Education and IRA Related Benefits for MN Veterans

US FlagThe Vietnam Veteran’s Memorial in Washington D.C. is inscribed with the names of 58,272 Americans who gave their lives in service to our country. 1,072 of them were Minnesotans.

The Washington Post’s Faces of the Fallen  lists those who gave their lives in the Iraq and Afghanistan wars; 6,748 and counting.

We all have friends and family members who have served in the military. Today, we take a moment to remember and honor them.

Education and IRA Related Benefits

Veterans, members of the military, and reservists are generally eligible for the same type of tax and education related benefits as the rest of us. While we can never fully repay the debt we owe them, they are entitled to some additional education and IRA related benefits as well.

Here are just a few:

SGLI and Military Death Gratuities

Hopefully, none of your family members have made the ultimate sacrifice, but Service Members Group Life Insurance (SGLI) benefits and Military Death Gratuities are eligible to be rolled over into a Roth or Education IRA. Up to $500,000 of benefits can be rolled over into a Roth IRA without any income restrictions. Of course, certain conditions must be met:

  • Contributions must be made within one year of receiving the benefit
  • The death must be the result of an injury but does not need to be combat related
  • The amount rolled over must not exceed the total death benefit less any amount contributed to an Coverdell Education IRA or other Roth IRA

Waiver of the 10% IRS Penalty

Early distributions from IRAs and retirement plans are normally subject to a 10% penalty in addition to any taxes due. Some exceptions do exist. One of them is for Active Reservists. To be eligible Active Reservists must be called to duty for 179 days to qualify. Distributions must be taken between the call of duty and the end of the active duty period.

While such distributions are taxable, they are exempt from the 10% penalty that normally applies to early distributions. Distributions may be repaid to the IRA during the two years beginning when active duty ends. Since there is no tax deduction on the repaid distribution, reservists might consider adding the money to a Roth IRA which grows tax free. Repaid distribution amounts are not subject to income or annual contribution limits.

For more information about tax benefits related to the military download IRS publication 3 at www.irs.gov. Or watch this short video.

The Post-9/11 GI Bill

The Post-9/11 GI Bill provides education benefits for those who have served on active duty for 90 or more days since September 10, 2001. Benefits are based on the amount of service credited since September 10, 2001 and can include: up to 100% tuition and fee coverage, a monthly housing allowance, reimbursement for books and supplies, and other benefits. Your exact benefit, the benefit limitations, and the eligibility requirements vary. For more information check out www.gibill.va.gov

Minnesota GI Bill

The MN GI Bill was enacted in 2007 and expanded in 2013. It provides up to $1,000 per semester to eligible MN veterans and surviving spouses and children.  In addition, MN veterans who were residents of MN at the time they entered the military are recognized as residents and eligible for in-state tuition if they attend a state college or university within two years of completing their military service.

To learn about the MN GI Bill and other education related benefits visit the MN Office of Higher Education website, www.ohe.state.mn.us

Honoring our Vets

Our military service members and their families make significant sacrifices to serve our country every day. We all have friends and family members who have served. Today, we take a moment to remember and honor them.

If you are a veteran, thank you for your service.

 

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