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
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 photos by Darnell Gardner

Navy Operational Support Center changes command

Lt. Cmdr. Eric Cottrell assumes command of the Navy Operational Support Center, Moreno Valley, a tenant unit at March Air Reserve Base, Calif., July 20. Prior to his arrival, Cottrell served as the deputy executive assistant to...

News Briefs | July 27, 2012

ATTENTION MARCH RUNNERS! According to the information received from Air Force Reserve Command, “Permissive TDY” orders with no pay, is the only status authorized and required for Space A travel to Wright Patterson Air Force Base. For more information, contact Chief Master Sgt.Terry L. Luzader, chief, NAF Aviation Resource Functional Manager at 951-655-7608. KAYAKING IN...

AF releases mid-year selective re-enlistment bonus list, changes

WASHINGTON D.C. — Air Force officials released the fiscal 2012 mid-year selective re-enlistment bonus list along with some changes to the program, July 19. In addition to a rebalance in overall payments, officials identified 53 Air Force specialties, down from 78, to receive bonuses. Based on the semiannual program review that began in March, officials...


Strengthening our core

WASHINGTON D.C. — The greatest threat to the United States Air Force right now is not external, but from within. The allegations of sexual misconduct at Lackland Air Force Base, Texas, splashed across the news will undoubtedly be fully investigated and criminal behavior will be prosecuted appropriately. The victims will be heard and they will...

Does the EPR need a bailout?

What do enlisted performance reports, Goldman Sachs and Bank of America have in common? They suffer from bad brand name recognition. So, what should we do? Should we bail out our EPR system? We should rename the EPR system. We could change the name to Yearly Evaluation Report or YER? Years ago, we hoped a...

452nd Air Mobility Wing Third Quarter Awards Board winners

AirmanSenior Airman David Piccoli, 452 ALCF NCOStaff Sgt. Andrea Hall, 452 OSS CGOCapt. Johnathan Jordan, 752 AMXS Not pictured: Senior NCO, Master Sgt. Delicia Speller, 452 OSS  


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>