Military service members to participate in Thrift Savings Plan

Beginning Tuesday, military service members will be able to participate in the Thrift Savings Plan (TSP). The TSP, administered by the Federal Retirement Thrift Investment Board, previously has been available only to federal civilian employees. The fiscal 2001 Floyd D. Spence National Defense Authorization Act extended TSP participation to active-duty and reserve members of the Army, Air Force, Marine Corps, Navy and Coast Guard, and uniformed members of the Public Health Service and the National Oceanic and Atmospheric Administration. Military personnel may contribute up to 7 percent of their base salary and up to 100 percent of incentive and special pay, including bonuses, to the federal government's investment plan during 2002, according to a final rule published in the Federal Register Thursday.] Federal civilian employees can contribute to the TSP only from their basic pay. Service members can also contribute to the TSP from their combat zone pay, which is not taxed. Members of the military receive such compensation when they are on active duty in a combat zone. The maximum TSP contribution will increase 1 percentage point each year until 2005. After that, contributions will be limited by Internal Revenue Code guidelines. For 2002, the federal limit on how much an individual can save on a tax-deferred basis through a retirement savings plan is $11,000. Military members enroll in TSP by completing a TSP election form and submitting it through their local service branch finance office. Enrollment forms are available for download on the TSP Web site, www.tsp.gov, or can be obtained at local military finance offices. The TSP enrollment period ends Jan. 31, 2002. The next TSP open season runs from May 15 through July 31. TSP contributions made on or before Dec. 31, 2001 will be deducted from pay the first full pay period of Jan. 2002. Like civilian workers covered by the old Civil Service Retirement System, service members generally will not receive TSP matching funds from the government. Military members who already have civilian TSP accounts, including past and present federal employees who serve in the National Guard and Reserve, can open an entirely separate, second TSP account. For more information on the rules governing military TSP accounts, see the final rule in the Federal Register.