Transcript Members Acquired by Acquisition Hills vs. Plan

Finances and Deployment:
Before, During & After
AWAG Leadership & Training Seminar
Presented by:
Joseph “J.J.” Montanaro, CFP®
USAA Financial Planner
The Fine Print
Investments/Insurance: Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
 USAA or its affiliates do not provide tax advice. Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor. The information is provided
for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional representation before acting on
any information you may have found in this article. This article is in no way attempts to provide advice that relates all personal circumstances.
 Conversions from a Traditional IRA to a Roth are subject to ordinary income taxes. Please consult with a tax advisor regarding your particular situation.
 Diversification does not guarantee a profit or prevent a loss.
 Any examples given during this presentation are hypothetical illustrations and not an indication of the benefits or features of any USAA product. You should seek policies and advice based
upon your own particular circumstances. Sample loans are for illustration purposes only and are not a rate quote, pre-approval, or commitment to lend.
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 Past performance is no guarantee of future results.
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company has sole financial responsibility for its own products. Investment provided by USAA Investment Management Company, and financial Advisors Inc., both registered broker dealers.
Life insurance and annuity products provided by USAA Life Insurance Company, San Antonio, TX, and in New York by USAA Life Insurance Company of New York, Highland Falls, NY.
Financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California, License #
0E36312), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer. Investments provided by USAA
Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers. Credit cards provided by USAA Savings Bank. Other banking products provided by
USAA Federal Savings Bank. Both Member FDIC.
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Agenda
Financial Considerations
Pre-Deployment
Deployment
Post Deployment
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Who We Are
 Founded in 1922 by 25 U.S. Army Officers
 Headquarters in San Antonio, Texas
 Membership Earned Through Military Service
 Member-Owned
 Strong Financial Ratings
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Our Mission
USAA Mission
The mission of the association is to facilitate
Our Brand Pillars
the financial security of its members,
associates, and their families through
provision of a full range of highly competitive
financial products and services; in so doing,
USAA seeks to be the provider of choice for
the military community.
Shared
Military
Values
Financial Passionate
Strength
Member
& Wisdom Advocacy
Core Values
Service
Loyalty
Honesty
Integrity
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Pre-Deployment
Managing Finances
 Income Up (up to $625/month):

Hostile fire or Imminent Danger

Family separation

Hardship duty
 Expenses Down
 Income taxes
 Transportation expenses
 Lease termination
 Not all down (hired help, do-it-no-longer –
yourself)
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Pre-Deployment
Servicemembers’ Civil Relief Act (SCRA)
The Servicemembers’ Civil Relief Act (SCRA) provides protection to individuals
entering or called to active duty to help ease the transition from civilian to military duty.
 Interest rate cap

6% cap

Pre-service/activation (for reserve component)

Notification and copy of orders
 Auto lease termination (180 day orders)
 Residential lease termination (90 day orders)
 Other provisions

Stay of proceedings

Eviction protection
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Pre-Deployment
Having a Plan is Essential
 Pay down debt

Credit cards

Car loans

Student loans
 Save, Save, Save
 Emergency fund
 Other goals
 Retirement
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Pre-Deployment
Caring for Families and Love ones
 Legal documents

Will

Powers of attorney

Living will

Beneficiary designations
 Non-legal documents
 Letter of instruction

Accounts

Passwords/access

Petcare instructions
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Pre-Deployment
Caring for Families and Love ones
 Life Insurance
 What you have: SGLI
 What you need:






Replace income
Pay off debts
Rules of thumb
Calculators (www.va.gov & www.usaa.com )
Fund college
Care for children
 Supplementing SGLI
 Permanent Insurance
 Term Insurance
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Pre-Deployment
Preplanning
 Online billpay and automatic payments
 Detailed operations order
 Communications plan
 Head retail therapy off at the pass
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Deployment
Savings Deposit Program (SDP)
 Savings Deposit Program (SDP)

DoD Savings Account

Eligible at 30 days on the ground

10% interest!!!

