Qualified reservists, when called into service, can then make tax-free withdrawals from certain retirement accounts.
The rules for qualified reservists are relatively recent and were introduced under the Pension Protection Act 2006. Initially, the rules only applied to active reservists on or before 30 December 2007.
This causes many service workers to withdraw their benefits early, but this could have long-term negative effects on retirement savings.
Retirement benefits received are still subject to certain state and federal taxes.
Perhaps the biggest downside of the qualified reservist rules is that missing even one year of savings in a 401k or IRA can affect retirement.