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Human Resources Directorate

Roth Thrift Savings Plan

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The Thrift Savings Plan has introduced a new way to save for your retirement: Roth TSP.

The Roth benefit allows participants to contribute on an after tax basis to their TSP accounts. Roth TSP earnings are tax free when the funds are withdrawn, as long as participants are at least age 59 and a half and the withdrawals are made at least five years after the beginning of the year in which their first Roth contribution were made.

This new feature is available to civilian employees on 14 May 2012 (pay period 10) and to military personnel (active duty and Selected Reserve) in May to take effect on 1 June 2012.

Roth contributions are made in addition to or in lieu of traditional contributions. The combination of Roth and traditional contributions are subject to the same total Internal Revenue Service 2012 elective deferral limit of $17,000.

In addition, participants who turn 50 years of age or older in 2012 may elect to make Roth catch up contributions in addition to or in lieu of traditional catch up contributions. All catch up contributions are contributed from basic pay. The total contribution must not exceed the 2012 catch up limit of 5,500 dollars.

Civilian participants may designate any whole percentage or whole dollar amount of basic pay as Roth contributions. Agency automatic and matching contributions available to FERS employees are always treated as traditional contributions. Their earnings are tax deferred. Roth contributions are added to traditional contributions when determining the percentage of pay contributed for purposes of the agency matching contribution formula.

Military members may only elect to designate whole percentages, not whole dollar amounts. These contributions can also be made in addition to, or in lieu of, an election to make traditional contributions.

Money already in participants TSP accounts when they begin making Roth contributions remains part of the traditional balance. Participants cannot convert those funds to Roth. Use of the Roth TSP instead of the traditional TSP will have an effect on your taxable earnings and should be considered as you make your financial plans.

Additional Roth TSP contribution election information will be provided in a future ALCOAST.

Regards,

Curtis B. Odom

Curtis B. Odom
Acting Assistant Commandant for Human Resources

Issue date: 5/17/12

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Last Modified 7/8/2014