DoD

April 26, 2012

Thrift Savings Plan to offer new Roth option

Karen Parrish
American Forces Press Service

WASHINGTON – Service members and Defense Department civilian employees who are eligible for the Thrift Savings Plan will soon have a new Roth option for retirement savings under the program, defense finance officials announced today.

The change will allow participants to contribute after-tax dollars to the federal government-sponsored retirement savings and investment plan, according to a Defense Finance and Accounting Service statement released today.

As with traditional and Roth individual retirement accounts, the TSP’s two options will now allow plan participants to invest either before- or after-tax dollars, although limits on annual contributions, catch-up contributions and agency matching funds will remain the same, officials said.

The plan, which is similar to a 401(k), is open to federal civilian employees and military members. For 2012, the maximum contribution is set at $17,000. Catch-up contributions, available to participants 50 or older, are capped at $5,500 over the standard limit.

Only civilian employees are eligible for agency matching contributions. All eligible civilian employees receive one percent in agency matching funds. Eligible plan participants receive a dollar-for-dollar agency matching contribution for the first three percent of pay they contribute, and 50 cents on the dollar for contributions of between three and five percent. Contributions above 5 percent of pay are not matched.

The current plan treats all contributions as pre-tax dollars – participants do not pay taxes on pay they put into the plan, but will pay deferred taxes when they receive those funds in retirement.

The new Roth option will allow contributions that are taxed in the year they are made, but will be tax-free in retirement, TSP officials said.

Greg T. Long, TSP executive director, urged in a letter to participants that they carefully consider whether Roth TSP would be to their advantage.

“As with all tax matters, you should seek the advice of a qualified tax or financial advisor for information pertaining to your specific tax situation,” Long wrote.

He added the plan’s website will soon offer a Roth calculator, and other website content including forms and publications will be updated in May to include information about the Roth feature.

Defense finance officials said the Roth option will be available on a phased basis by military service from June to October. Officials said the schedule will allow service finance employees to complete and thoroughly test the complex changes needed to the various payroll systems.

Defense finance officials said more specific deployment dates on Roth TSP elections will soon be available on www.dfas.mil.

Officials said service members and their families may contact Military OneSource at 800-342-9647 to schedule an appointment with a financial consultant.




All of this week's top headlines to your email every Friday.


 
 

 
(U.S. Air Force Illustration by Airman 1st Class Cheyenne Morigeau)

Don’t become a target

Considering recent threats against Americans and the exponential growth of social media use, becoming a target of an adversary is easier than ever. Operations Security is a process that identifies unclassified, critical informa...
 
 
BreastCancerAwareness_pict

An Airman’s story: My mother didn’t fight alone

MOODY AIR FORCE BASE, Ga. – His green eyes frantically searched the crowd for his dying mother. During his final pass and review at basic military training (BMT) he saw her in the stands, cheering him on. A year later, ...
 
 

Fire Prevention Week 2014

(U.S. Air Force photo by Airman 1st Class Chris Drzazgowski) Sparky the Fire Dog, National Fire Protection Association spokesdog, and members from the 355th Fire Emergency Services flight taught children from the Child Development Center how to stop, drop and roll at Davis-Monthan, Oct. 8. The 355th FES conducted several events in conjunction with Fire...
 

 

Troops to Teachers helps Airmen serve after separation

NELLIS AIR FORCE BASE, Nev. – For many service members who are separating from the military, finding employment that utilizes prior training or skills gained while serving can be difficult. For Airmen who are honorably discharged from their military commitment and have an interest in ‘serving’ again as an educational instructor, the Troops to Teachers program is...
 
 

Military Tuition Assistance Program implements changes for FY15

HOLLOMAN AIR FORCE BASE, N.M. – Air Force active duty Airmen who want to take advantage of the military assistance programs for voluntary education in the coming academic year can expect several changes that were implemented on Oct. 1, 2014. The new Air Force Credentialing Opportunities Online, also referred to as AF COOL, will take the place...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>


Directory powered by Business Directory Plugin