Advising armed forces members past and present

Andrew King, co-head of Tax Policy & Research for Goldman Sachs Ayco.

Andrew King, co-head of Tax Policy & Research for Goldman Sachs Ayco, explains how to help U.S. service members and veterans avoid a battle with federal bureaucracy to get financial benefits.

U.S. service members and armed forces veterans have done more than enough fighting for American citizens. They shouldn’t have to battle the federal bureaucracy to find their financial benefits too.

Advisors working with military personnel past and present need to mindful of two main items when it comes to government retirement plans: pensions and thrift savings plans. According to Andrew King, co-head of Tax Policy & Research for Goldman Sachs Ayco, as well as a former MP in the Marine Corps Reserve and logistics officer in the Army National Guard, Uncle Sam only offers pensions to those who serve at least 20 years. He adds that the type of service – active or guard – also matters when it comes to accessing that pension, as it might not be until age 60 for some.

When it comes to thrift savings plans, King says it will likely look and act a lot like a traditional 401k plan as far as contributions, distributions and investment choices.

As for life insurance, service members and veterans can rest a little more easily than their civilian counterparts as there is a good chance they are automatically covered.

“When trying to figure out size of life insurance, current service members are automatically enrolled at $400,000 of insurance, their spouse is typically automatically enrolled at $100,000,” said King. “The other thing to consider is when that service member is transitioning from military and out to civilian life, they have 120 days to convert that policy to a to a civilian insurance contract.”

Those that transfer out may want to go back to school on the GI Bill. Nevertheless, it often takes an education unto itself to navigate the myriad of course and payment choices under the GI Bill.

“They might qualify for more than one, but they can only get benefits under one,” said King. “So they’ve got to figure out which programs are going to offer the best bang for my buck. For many veterans or service members that have served since September 11th, 2001, that’s going to be the post-9-11 GI Bill.”

Financial advisors should also keep in mind that education benefits are not transferable to family members under most, but not all, GI Bills, save certain circumstances, so it’s worth checking.

When it comes to VA home loans, they are a lot like traditional mortgages, according to King. There are a few benefits for service members and veterans, however. For example, military personnel don’t need a down payment.

“There’s no PMI if you don’t make a down payment, although there could be an additional cost or fee for not making a large enough one,” said King, adding that interest rates and closing costs are often lower as well.

Finally, King reminds service members and veterans that they don’t have to wade through all these often-complex benefit policies alone. There is help available.

“There’s a lot of great resources through the government websites,” said King. “Each of these programs oftentimes will have people to help as well. For example, if you’re applying for your GI Bill, there’s a veterans services office at the school and the VA maintains a database of accredited representatives that can help you navigate these benefits, either for free or for a fee.”