Making it in the MilLife

CORRRECTION: In our most recent entry combat zone tax exemptions, we erroneously indicated that if a re-enlistment bonus received while in a combat zone is taken via installment payments, payments received after the servicemember is no longer in the combat zone are subject to taxes. Combat zone re-enlistments are income tax-free, regardless of whether the money is actually received while in a combat zone or not. This has already been corrected in the blog entry, but we wanted to highlight the correction here as well.

National Guard and Reserve members often aren’t aware of their rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA), which spells out what benefits employers are required to maintain after they’re called to active duty.

The Uniformed Services Employment and Reemployment Rights Act (USERRA) provides significant employment protections for National Guard and Reserve servicemembers when they are called to active duty. It is common knowledge that USERRA essentially guarantees activated servicemembers the right to return to the same or equivalent job for call-up periods of up to five years, or longer for certain specialties. But what other key protections are covered by USERRA?

Seniority escalation, pension benefits, and healthcare coverage also are generally protected. This means a company cannot deny you a promotion, discontinue your pension plan coverage, or deny you reinstatement in your healthcare plan (including adding new restrictions on pre-existing conditions) due to your military service.

You also have the ability to fund “make up” 401(k) or similar retirement plan contributions for periods covered by deployment. You have up to three times the deployment period – not to exceed five years – to make back payments, and the employer is obligated to match any contributions under the normal rules for the retirement plan.

Example: Maj. Jack Barnes, USARNG, is called to active duty for a period of one year. He has been contributing 10 percent of his $75,000 annual salary ($7,500 a year) to his civilian employer’s 401(k) plan. His employer provides a 4 percent matching contribution ($3,000 a year.) Major Barnes would have up to three years following the end of his deployment to contribute his $7,500 for the year he was deployed, and his employer would be required to deposit the $3,000 matching contribution.

Most employers are good about supporting deployed servicemembers, complying with both the spirit and the letter of the law. However, there have been cases of serious USERRA violations against servicemembers returning from deployment. Make sure you know your rights and use all of your legal protections to your best advantage.