|
COLA Nosedive for 2010?
On the heels of the recent 5.8% COLA,
the first two months of FY2009 saw steep
price drops that put inflation in a 3.8%
hole. What does that huge swing mean for
the 2010 COLA?
VA Wrongfully Recouped from Widows
For 12 years, the VA has been ignoring a
law that bars recoupment of VA
disability compensation from the
survivor for the month in which a
disabled veteran died. What's more, the
Pentagon has the same recoupment process
for military retired pay - and it's
legal.
Retirees Get Some Relief - Next Year
Congress has changed the law to exempt
(for one year, anyway) seniors age 70
1/2 from having to take distributions
from their IRA and 401(k) accounts. But
the exemption applies only to
distributions for 2009 – not 2008.
Happy Holidays
MOAA extends our best wishes to you and
your family in this holiday season.
We're taking a holiday, too, so this
will be the last Legislative Update of
2008.
COLA Nosedive for 2010?
The 5.8% cost of living adjustment
(COLA) retirees will see in their Jan. 2
paychecks will be the largest one since
1982.
But the new fiscal year is a whole
different story, as steeply falling
prices have started off next year's COLA
calculation in a deep hole. This month,
the Bureau of Labor Statistics announced
that the consumer price index dropped
2.3% in the month of November.
That makes a whopping decline of 3.8%
for the first two months of FY2009 - the
biggest two-month drop in more than 60
years.
Check out MOAA's comparison of
the last two years' starting COLA tracks
vs. this year's and draw your own
conclusions about what that may mean for
the 2010 COLA.
In case you’re wondering: if inflation
is negative for the year, there would be
no COLA in 2010. Retired pay would not
be reduced.
On a related note, we've received some
questions about when paychecks will
reflect various other increases in pay
for active duty and retired members. It
can get confusing, because the dates
aren't all the same.
Here's a quick-reference summary of what
payments you'll see reflected in what
checks:
-
Active duty/Guard/Reserve pay raise
Jan. 15 check
-
VA disability compensation COLA:
Jan. 2
-
Military retired pay COLA: Jan. 2
-
Concurrent Receipt
(non-combat-related) phase-in
increase for 50%-90% disabled
retirees with 20+ years of service:
Feb. 2
-
Combat-Related Special Compensation
(CRSC) COLA: Jan. 2
-
Survivor Benefit Plan COLA: Jan. 2
VA Wrongfully Recovering Disability Pay
Apparently for the past 12 years
Veterans Affairs has been wrongfully
collecting disability and pension
payments from the widows of deceased
veterans. This became public in early
December when Senator Daniel Akaka
(D-HI), Chairman of the Senate Veterans'
Affairs Committee, confronted department
officials about the practice which is
contrary to the law.
In 1996 Congress enacted a law
stipulating that disability and VA
pension checks issued in the month of a
veteran's death shall be payable to the
surviving spouse. In other words,
recoupment for disability or other
pensions during the month of death is
barred by law.
Astonishingly, the VA never changed
their pay system to account for this
legal provision and have acknowledged as
much.
Now, the VA is scrambling to fix the
problem and pay all affected survivors.
Secretary Peake has established a
special task force to do that, and
anticipates issuing checks to affected
survivors at the end of this month.
Surviving spouses who have questions can
contact the VA Survivors' Call Center
at1-800-749-8387, Monday through Friday
from 7:00 am to 7:00 pm CST.
But the VA issue isn't the only problem
here.
Current law still requires the Defense
Department to recoup the final month's
military retired pay from military
widows, and then reissue them only a
pro-rata check for the number of days
the retiree was alive.
MOAA says what's good for the VA is good
for DoD.
We've been working with Rep. Walter
Jones (R-NC) to change the law to let
military widows keep the final month of
retired pay, and we'll push that hard in
2009.
New military widows are traumatized
enough without the added, insensitive
shock of having the Pentagon reach into
their bank accounts to recoup retired
pay that usually has already been spent
on housing, car payments or other bills.
Retirees Get Some Relief - Next Year
As part of the economic recovery effort,
Congress recently passed H.R. 7327, the
Worker, Retiree and Employer Recovery
Act of 2008, which is now on the
President's desk for signature.
This legislation provides a temporary
waiver of some required distributions
from IRAs and 401(k) plans.
The good news is that people age 70½ or
older won’t be forced to take a
distribution from their employer
retirement plans next year if they would
prefer not to.
Most retirees' plans have taken a
beating during the recent stock market
decline, and being forced to take money
out at the market bottom isn't very
attractive for many people who would
like to wait and see if the market
rebounds before having to take
distributions.
The bad news is that the exemption
doesn't apply to 2008 distributions, so
people age 70½ or older who haven't yet
taken a minimum distribution this year
will have to do so by the end of
December.
Happy Holidays
With many of the MOAA staff out of town
for the holidays, and the next two weeks
interrupted by mid-week holidays, this
will be the last MOAA legislative update
until Friday, January 9.
For those of you who are deployed, along
with your spouses, moms, dads and
children who remain on the home front,
please know that we recognize and deeply
appreciate the gift you are giving to
our country through your selfless
service and sacrifice. You are
especially in our hearts and on our
minds.
We wish you and yours the merriest of
Christmases, a belated happy Hanukkah,
and all the best in the New Year.
If you're traveling over the next two
weeks, please be safe. We'll need every
possible member back with us for the
tough legislative battles to come in
2009. |
