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.