One of the Best Investments: Thrift Savings Plan

According to Henry Manning one of the smarter financial decisions a soldier can make is to opt in for the Thrift Savings Plan program.

Manning, the operations officer for the assistant secretary of the Army for Manpower and Reserve Affairs said that TSP is similar the well-liked 401K plans offered to employees at many civilian jobs, but is, in fact, much more beneficial.

The TSP, like the 401k, is a way for income to be tax-deferred. What sets the TSP apart from some other plans, is the benefit that there are no added on management fees and TSP has held a solid performance record over the years.

Possibly the greatest benefit of TSP is that the government will match a soldier’s contribution, up to five percent, said Manning.

TSP can also be modified according to the soldier’s individual needs. This could be a specified blend of stocks, bonds or the more conservative savings fund. Manning also noted that the customization could be changed without penalty at any time.

According to Manning, the disadvantage of not opting for TSP is that after separating from the Army, soldiers will not have those retirement savings to rely on and no money to show for their valued service.

Manning divulged that he has also had a TSP account for a number of years and that many other Army personnel he knows to take advantage of it as well.

Speaking with a financial counselor from Army Community Service who can help soldiers customize how and where their TSP funds are directed is suggested by Manning. Because of this beginning, the process now is imperative to more quickly take advantage of this.

He pointed out that opting into TSP does not happen automatically. Each soldier needs to individually enroll and specify the percentage of contribution.

Soldiers who joined the United States Army January 1, 2018, or after, will be matched by the government at one percent of contributions after sixty days of service. After two years, the government will match up to five percent of contributions, said Manning, noting that soldiers who entered the Army before this year can immediately get up to five percent matching after they have enrolled in TSP.

Sgt. Laura Martin has a TSP account and illustrated just how simple enrollment is. She pulled up her MyPay account,  found in the TSP option, to select with instructions on enrolling either in a traditional tax-deferred TSP, or a Roth TSP, which is not tax-deferred. Also, a soldier, Martin’s husband, has a TSP account too. She said they both took out a TSP loan, interest-free, to pay cash for a house where they will live once they have retired.

In conclusion, Manning said that the greater part of soldiers do not stay in service for twenty years to take advantage of a traditional retirement pension, which makes enrolling in TSP make perfect sense.