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
Hale_Koa_Hotel_aerial_view

Using military lodging facilities for summer travel

The Hale Koa Hotel in Honolulu, Hawaii is one of many military lodging facilities available for use by service members at locations all over the world. One of the most attractive benefits available to service members and their ...
 
 
DoD
AFN photo/ Steve McGill

Familiar American Forces Network voice leaving airwaves

AFN photo/ Steve McGill AFN Broadcast Center’s Chief of Marketing and Promotion Eric Tassill, the most recognizable voice on AFN TV since 1996, is retiring in August. American Forces Network Television (AFN TV) is going to st...
 
 
DoD

DOD to include red cross emblem on some Common Access Cards

By late July, the Defense Department will issue the Geneva Conventions Common Access Card with a red cross emblem to military personnel and DOD civilian employees in certain medical, medical auxiliary or religious occupational specialties, a Pentagon official said today. During an interview with American Forces Press Service and the Pentagon Channel, Sam Yousef, program...
 

 
DoD
DOD photo /Glenn Fawcett

DOD holds Pride Month celebration

DOD photo /Glenn Fawcett Deputy Defense Secretary Robert Work delivers remarks at the 2014 Defense Department Lesbian, Gay, Bisexual and Transgender Pride Month ceremony at the Pentagon, June 5, 2014. Work emphasized the import...
 
 
DoD

Commission seeks service members’ compensation preferences

The commission tasked by President Barack Obama and Congress to modernize military compensation and benefits programs is seeking input from service members on their preferences. Alphonso Maldon Jr., chairman of the Military Compensation and Retirement Modernization Commission, said understanding service members’ compensation preferences is central to the commission’s effort to craft moderni...
 
 
DoD
critical-days-of-summer-graphic2

DOD emphasizes importance of summer safety

WASHINGTON, – As the summer season approaches, the Defense Department (DOD) is redoubling its efforts to promote safety and emphasize responsibility to all service members and their families, DOD’s director of personnel ris...
 




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