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Military Finances 101: Happy Birthday! Do You Know What Changed? Thumbnail

Military Finances 101: Happy Birthday! Do You Know What Changed?

Insights Taxes Tricare

Today is my brother's birthday. I won't say how old he is (he's not 86), but he is older than me. That got me thinking. There are a lot of things related to finances that change on birthdays. Here is a list:

  • 13 - Child Care Credit. You can only claim the credit for a child who was under 13 when you paid for the care.
  • 16 - Insurance. Junior just got his Driver's License. Have you added him to your auto insurance?
  • 17 - Child Tax Credit. When your child turns 17 you lose the child tax credit for the year
  • 18 - FICA. If Junior and his sister work for you as employees, you now have to start withholding and paying Social Security and Medicare Taxes.
  • 18 - Estate Planning. Junior is an adult now (I know, he really isn't) in the eyes of the law. You might want to put some documents in place so that you can make medical decisions for him and have access to his medical records in case of an emergency.
  • 18 - Coverdell ESA. You can no longer contribute to an ESA once the beneficiary turns 18.
  • 19 - Dependent. When Junior turns 19, he is no longer a dependent unless he is a full-time student
  • 19 - Kiddie Tax. If not a dependent full-time student, Junior is no longer subject to the Kiddie Tax
  • 21 - FUTA. If your kids work for you, you now need to start paying Federal Unemployment Tax
  • 24 - Dependent. Junior may or may not be a dependent. Junior will be a dependent, if a full-time student, if under age 24. After turning 24, Junior may be a dependent if certain conditions are met (primarily living location and income limits)
  • 24 - Kiddie Tax. Kiddie tax ends, even if a dependent
  • 26 - Tricare Young Adult. Junior ages out of TYA
  • 30 - Coverdell ESA. The account must be emptied 30 days after the beneficiary turns 30.
  • 50 - Catch-up Contributions. If you turn 50 during the year, you are allowed to make catch-up (increased) contributions to retirement plans such as TSP, 401(k)s and IRAs. The amount changes based on inflation
  • 55 - Early Distributions from Retirement Accounts. If you leave an employer after turning age 55, you can take distributions from your employer's sponsored retirement plan (401(k), 403(b), TSP) without penalty. Note this does not apply to IRAs and retirement plans from other employers
  • 59 1/2 - Retirement Plan Distributions. At age 59 1/2 you can take penalty-free distributions from retirement accounts.
  • 60 - Widow's Social Security. Widows can now claim Social Security benefits (amount increases if delayed)
  • 62 - Social Security. You can claim reduced Social Security benefits
  • 65 - Medicare. If you are not covered by a qualified employer's health insurance, you must start paying Medicare Part B premiums or be subject to penalty when you do start Medicare. Even if you are covered by an employer's insurance, you must pay Medicare Part B premiums, or you will lose Tricare until you do start paying the premiums
  • 67 - Social Security. 67 is the Full Retirement Age for those born in 1960 or later
  • 70 - Social Security. At age 70, you stop earning increased benefits for delaying your claim
  • 70 1/2 - QCDs. You can now make Qualified Charitable Contributions from your IRA
  • 73 - RBD (Required Beginning Date). If you were born in 1951 - 1959, you must start taking required minimum distributions from retirement accounts.
  • 75 - RBD. If you were born in 1960 or later, you must start taking required minimum distributions.
  • Around 80. Most retired Senior Military Officers and NCOs will be done "paying" for SBP

Military Finances are Different

Ask an advisor that doesn't work with Active and Retired Senior Military Officers and NCOs about when your SBP will end, and he or she will have to look up what SBP is. He or she probably won't know much about Tricare for Life either. And there are other things unique to military life. That's why we think you should work with a Financial Planner of Advisor that deals with your issues each and every day. If you'd like to find out how we work with Active and Retired Senior Military Officers and NCOs, click the button below to schedule a free initial consultation.

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