Deposit up to $10,000

Draws interest for 90 days after return

Limited access
A great way to get more interest on existing savings, build savings,
or save for short-term goals.
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Deployment
Thrift Savings Plan (TSP)
 Government version of 401(k)
 Tool to save for retirement
 Contribute as little as 1% and easily adjusted
via myPay
 Limit of $17,500 in 2013 for those under age
50
 Two plan choices

Traditional

Roth
 Broad-based investment alternatives
 Lifecycle Funds (pre-mixed version of available
funds)
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Deployment
Thrift Savings Plan (TSP)
 Contribution limits:

Increased total contribution limit ($51,000)

Roth contributions still limited to $17,500

Potential to contribute $33,500 to traditional
plan and $17,500 to Roth
 Roth contributions:

Limited to $17,500

Opportunity to never pay taxes on
contributions or earnings
 Tax-exempt contributions to traditional plan
tracked separately; growth is taxable.
 Consider using Roth TSP whenever in
combat zone
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Deployment
Other Opportunities
 Roth conversion:

Shift traditional IRA to Roth IRA

Overall taxable income could be down, minimizing
taxes from conversion
 Earned income tax credit

Elect to recognize tax-exempt income as taxable

Creates eligibility for refundable tax credit

Overall could be advantageous
Resource: IRS Publication 3: Armed Forces’ Tax Guide
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Post -Deployment
Assessment
 Assess where you stand:

Bills

Available cash

Requirements (restart accounts,
deposits, etc.)
 Big ticket purchases:

Cooling off period

Avoid temptation to make-up for lost
time with $$

Shop around and research
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Post -Deployment
Recharge and Restart
 Develop Windfall Plan (if applicable):

Pay down debt

Save for short and long term

Treat yourself (a little)
 Develop Spending Plan (budget):

10-15% Transportation

20-25% Housing

10%+ Retirement
 Savings & Investments:

Emergency fund/short-term goals

Intermediate goals

Retirement
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Post -Deployment
Three Tier Savings and Investment Plan
 Emergency fund/short term

Equivalent of at least 3 months expenses + money set aside for purchases
within the next year

Saved in savings account, money market, or similar

Goal: be there when you need it
 Intermediate goals

Money invested for goals 2-10 years

Account type: individually or jointly owned

Invested in CDs, bond funds, or stock funds

Goal: grow without excessive risk
 Long-term

Invested for retirement or other goals 10+ years

Account type: tax-advantage accounts like IRAs, Thrift Savings Plan, 529
plans (college)

Invested in diversified portfolio (time horizon, risk tolerance, tax situation)
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Post-Deployment
Pre-Tax Plans
 Traditional Thrift Savings Plan (TSP)

Save taxes now

$17,500 annual contribution limit (2013)

Withdrawals taxed at age 59 ½ or older

Automatic, easy to manage

Inexpensive index, lifecycle funds
 Traditional IRA

Potential tax deduction

$5,500 annual contribution

Withdrawals taxed at age 59 ½ or older
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Post-Deployment
Pre-Tax Plans
 Tax-Free Plans
 Roth TSP
o $17,500 annual contribution limit
o Retirement withdrawals tax free
 Roth IRA
o $5,500
o Retirement withdrawals tax free

Other Options
 Non-retirement investments
o Capital gains tax
 Tax-Diversification-taxable, pre-tax, taxfree
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Take Charge!
 Spend less than you earn
 Protect your life, loved ones, and possessions
 Save for emergencies
 Pay off debt
 Save now for retirement
 Prepare your legal documents
 Have an up-to-date financial plan
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Questions
USAA
800.306.2599
USAA.com
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Pre-Deployment
Having a Plan is Essential
 Pay down debt

Credit cards

Car loans

Student loans
 Save, Save, Save
 Emergency fund
 Other goals
 Retirement
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