$30,000 Redux bonus could cost you $427,000

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Deal or no deal
$30,000 now or $427,000 later?


$30,000 Redux bonus could cost you $427,000
By Rick Maze - Staff writer
Posted : Sunday Nov 30, 2008 11:53:39 EST

A $30,000 bonus — tax-free if taken in a war zone — has to look attractive to many U.S. troops in times of economic turmoil.

Whether you are upside-down on your mortgage — owing more than the house is worth and possibly facing escalating monthly payments because of an adjustable rate loan — or your spouse has lost a job, or the credit card bills are mounting, many midcareer service members could find good use for the one-time payment offered as they reach the 15-year mark of a military career.

But there’s a huge downside — taking the Redux bonus puts you in a much less generous military retirement plan that will cost you dearly in your post-military life.

“It is easy to see why some people might look at the $30,000 — which is probably $23,000 after taxes — as a pot of money coming at exactly the right time,” said Steve Strobridge, director of government relations for the Military Officers Association of America.

“But this would be a huge mistake,” Strobridge said. “The only time when anybody ought to consider this is when the mafia is holding your parents hostage on their 50th anniversary and demanding $20,000. Taking the Redux bonus is never a good deal.”


Rest of article at: http://www.airforcetimes.com/news/2008/11/airforce_reduxreview_113008/%2e