Military Pay Newsletter

JANUARY 2008

Army Wounded Warrior Pay Management Program In late 2004, the Defense Finance and Accounting Service (DFAS) discovered that wounded Soldiers who had served in the Iraqi and Afghan theater of operations may have been erroneously overpaid or had debts for which subsequent collection may not be practical. In an attempt to fix and prevent the problems from occurring in the future, DFAS, in cooperation with the Army, developed and deployed the Wounded Warrior Pay Management Program in June of 2005. The program is a comprehensive process that links casualty, medical and financial information and provides it to finance offices worldwide, allowing the pay community to identify and track wounded and ill Soldiers returning from theater. This reduces the likelihood that they will incur debt related to their deployment. The goal of the Wounded Warrior Pay Management Program is to provide VIP pay account management to all wounded Soldiers and their family members through face-to-face interaction, education of combat pay entitlements and travel pay, and forgiveness or cancellation of erroneous debts related to the Soldier's medical evacuation. DFAS ensures erroneous debts for wounded Soldiers are suspended to allow for a review of the Soldiers' accounts and forgiveness of eligible debts. Since August 2005, DFAS and the Army have forgiven $12.93 million in debts for 13,826 Soldiers, thus preventing many Wounded Warriors from incurring financial hardship. The Army and DFAS have established Wounded Warrior Pay Support teams at all major military installations, including all major Army medical treatment facilities. Each team is responsible for providing face-to-face customer support and to continuously review pay accounts for accuracy. From the time of medical evacuation, "boots on ground" finance support is provided to all wounded Warriors at each installation. Soldiers and their family members are provided with pay and entitlement information and educated on how the Soldier's patient status will affect his or her pay. Assistance in completing travel vouchers and invitational travel orders for Soldiers and their family members is also provided on site. For family members of Wounded Warriors at medical treatment facilities (MTF), please visit the local finance office for pay and entitlement inquiries. Soldiers and their families may also contact: Army Wounded Soldier and Family Hotline at 1-800-984-8523 DFAS Customer Service at 1-888-DFAS-411 Visit DFAS' Wounded Warrior webpage at http://www.dfas.mil/militarypay/woundedwarriorpay.html for additional information on the Wounded Warrior Pay Management Program as well as answers to pay and entitlement questions. For Soldiers or family members that have received service from the Wounded Warrior Pay Management Team, please take a few minutes to provide feedback by clicking below: http://ice.disa.mil/  [Family Member] http://ice.disa.mil  [Service Member] The Wounded Warrior Pay Management Program continuously looks for ways to improve and strives to provide the very best pay support to our Wounded Warriors day after day. [Editor's Note: The Army is not alone is forgiving Wounded Warrior debts. The other Services participate in debt forgiveness as well. For example, DFAS and the Air Force have forgiven $10.82 thousand in debts for 14 Airmen, thus preventing many Wounded Warriors from incurring financial hardship.]

Tax Season Reminders 1. Verify your personal and tax information from Leave and Earnings Statements (LES). Any changes will need to be made through the military member's payroll office. Pay information, including your W-2, is available 24/7 at www.mypay.gov. Further pay information is available at your servicing finance office. 2. The Internal Revenue Service Publication 3 entitled "Armed Forces' Tax Guide" is available at www.irs.gov/pub/irs-pdf/p3.pdf 3. Prepare for next year by reviewing withholding for federal and state taxes. 4. Get refunds in less than half the time by using IRS e-file with a direct deposit into your bank account. It's faster, safer and more convenient.

