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.


 
 

 
DoD
AFN photo/Charlie Gill

Robert Sekula, man of many hats

AFN photo/Charlie Gill Robert Sekula, a broadcast journalist/producer working at the American Forces Network Broadcast Center, one of March Air Reserve Base’s mission partners, wears many hats. Robert Sekula’s ever-present ...
 
 
DoD
DSC_0002

Senate panel backs smaller military pay hike, retirement reform

Senate lawmakers on Tuesday shook hopes for a larger military pay raise next year by recommending only a 1.3 percent hike in their draft version of the 2016 defense authorization bill, a move that could further widen the “pay...
 
 
DoD
MonthoftheMilitaryChildAPRIL2015

Sacrifices of the military child recognized during April

WASHINGTON (AFNS) — To highlight the year-round contributions, courage and patriotism of the military community’s youngest members, the Defense Department observes April as the Month of the Military Child, said a Pentag...
 

 
DoD
Extra-app

New Exchange EXTRA app puts savings and more at shoppers’ fingertips

DALLAS – With the swipe of a finger, military shoppers can launch a brand-new way to connect with the Army & Air Force Exchange Service through its free Exchange EXTRA app. The app gives shoppers quick access to informati...
 
 
DoD

DOD releases 2015 military pay, compensation rates

WASHINGTON (AFNS) — The Defense Department announced the 2015 military pay and compensation rates for service members Dec. 22, with most service members receiving a 1 percent increase in basic pay. The new rates for basic pay, basic allowance for housing (BAH), basic allowance for subsistence (BAS), and the cost of living allowance (COLA) rates...
 
 
DoD
(U.S. Air Force photo/Staff Sgt. Scott Saldukas)

President Obama expresses gratitude to troops, civilians

(U.S. Air Force photo/Staff Sgt. Scott Saldukas) President Barrack Obama thanks service members and Defense Department civilians for their service and dedication to their nation, during a speech given Dec. 15, at Joint Base McG...
 




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