Roth TSP opens to active-duty Army, Navy and Air Force

Active-duty members in the Air Force, Army and Navy can now invest in the Thrift Savings Plan’s Roth option, according to the American Forces Press Service.

The Defense Financing and Accounting Service said these service members can participate in the Roth option beginning . Members of the Marines, Coast Guard, reservists and Defense Department civilians were able to start making Roth contributions this summer. Key differences between the Army, Navy and Air Force pay structure slowed the implementation of the Roth option for these services.

TSP Roth contributions are invested either on a pretax or after-tax basis as long as the total amount is within the limits set by the Internal Revenue Service. Following an increase in the cost-of-living index in 2012, the IRS raised the contribution limit to $17,000 a year, up from $16,500 in 2011. Employees age 50 and older will be able to contribute an additional $5,500.

The program is part of a multiyear initiative to shift more federal employees into the TSP, with agencies automatically directing 3 percent of employees’ pay to the program unless they specify otherwise. In February, Gregory Long, TSP’s executive director, said the Roth TSP would be a “game-changer” for younger federal employees.  

Approximately 20,000 people had enrolled in the plan as of early September. Complicated payroll systems are slowing further federal employee participation in Roth plans. Other branches of the National Guard and reserves will be able to make Roth TSP contributions by mid- to late-2013, AFPS said.