Finance & Legal Resources

When you separate from military service, you have several options for your TSP account. Making the right choice here can significantly impact your retirement.

The VA home loan is widely considered the most powerful mortgage benefit in the United States. If you are eligible, there is almost no reason to use a conventional loan for your primary residence.

Key Advantages

• ✓Zero down payment — No down payment required on loans up to the conforming loan limit (no cap for veterans with full entitlement)
• ✓No PMI — No private mortgage insurance, ever. This saves $100-$300+/month compared to conventional loans with less than 20% down.
• ✓Competitive interest rates — VA loan rates are typically 0.25-0.50% lower than conventional rates
• ✓Reusable benefit — You can use the VA loan benefit multiple times throughout your life
• ✓Funding fee waiver — Veterans with a service-connected disability are exempt from the VA funding fee (saving $2,000-$10,000+)
• ✓Lenient credit requirements — No minimum credit score set by the VA (though lenders typically require 580-620+)

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  VA disability pay is tax-free. Disability compensation is not included in gross income for federal or state taxes. This also means it does not count against Social Security earnings limits.
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  Combat Zone Tax Exclusion (CZTE). All military pay earned during service in a designated combat zone is exempt from federal income tax. This includes bonuses and reenlistment pay received while deployed.
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  Property tax exemptions. Most states offer property tax reductions or full exemptions for disabled veterans. Some states exempt 100% disabled veterans entirely. Check your state-specific benefits.
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  State income tax exclusions. Several states fully exclude military retirement pay from state income tax. Others offer partial exclusions.
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  Free tax preparation. MilTax (through Military OneSource) provides free tax filing software and access to tax consultants for military members, veterans, and families.

Transitioning from military to civilian pay requires careful planning. Here are key steps to take before and after separation:

1. 1
   Build an emergency fund. Save at least 6 months of expenses before separation. Job searches take 3-6 months on average. Use our Salary Calculator to understand what civilian salary matches your military compensation.
2. 2
   Understand your true military compensation. Your total compensation includes tax-free BAH, BAS, TRICARE, and other benefits. A civilian salary of $60,000 may actually be a pay cut from your military compensation.
3. 3
   Budget for new expenses. Health insurance premiums, housing costs without BAH, and self-funded retirement contributions are expenses you may not have had in the military.
4. 4
   Review your SGLI coverage. Service Members Group Life Insurance converts to Veterans Group Life Insurance (VGLI) within 1 year and 120 days of separation. Compare rates with private term life insurance.

Retirement Pay

If you served 20+ years, you are entitled to military retirement pay. Under the legacy High-3 system, you receive 50% of your average highest 36 months of base pay, plus 2.5% for each additional year. Under BRS, the multiplier is 2.0% per year, plus TSP matching.

Survivor Benefit Plan (SBP)

SBP provides your spouse or dependents with up to 55% of your retirement pay if you die. The cost is 6.5% of your retired pay. Key considerations:

• ●SBP is automatically enrolled at separation unless you opt out (spouse must agree)
• ●Premiums are paid with pre-tax dollars, reducing taxable income
• ●SBP premiums stop after 360 payments (30 years) and reaching age 70
• ●The SBP-DIC offset was eliminated by law in 2019 (NDAA FY2020) and fully phased out by January 2023. Surviving spouses now receive both benefits

Several organizations provide free or low-cost legal services to veterans, covering everything from VA claims to civilian legal issues.