Soldiers Urged to Consider the Option of Thrift Savings Plans
Participating in the Thrift Savings Plan (or TSP) is likely one of the smartest decisions a soldier opting into the Blended Retirement System can make, according to operations officer for the Deputy Assistant Secretary of the Army, Military Personnel and Quality of Life, Henry Manning.
Thrift Savings Plans are similar to the ever-popular 401K plans offered to many civilians by their employers, noted Manning, but in a lot of ways, they are actually better.
Much like the 401K, a TSP is an avenue for tax-deferred income to develop. However, a great advantage is that dissimilar to various other plans, there will not be any management fees, and TSP contributions trim down taxable income. Over the years it has exceeded expectations in performance.
The government will match up to five percent of a soldier’s contributions, which Manning says is possibly the greatest benefit of TSP.
TSP may also be customized and adjusted in order to meet the solder’s needs on an individual basis. This could be a particular combination of bonds, stocks, as well as the potentially more conservative savings fund. It is worth noting that it is possible to alter the customization without penalty at any time.
TSP provides Soldiers departing from the Army before they are eligible with a DOD contribution and earnings. Soldiers separating after just two years may collect all associated TSP earings with them. This is not permitted with the legacy retirement system.
Manning shared that he himself has had a TSP account for numerous years and various Army personnel he is acquainted with taking advantage of it as well.
There is sign up and plan management assistance available. It is suggested that soldiers are seeking this tap into the knowledge of the Army Community Service personal financial advisor. Families are able to customize where their funds are invested, as well as gain other useful budgeting tips through these programs.
Opting into TSP is not automatic, the DA representative stressed. Every soldier would need to enroll, and select the percentage of their contribution individually.
The government will match one percent of contributions after sixty days of service for soldiers who joined the Army 1/1/18 or after. The government will match up to five percent of contributions after two years. However, Manning noted that Soldiers who joined prior to this year could immediately get up to five percent matching as soon as they opt-into BRS and enroll in TSP.
Sgt. Laura Martin has a TSP account and demonstrated how simple enrollment is. Martin pulled up her MyPay account, which has a 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 an identical savings plan set up. Both of them recently took out a TSP loan, which is penalty and interest-free, to pay cash for a home where they plan to live in once they retire.
Manning said that most soldiers don’t stay in the Army for the twenty years needed to take advantage of the traditional retirement pension, using the Martins as an example. That is why, in his opinion, enrolling in a TSP makes all the sense in the world.