Earnings Assistance and Relief Tax Act of 2008 offers new financial benefits for reservists and their families by bridging their military service to their existing civilian employment benefits.

The act modifies certain retirement plan protections for reservists who are called to active duty and who are able to return to their civilian employers after serving our country, explains Bob Evart, senior tax manager for First Command Tax Services.

“For specific retirement plans, the new law requires if a participant dies while performing qualified military service, his or her survivors would be entitled to any additional benefits that would’ve been provided had the participant resumed employment upon return,” he says. “Also, a participant who leaves for service and cannot be reemployed on account of disability will be treated as if they had been rehired as of the day before the disability and then had terminated employment on the date of disability.”

These changes apply to deaths or disabilities occurring after 2006.

Instead of expiring, the Internal Revenue Code provision that permits active duty reservists to make penalty-free withdrawals from retirement plans is becoming permanent. The provision also extends the limitations period for filing tax refund credit claims arising from Department of Veterans’ Affairs disability determinations. And it permits a military gratuity or amount received under the Servicemembers’ Group Life Insurance (SGLI) program to be rolled over to a Roth IRA or Coverdell education savings account.

Trust your taxes to us
First Command Tax Services offers the tax-preparation expertise and tax-planning advice to help you reduce your tax liability as you pursue your financial goals. In addition to tax preparation, we offer a variety of services year-round, including:

• Cost basis computations for investments
• Professional tax research and advice
• Reprints of previous years’ investment statements

Regardless of your location, occupation or situation, we can provide the answers for your tax preparation needs.

For more information on First Command Tax Services, talk to your First Command Financial Advisor or visit us online at www.firstcommandtaxservices.com.

First Command Tax Services is the exclusive tax preparation service of First Command Financial Planning, Inc. (Member SIPC). This article is provided for information purposes only and should not be considered tax or legal advice. Should you require tax guidance specific to your situation, please contact a tax or legal professional.

Watch out for the AMT
While recent tax law changes have been helpful in reducing your regular federal income tax bill, they still have not eliminated the alternative minimum tax (AMT).

“The AMT was created in 1969 in response to a small number of high-income individuals who paid little or no federal income taxes,” said Bob Evart, senior tax manager for First Command Tax Services. “As a result of inflation and bracket creep, millions of average American families are now affected by the tax.”

Although relief legislation was again pending at the time of this writing, it is still critical to evaluate all tax planning strategies in light of the AMT rules before actually making any moves.

“Because the AMT rules are so complicated – and because they are subject to change – you may want our assistance,” Evart said. “We stand ready to help.”