Sidestepping Costly Tax Errors: Retirement Planning Pitfalls for Military Families

As members of military families progress in their careers while navigating frequent moves and deployments, critical retirement planning mistakes often arise costing them tens of thousands in lost savings. As complex regulations continue evolving, even minor tax oversights can sabotage retirement readiness for those who served our country. This guide examines key tax traps that military families can avoid.

Juggling demanding duty schedules while raising families and frequently relocating makes proactive tax planning difficult. However during high earning years, small gaps fail to raise red flags. Eventually once retirement begins and income sources shift, the price of these errors grows exponentially.

Top Tax Traps Military Families Must Avoid

Not Harvesting Tax Losses

By reviewing investments annually and selling off declining assets for deductible losses offsetting any taxable gains, military families retain more wealth instead of overpaying IRS taxes.

Missing Retirement Account Rollovers

Frequent moves between bases makes keeping track of 401Ks and Pentagon TSP accounts challenging. Allowing multiple accounts to languish costs years of optimized tax-deferred growth essential for income replacement.

Mishandling VA Disability Pay

Years after injuries, honorable discharges or exposure to hazards like burn pits, critical missteps in applying for and transferring disability pay can significantly reduce retirement wealth.

Improper Home Sales After PCS Moves

Failing to qualify for capital gains tax exemptions when selling homes after Permanent Change of Station (PCS) relocations results in huge tax bills decreasing savings.

Not Updating Beneficiaries

Divorces, deaths in the family, new children all require proactive updates to beneficiaries of retirement accounts, SGLI insurance payouts and more. Outdated designations sabotage intended recipients.

In the prime of military careers filled with responsibilities and transitions, addressing small planning gaps pays exponential rewards later on. With so much on the line for retirement, specialists urge periodic check-ups to optimize wealth retention.

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We've been working with TSP and military families for over 30 years. You can start moving past any of these mistakes with a no-cost evaluation with us, in-person in our Roseville office, or online.

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