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0415. Thrift Savings Plan opens to military Oct. 9

by Jim Garamone
American Forces Press Service

WASHINGTON (AFPN) -- Servicemembers can begin to sign up for the Thrift Savings Plan beginning Oct. 9, Defense Department officials said.

The Thrift Savings Plan is a retirement and investment plan that has been available to civilian government workers since 1987. Congress extended the plan to include servicemembers.

"It's in addition to your regular retirement," said Army Lt. Col. Tom Emswiler, a tax expert with DoD's Office of Military Compensation. "It's an optional program."

The open season for signing up will run from Oct. 9 to Dec. 8. Deductions will start in January 2002. In 2002, servicemembers can contribute up to 7
percent of their basic pay. That limit of 7 percent of basic pay will rise to 10 percent by 2005 and become unlimited in 2006.

Unlike civilians, who cannot make lump-sum payments into the program, servicemembers will be able to contribute all or a percentage of any special
pay, incentive pay, or bonus pay they receive.

"You can contribute from 1 percent to 100 percent of your special pays, incentives and bonuses into the thrift plan," Emswiler said.

The total amount generally cannot exceed $10,500 for the year. Contributions from pay earned in a combat zone will not count against the $10,500 ceiling.
Combat zone contributions will be subject to a different limitation, however, 25% of pay or $35,000, whichever is less.

Like civilian employees in the program, servicemembers will choose how they want their money invested. Right now, there are three funds civilians choose
from. The funds run the gamut from safe -- the G Fund invests in special government bonds -- to riskier investments -- the C Fund tied to the stock market. There is also an F Funds that invests in commercial bonds.

TSP will unveil two funds in May. S Fund investments go to a stock index fund that paces small businesses. I Fund investors will track international companies the same way.

Servicemembers will be able to start, change or reallocate their TSP contributions during two open seasons held each year, in November to January
and May to July.

"Because bonuses are hard to predict, if you are already participating in the plan and contributing from basic pay and you receive, for example, a
re-enlistment bonus, you can elect to contribute at any time," Emswiler said.

Contributions to the plan come from "pre-tax" dollars. Servicemembers will pay no federal or state income taxes on contributions or earnings until they're withdrawn.

The services will have teams visiting bases to explain the program. Until then, those who wish to can see the thrift plan's uniformed services Web page at for more information.


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