Tax Change Helps Military Reservists

None by KCPW

(KCPW News) New tax laws should give members of the guard and reserve a bit of breathing room to deal with the financial pressures of deployment. The Pension Protection Act of 2006 eliminates the extra 10-percent tax that normally applies when someone draws from their retirement fund before the age of 59 and a half.

Service members can qualify for the benefit if they have been activated for at least 180 days. Reservists still have to pay regular taxes on any retirement funds invested before taxes. But the additional 10 percent fine for early withdrawal has been lifted as an extra help to the guard and reserve during the war.

Chief Warrant Officer Annette Barnes of the Utah National Guard's Family Programs says financial challenges are at the top of the list for service members:

"We deal with people that move into different, more affordable homes when their soldier deployes or in with family members," says Barnes. "They do have to make changes and budget more creatively than they've ever had to before."

The new tax benefit is retroactive, so any military reservist or guardsman who has taken an early draw on a retirement account since September 11, 2001 can immediately apply for reimbursement by the IRS.

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