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Financial Information for Senior Military Officers

TRICARE Young Adult (TYA) Premiums to Increase...A Lot

TRICARE Young Adult, the insurance coverage for prior dependents of Military Members under age 26, will become significantly more expensive starting on January 1, 2016.

Premiums for the Prime version of TYA will increase 47% from $208 per month to $306 per month.

Standard version of TYA will increase 25% from $181 per month to $228 per month.

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SBP and Your Long-Term Care Insurance...It Really Does Have an Impact

Granted...probably no surprise there, but I found out something today that further convinces me that the standard GI issue family should think long and hard before turning down the Survivor Benefit Plan (SBP).

 

I was trying to place Long-Term Care Insurance (LTCI) for someone.  I received quotes from the Federal LTCI program and talked to my trusty LTCI specialist.  The commercial market couldn't match what the Federal LTCI program could provide.  Comparing comparable benefits the least expensive commercial product was nearly $1,200 (43%) per year more.  The most expensive policy was nearly $2,000 (73%) per year more expensive.  Why?

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TSP/401(k) Loan? Step Away From the Paperwork, Please…

Let’s say you’re sitting on $10,000 of Credit Card debt and you can take a loan from your TSP/401(k) to pay it off. The credit card is at 12% interest and the interest on the loan from your retirement plan is only 7%. Take the loan right? Simple math…7% interest is less than 12% interest so take the lower rate. Well, you’ve not finished reading the “story problem”. Your not sure of the train from Philadelphia’s speed (so to speak).

 There is more to the story problem. The first issue is opportunity cost and the second (and bigger issue) is tax ramifications. Let’s look at the numbers.

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Give away $14,000, No Problem! Right?

If you spend much time reading financial publications (you know the names) or watching financial TV shows, you’ve probably heard, “You can give away $14,000 to anyone in a year and have ZERO gift tax ramifications and if you’re married your spouse can too!” I b2ap3_thumbnail_charity-2_20140701-112953_1.jpgdon’t know how many times I have heard that. The problem is, it isn’t exactly true.

The reality is that you can gift up to $14,000 in a present interest per year and exclude the gift from any gift tax. What is a present interest? It means the person who receives the gift can use the money now. If you put the money into something where the recipient can’t get the money now, you lose the exemption and the gift becomes potentially subject to gift tax (since the current lifetime Unified Tax Credit is large most people won’t owe taxes) and you must file a gift tax return.

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Beware the Short Sale Tax Bite

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Due to the financial crisis/great recession many Americans found themselves under water on their mortgage — they owed more than the house was worth. One way out of this situation was to execute a “short-sale”. In a short sale the lender agrees to accept the proceeds from the sale of the house as payoff for the loan. Any remaining debt was forgiven. Fortunately, a lot of homeowners are now back above water, but some of you may still be considering a short-sale. But, before you do you need to realize that the tax treatment of a short-sale changed on 1 Jan 14.

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Disclaimer

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.

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