DoD

April 20, 2012

Thrift Savings Plan to offer new Roth option

Karen Parrish
American Forces Press Service

WASHINGTON, D.C. — 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, April 13.

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.

Agency matching contributions are one percent for all eligible employees, dollar-for-dollar for the first three percent of pay an eligible employee contributes to the plan and 50 cents on the dollar for eligible employee 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.

 


Did you enjoy or perhaps disagree with something in this article? If so, we’d love to hear your thoughts in the comments below. Don’t forget, you can sign up for our email newsletter or subscribe to our RSS feed to keep up with our latest headlines.



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


 
 

 
U.S. Air Force photo/Capt. Perry Covington

Master Sgt. Bode named AFRC’s 2014 Crew Chief of the Year

U.S. Air Force photo/Capt. Perry Covington Master Sgt. James Bode, Air Reserve Technician and dedicated crew chief, 752nd Aerospace Maintenance Squadron, March Field, runs through some routine maintenance checks on his KC-135 S...
 
 

Retired reservist finds inspiration through loss

(Final in a three-part series chronicling Angela Alexander’s incredible story which led to a book, a ministry and now, a documentary.) Following the untimely death of her two sons in a car crash, Angela Alexander, a retired Air Force Reservist, faced the challenge of sharing her story with the world. She knew God wanted her...
 
 

Acting under secretary of the Air Force appointed

WASHINGTON (AFNS) — President Barack Obama appointed Lisa S. Disbrow to serve as the acting under secretary of the Air Force March 30. Disbrow will take over for Eric Fanning who was recently appointed as chief of staff for Secretary of Defense Ash Carter. “Lisa Disbrow is already a tremendous asset to our Air Force...
 

 

AF Smart Operations of the 21st Century Training Course

Students feverishly poured over charts and graphs as they worked their way through the presented problem at March Air Reserve Base, Calif., during a five-day, Air Force Smart Operations of the 21st Century (AFSO21) Green Belt Training Course from March 22nd to March 27th, 2015. A gathering of both enlisted and officers alike, the group...
 
 

Earth Day 2015 Recycling Facts

Recycling just 48 cans is the energy equivalent of conserving one gallon of gas Since 1990, the paper recovered through U.S. recycling efforts would fill 200 football stadiums to a height of 100 feet The most recycled consumer product in America is the automobile, with 26 cars being recycled every minute Every ton of recycled...
 
 
NCO-induction

Induction ceremony recognizes NCO/SNCO accomplishments

U.S. Air Force photo/Senior Airman Russell McMillan Airmen being inducted into the NCO and SNCO ranks sit in the Cultural Resource Center April 11, 2015, during the induction ceremony. The ceremony recognizes and applauds the 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=""> <strike> <strong>


Directory powered by Business Directory Plugin