A heads up for all in the military, and some of you about to enter. Finally the military is going to have another retirement financial savings venue in addition to the pension plan. Here is some of the main information pulled directly from the website:
Uniformed Services Participation in The Thrift Savings Planhttp://www.tsp.gov then click on UNIFORMED SERVICES
What is the Thrift Savings Plan (TSP)? On October 30, 2000, President Clinton signed the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398). One provision of the law extended participation in the Thrift Savings Plan (TSP) for Federal civilian employees to members of the uniformed services.
The Thrift Savings Plan (TSP) is a retirement savings and investment plan that has been available to civilian employees of the Federal Government since 1987.
The purpose of the TSP is to provide retirement income. It offers participants the same type of savings and tax benefits that many private corporations offer their employees under so-called "401(k) plans."
The TSP allows participants to save a portion of their pay in a special retirement account administered by the Federal Retirement Thrift Investment Board. The money that participants invest in the TSP comes from pre-tax dollars and reduces their current taxable income; investments and earnings are not taxed until they are withdrawn.
When will I be able to join the TSP? Members will be able to sign up to participate in the TSP during a special 60-day enrollment period, known as an open season, beginning on October 9, 2001, and ending on December 8, 2001. Contributions to the TSP based on the sign-up will begin to be deducted from paychecks the first week of January 2002.
Members who do not enroll during the special open season will have two "open seasons" per year to enroll thereafter. (Open seasons are currently May 15 through July 31 and November 15 through January 31.)
How much can I contribute? In 2002, you can contribute up to 7 percent of the basic pay you earn each month. You may also be able to contribute all or any whole percentage of any special or incentive pay (including reenlistment or other bonuses) you receive. However, the total amount you contribute each year cannot exceed the Internal Revenue Code's elective deferral limit (26 U.S.C. § 402(g)) for that year (for 2001, the limit is $10,500; it is recalculated each year and may be higher in 2002).
Will the Department of Defense match my contributions? The law allows the secretaries of the military services (i.e., Army, Navy, Air Force) to designate critical military specialties for matching contributions. Members serving in these specialties who agree to serve for six years will be eligible for matching contributions. The matching contributions apply only to amounts you contribute from your basic pay. Your service can tell you whether your specialty has been designated as critical and whether you are eligible to contract to receive matching contributions. Matching contributions and their attributable earnings will be taxable to you when you withdraw them from the TSP.
How are my contributions invested? You can invest any portion of your TSP account in the five TSP investment funds:
• Government Securities Investment (G) Fund
• Fixed Income Index Investment (F) Fund
• Common Stock Index Investment (C) Fund
• Small Capitalization Stock Index Investment Fund (S) Fund (available in May 2001)
• International Stock Index Investment Fund (I) Fund (available in May 2001)
Can I withdraw or borrow from my account before I separate from the uniformed services? The TSP loan program allows you to borrow your own contributions and attributable earnings from your account for a general purpose loan or for a loan to purchase your primary residence. The minimum loan amount is $1,000. The maximum loan amount is $50,000; however, the amount you can borrow may be less depending on any outstanding TSP loans you have already taken and certain limits set by the Internal Revenue Code. (If you have both a uniformed services and a civilian TSP account, your account balances will be combined for purposes of determining the maximum amount you may borrow from either account.) You also pay interest on the amount borrowed. The loan repayment, including interest, will go into your TSP account.
Uniformed Services Participation in The Thrift Savings Planhttp://www.tsp.gov then click on UNIFORMED SERVICES
What is the Thrift Savings Plan (TSP)? On October 30, 2000, President Clinton signed the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398). One provision of the law extended participation in the Thrift Savings Plan (TSP) for Federal civilian employees to members of the uniformed services.
The Thrift Savings Plan (TSP) is a retirement savings and investment plan that has been available to civilian employees of the Federal Government since 1987.
The purpose of the TSP is to provide retirement income. It offers participants the same type of savings and tax benefits that many private corporations offer their employees under so-called "401(k) plans."
The TSP allows participants to save a portion of their pay in a special retirement account administered by the Federal Retirement Thrift Investment Board. The money that participants invest in the TSP comes from pre-tax dollars and reduces their current taxable income; investments and earnings are not taxed until they are withdrawn.
When will I be able to join the TSP? Members will be able to sign up to participate in the TSP during a special 60-day enrollment period, known as an open season, beginning on October 9, 2001, and ending on December 8, 2001. Contributions to the TSP based on the sign-up will begin to be deducted from paychecks the first week of January 2002.
Members who do not enroll during the special open season will have two "open seasons" per year to enroll thereafter. (Open seasons are currently May 15 through July 31 and November 15 through January 31.)
How much can I contribute? In 2002, you can contribute up to 7 percent of the basic pay you earn each month. You may also be able to contribute all or any whole percentage of any special or incentive pay (including reenlistment or other bonuses) you receive. However, the total amount you contribute each year cannot exceed the Internal Revenue Code's elective deferral limit (26 U.S.C. § 402(g)) for that year (for 2001, the limit is $10,500; it is recalculated each year and may be higher in 2002).
Will the Department of Defense match my contributions? The law allows the secretaries of the military services (i.e., Army, Navy, Air Force) to designate critical military specialties for matching contributions. Members serving in these specialties who agree to serve for six years will be eligible for matching contributions. The matching contributions apply only to amounts you contribute from your basic pay. Your service can tell you whether your specialty has been designated as critical and whether you are eligible to contract to receive matching contributions. Matching contributions and their attributable earnings will be taxable to you when you withdraw them from the TSP.
How are my contributions invested? You can invest any portion of your TSP account in the five TSP investment funds:
• Government Securities Investment (G) Fund
• Fixed Income Index Investment (F) Fund
• Common Stock Index Investment (C) Fund
• Small Capitalization Stock Index Investment Fund (S) Fund (available in May 2001)
• International Stock Index Investment Fund (I) Fund (available in May 2001)
Can I withdraw or borrow from my account before I separate from the uniformed services? The TSP loan program allows you to borrow your own contributions and attributable earnings from your account for a general purpose loan or for a loan to purchase your primary residence. The minimum loan amount is $1,000. The maximum loan amount is $50,000; however, the amount you can borrow may be less depending on any outstanding TSP loans you have already taken and certain limits set by the Internal Revenue Code. (If you have both a uniformed services and a civilian TSP account, your account balances will be combined for purposes of determining the maximum amount you may borrow from either account.) You also pay interest on the amount borrowed. The loan repayment, including interest, will go into your TSP account.