"...Several of the provisions of the CARES act made changes to the way you can withdraw money from your Individual Retirement Account (IRA), 401k employer sponsored retirement plan or your Thrift Savings Plan (TSP) account, which is the 401k plan for federal government employees including military members..."
"...U.S. Rep. Michael Waltz, R-Fla., has taken up a proposal from a key member of the Trump administration to ensure federal retirement funds are not invested in companies connected to the Chinese military.
Waltz weighed in on the bill at the end of last week.
“It is absolutely crazy for our military and federal employees to be indirectly contributing to China’s military operations – and what’s worse is that nearly all of these people are completely unaware of this situation,” Waltz said.
“Every month, a combined 5.6 million U.S. military members and federal employees contribute to the Thrift Savings Plan (TSP), a 401K-style plan taken out of their paychecks. The TSP, which is administered by the FRTIB, is responsible for over $700 billion in assets, making it one of the world’s largest retirement funds,” the congressman’s office noted. “The specific portion of the retirement plan in question is the I Fund, one of the most important funds with $50 billion in assets..."
"...The Federal Retirement Thrift Investment Board (FRTIB), the agency that oversees the Thrift Savings Plan, has issued proposed regulations for the rollout of the Blended Retirement System (BRS)...
The proposed rules published by the FRTRIB outline four major changes made to the TSP portion of a military service member’s retirement package by BRS and how they will be implemented. Those are:..."
"...The long-awaited Defense Department retirement calculator has arrived, designed to help service members choose between the existing and incoming retirement systems as they plan their long-term financial future.
The calculator, labeled a "beta version" but available to anyone at militarypay.defense.gov/Calculators/BRS/, asks for basic information such as age, years of service, rank and estimated years of service at the time of separation and retirement. It fills in the blanks for items such as expected rate of investment return, life expectancy, Thrift Savings Plan contribution percentage and career progression, but users can alter those fields, and others, to tailor their results.
After the user enters all the data, the calculator will offer a comparison between the plans...."
"...Like all 401(k) type plans, the TSP provides spousal rights for spouses of employees and retirees. Interestingly, the rights granted to the spouse are different depending on whether the employee/retiree is covered under CSRS or FERS.
Under FERS, unless the spouse waives his or her right, they are entitled to receive a specific type of TSP annuity (i.e., joint-life with a 50% survivor benefit and no additional features). There are many different options offered in the current TSP annuity (which is offered by MetLife) and, in my opinion, this spousal default choice is one of the least appealing..."
"...In November 2015, the President signed the FY 2016 National Defense Authorization Act. Included among the thousands of items in the act was a significant change in the military retirement system.
The change, based upon recommendations from the Military Compensation and Retirement Modernization Commission, is intended to provide Service members with a portable retirement benefit whether serving four years or forty years, while providing cost savings...
The new blended retirement system retains the 20-year cliff vested annuity, but reduces the multiple from 2.5% to 2.0%.
Under the new plan, you would receive 40% of the average of your highest three years of base pay after 20 years of service. Each additional year of service in excess of 20 years provides you with an additional 2% of your high three base pay.
To offset the reduced defined benefit, the defined contribution component, TSP, becomes an integral part of the retirement plan...."
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"...The Internal Revenue Service has increased the cap on annual individual contributions to employer-sponsored retirement savings plans, including the Thrift Savings Plan, to $18,000 for 2015.
The increase, which tracks changes in the cost-of-living index, is the first since 2013, when the cap rose to $17,500 from $17,000...
For military service members, the cap includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone..."
"...On October 1, service members became eligible to take advantage of a Roth version of the Thrift Savings Plan, where money is deducted from taxed income, but becomes tax-free money when it is withdrawn.
According to TSP's external affairs director, Kim Weaver, there's a big difference between the two options.
"The biggest difference is that the traditional TSP is pre-taxed money, so it reduces the amount of your income in that year," she said. "So let's say your salary is..."
