Thrift Savings Plan's open season about to begin
April 10, 2003
ARLINGTON, Va. — As preoccupied as everyone is with the war in Iraq, civilian and military employees should remember that the April 15 to June 30 open season is about to begin for the Thrift Savings Plan.
The TSP is the federal government’s version of the civilian work world’s 401(k) retirement and investment savings program.
The program, which began in 1987, but was only expanded to the military community in 2002, allows participants to shelter up to 8 percent of their basic pay from taxes, up to $12,000.
Once a servicemember decides what percentage of his or salary to contribute to the TSP each month, the government automatically takes the money from that person’s paycheck before taxes are calculated.
Earnings from the savings plan are tax deferred until the servicemember withdraws money from the plan, usually after retirement when he or she is in a lower tax bracket.
Open season is the only time when you can join the TSP plan, or when existing TSP account holders can increase or decrease the percent of his or her salary that gets contributed to the plan.
But other TSP transactions can occur at any time, including quitting your contributions entirely, checking the status of your account, or change the way your allocations are invested among the five TSP funds.
Contributors are allowed to choose how their contributions are distributed among five different funds, each of which carries a different level of risk — from the can’t-lose G fund, which is Treasury bonds back by the U.S. government, to the C fund, which is based on Standard and Poor’s top 500 stocks.
Any changes you make to your TSP account during Open Season or before May 31 will take effect June 1 for both military members and civilians.
Changes made on or after June1 will become effective in the following pay period for civilians and the following month for military members.
For more information on the TSP, go to www.tsp.gov.