Thrift Savings Plan Aids Retirement The Thrift Savings Plan (TSP) is a good vehicle for savings because it is tax-deferred in pretax dollar savings. This means that contributions come out of a member's income and they are not taxed on it until they use that money later, hopefully in retirement. Many service members take advantage of TSP because it is an attractive investment option with unique benefits for military members. These benefits include saving for retirement and the ability to complete tax-deferred or tax-exempt retirement investments first. Military members can contribute to TSP as soon as they become a member of the uniformed services. They may elect to contribute any percentage (one to 100 percent, subject to mandatory deductions) of your basic pay. However, annual total tax-deferred contributions cannot exceed the Internal Revenue Service limit, which is $15,500 for 2008. Deployed troops have different limits in TSP because their income is tax-exempt and the IRS has a separate limit for that category. The program highlights and limits for deployed personnel may be found at the TSP website [website reference is below]. Those who are contributing to TSP from their basic pay are allowed to contribute from one to 100 percent of any incentive or special pay, including bonus pay. Elective deferrals are tax-deferred amounts that participants contribute to TSP instead of receiving it as pay. The contributions are not considered taxable gross income for the year in which they are contributed. Catch-up contributions are supplemental tax-deferred contributions available to TSP participants age 50 or older who are already contributing the maximum amount of regular TSP contributions for which they are eligible up to the maximum IRS elective deferral limit. Catch-up contributions have their own annual limit of $5,000 in 2007. Catch-up contributions are invested in the TSP funds according to the most recent contribution allocation. Some new Army recruits who enlist in critical military occupational specialties areas may also be entitled to receive a matching contribution. Participants in the TSP Matching Funds Pilot Program receive matching contributions on the first five percent of pay that is contributed each pay period of their initial term. The first three percent of pay that is contributed is matched dollar-for-dollar; the next two percent is matched at 50 cents on the dollar. Another major benefit is that the expenses on the accounts are very low, about one-tenth of the average private mutual fund. TSP also has a loan program for special situations such as a first home purchase, where participants can borrow money from their own account and then pay it back at a market interest rate. Finally, the money in TSP can also be rolled over to another IRA account. Service members who leave active duty and join the National Guard or Reserve will still have TSP because they can invest in it whenever they're on active duty. They can even contribute a percentage of their weekend active duty pay. For more information on saving money go to www.militarysaves.org. For more information on military TSP, see www.tsp.gov/uniserv/features/chapter01.html.

Important Safeguard for your myPay Account The Virtual Keyboard is just the latest of many security features myPay has introduced to protect data in the DFAS pay management system. Each time an account holder visits the myPay Web site, a Virtual Keyboard will be presented for entry of their personal identification number (PIN). The Virtual Keyboard displays the keys in random order and requires a mouse click on the appropriate key to enter the PIN. The advantage of using the Virtual Keyboard is that others are deterred from learning an individual's PIN. Find complete details on this feature at https://mypay.dfas.mil/FAQ.HTM#VirtualKeyboard.

Protection from Predatory Lending Military members and families are often targeted by payday lenders. Payday loans are short-term cash loans based on the borrower's personal check held for future deposit or electronic access to the borrower's bank account. Borrowers write a personal check for the amount borrowed plus the finance charge and receive cash. In some cases, borrowers sign over electronic access to their bank accounts to receive and repay payday loans. Lenders hold the checks until the next payday when loans and the finance charge must be paid in one lump sum. To pay a loan, borrowers can redeem the check for cash, allow the check to be deposited at the bank, or just pay the finance charge to roll the loan over for another pay period. DoD is conducting an awareness media campaign to ensure families understand that the regulation exists and that it directly affects them. On the October military Leave and Earning Statements (LES), members were informed that "Starting 1 October 2007, a new Federal regulation prohibits creditors making payday loans, vehicle title loans and tax refund anticipation loans to active duty Service members and their dependents with annual percentage rates over 36 percent." To avoid debt, military members should consider financial management courses and personalized support from financial management specialists - often known by their initials, "PFMs" - that are available at military installations. In the Army, these services are located at the Army Community Service Office. In the Navy and Marine Corps, they may be found at the Fleet and Family Support Office. Air Force personnel can locate them at the Airman and Family Readiness Center. Learn more at http://www.militaryhomefront.dod.mil/  and http://www.militaryonesource.com.  Note: Military One Source is the official DoD program Web site to provide 24/7 family support to service members of all services and components (Active, Guard, and Reserve). (Source: Defense Finance and Accounting Service)