"...On October 1, service members became eligible to take advantage of a Roth version of the Thrift Savings Plan, where money is deducted from taxed income, but becomes tax-free money when it is withdrawn...
While most look at TSP as a roadmap to a comfortable retirement, Weaver said that enrolling in thrift savings, even for one or two enlistments, can pay real dividends.
"They can either leave it in their TSP untouched, move the money around within the funds or leave it in until they are ready to retire," Weaver said. "They can also roll it over into another 401k plan in the private sector if they choose to do that. So, just because service members leave the military, it doesn't mean they are forfeiting their money. Once they contribute their money, the TSP belongs to the participant." ."
"...The Federal Retirement Thrift Investment Board has announced the 2013 elective deferral limit for regular Thrift Savings Plan contributions increased from $17,000 to $17,500 for 2013, Air Force Personnel Center officials said. The TSP catch-up plan contribution limit will remain at $5,500..
Military members can contribute any whole percentage up to 92 percent of basic pay, as long as the annual total does not exceed $17,500 for 2013. If contributing from basic pay, Airmen may also invest all or part of their bonuses, special pay, or incentive pay."
"...The number of Thrift Savings Plan participants with Roth accounts swelled to 51,354 in September, the board governing the plan said Monday.
That’s a 28 percent increase from the roughly 40,000 federal employees and Marines who had signed up for the new Roth option by the end of August, the option’s fourth month in existence. Those participants have so far deposited nearly $50 million in their Roth option, the Federal Retirement Thrift Investment Board said. That’s up 66 percent from nearly $30 million in Roth accounts in August..."
Beginning Oct. 1, 2012, active-duty members of the Army, Navy and Air Force will be able to contribute to the Roth Thrift Savings Plan as part of their investment planning, Defense Financing and Accounting Service officials said today.
The after-tax contributions will be electronically deducted from service members’ pay accounts.
Active-duty service members also can start their Roth TSP contributions now through their online MyPay accounts, which offer the fastest, easiest and most secure method to manage both Roth and traditional TSP contributions. The second option open to service members is to submit a TSP-U-1 form to their finance office.
Active-duty Marines, Guardsmen, reservists and civilians paid by DFAS were able to begin making contributions to the program in June, officials said.
Additionally, the other branches of the National Guard and reserves will be able to make Roth TSP contributions by mid- to late 2013.
The timeline difference between active-duty and other service members resulted from an interim solution for reserve component members, which didn’t meet Federal Retirement Thrift Investment Board requirements, according to DFAS.
While work continues for options that will be available more quickly and satisfy the law and FRTIB requirements at the same time, the new schedule will allow time to make systems changes and electronic deductions that meet all requirements. DFAS officials said.
To begin making Roth TSP contributions, service members should determine how much of their pay is eligible. A Roth TSP worksheet can help make the calculations.
Military members are required to contribute an amount equaling 1 percent of their eligible pay to begin TSP contributions. For those who are not participating in traditional TSP investments, the initial Roth TSP election must meet this 1 percent requirement. The IRS maximum contribution to Roth TSP is $17,000 per year, DFAS officials said.
Military members can use pay earned in combat zones, and are excluded from federal taxes to contribute to Roth TSP.
"...Even though those who stay in the military for 20 years or more can qualify for a pension, it's still important to save on your own. In truth, few people actually stay in the military long enough to claim a pension, and, unlike civilian pensions, there’s no "partial vesting" to guarantee that workers who leave "early" get something. With the military, if you leave before 20 years, you get nothing. Even if you qualify, pension payments probably won’t be enough to cover your bills—you're usually entitled to 50% or less of your base salary if you retire at 20 years (and more if you stay beyond two decades)...
while you’re in the military, there are special investing opportunities and tax breaks to help you supercharge your savings. It's up to you to make the most of your options..."
TSP Logo (Photo credit: Wikipedia)"...When the Thrift Savings Plan's new Roth option launches next month, it won't be available to military service members — and they are among those mostly likely to benefit from the new option.