Over 20 Years Served - Medical Vs. Regular Retikrement?

[vaf]

I was helping a veteran who was planning to retire very soon with over 20 years served, when we just found out he had a seizure of unknown origin which caused him to wreck his car and someone else's. He ended up waking up in the ambulance and crushed his L5 disc, and he's now in the hospital. He called my husband just now, asking about how this would affect his retirement plans for the immediate future.

My husband told him to put his retirement on hold. I'm wondering, once he has his surgery and is otherwise stabilized, is he better off pursuing a medical retirement, or should he just retire based on time served and let the VA handle the issues?

My gut says to tell him to pursue a medical retirement, but I don't know if that's the best option for him.

May I get your opinions, please?

[Testvet]

I don't think it affects his retirement it will affect his VA benefits obviously since it is NOT combat related it will create the offset from retirement pay for his VA benefits which will then become non taxable income so the higher VA rating the better for his tax purposes I doubt his back injury will be severe enough to qualify him for SSD retirement but if he has further back problems or sciatica later in life it will help him qualify for higher percentages down the road all the time he spends on active duty after his back surgery will also give him more days towards his retirement and most of it will probably be spent on medical leave recuperating

[vaf]

I just found out that this gentleman, who is still active duty, had a prior seizure that was attributed to a reaction to meds he was prescribed for PTSD through the base military clinic (to an off-site doc, I assume, since it's just a clinic here and not a hospital).

This guy already has over 20 years served. My husband retired in the early 90's with over 20 served, but it was a medical retirement. He received 40% from the MEB/PEB process, so 40% of his retirement pay is tax exempt. Is that still the case when something like this happens to someone who served over 20 years?

I'm thinking that he shouldn't be discharged either way until he has back surgery to fix the damage from the car accident, and they find out exactly what caused the seizures. He's lucky he didn't kill himself or anyone else...

[vaf]

If anyone has any knowledge of the tax consequences of retiring on a medical vs. regular retirement based on serving over 20 years, if any, I could use an education on that subject. I'm not sure that the tax benefits of a medical retirement over 20 that my husband currently enjoys are still available, since he retired in the early 1990's.

Thank you.

[Commander Bob]

The 20 career Vet can draw both VA & military retirement.

I think , you have to be at least 50% disabled.

Are you familiar with CRDP (Concurrent Retirement and Disability Payments) ? here is a link for info.

http://www.military.com/benefits/military-...eceipt-overview

Edited May 26, 2010 by Commander Bob

[john999]

I do know that civilian federal employees who retire on disability pay have to pay tax on their annuity. I bet it is the same for military.

[broncovet]

VAF

Well, I am no expert on the matter, but my VA benefits come tax free, and I am pretty sure retirement benefits are taxable...I know Social Security is taxable. They have a scale, depending upon how much other income you have that goes something like if you earn more than 44,000 in a year, then 85% of your Social Security is taxable. However, if you earn less than $44,000 per year, only 50% of your social security is taxable. (this assumes you are married filing jointly) More here:

http://www.ssa.gov/planners/taxes.htm

So, my advice would be to go medical unless the "regular" retirement was more because $30,000 per year non taxable is more than $30,000 per year minus taxes. JMHO.