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.


 
 

 
DoD

TRICARE Pharmacy Rules Changing for Maintenance, Brand-name Drugs

WASHINGTON — TRICARE beneficiaries who take certain brand-name medications on a regular basis will be required to fill prescriptions at a military treatment facility or through a mail-in program beginning Oct. 1, a Defense Health Agency official said yesterday. George Jones, DHA’s pharmacy operations division chief, said the new policy does not apply to active-duty troops,...
 
 
DoD
Courtesy photo by Tim Brumbeloe

‘I Will Wait’ Tells Stories of Generations of Military Spouses

WASHINGTON — America sends its sons and daughters to war, and a new play titled “I Will Wait” looks at the effect of these deployments across the generations. The brainchild of Amy Uptgraft, the play connects the experien...
 
 
DoD
Equality_pict

Women’s Equality Day commemorates history, bridges future leaders

WASHINGTON (AFNS) — Women’s Equality Day, Aug. 26, not only commemorates the ratification of the 95th anniversary of the 19th Amendment — which solidified women’s voting rights — but it also coincides with...
 

 
DoD
ArmyDepot

Army Depot explosion in Japan remains under investigation

WASHINGTON — The cause of an explosion and the resulting large fire at a storage building early today at the Army’s Sagami General Depot in Sagamihara City, Japan, remains under investigation, Pentagon spokesman Navy Capt....
 
 
DoD
Lockheed_pict

Lockheed’s Legion Pod: Five fast facts

At Lockheed Martin, our targeting systems and sensors have a long history of innovation. Since the 1970s, we’ve utilized internal investment and pre-planned product improvement programs to provide warfighters with the latest ...
 
 
DoD

DOD awards contract for electronic health records

WASHINGTON (AFNS) — The award of the new modernization contract for electronic health records is a great opportunity to “save money, save time, and most importantly, save lives,” said Christopher A. Miller, the Defense Healthcare Management Systems program executive officer. In a culmination of a more than two-year effort, the Defense Department today awarded a...
 




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=""> <s> <strike> <strong>