OSAN AIR BASE, Republic of Korea –
Federal civilian employees and members of the uniformed services can now convert to a new Roth Thrift Savings Plan program through myPay that will give members the option of being taxed up front rather than during their retirement years at a possible higher rate.
Defense Finance and Accounting Service officials announced that beginning Oct. 1, active-duty members of the Air Force, Army and Navy are able to contribute to the plan which may benefit them in the long run.
Lower ranking Airmen who are in a lower tax bracket may benefit because of the amount of taxes they pay now rather than when they move up in rank, explained 1st Lt. Allen Dismuke, 51st Comptroller Squadron flight commander.
"This alleviates a tax burden for their future when they would have to pay more as they gain the rank," he said. "Roth TSP is an option for members to plan for their retirement based on their future tax bracket. This option lets them pay off deductions now so when they retire, they won't be taxed."
The new plan can be started through MyPay, offering 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.
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 the 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 the Roth TSP.
For more information or questions concerning the TSP, members can visit www.tsp.gov, which gives a comprehensive overview of the TSP, and both the Traditional and Roth options.
(American Forces Press Service contributed to this article)