The Thrift Savings Plan’s new Roth option opened up to civilian Defense Department employees today, the Air Force said.
Defense civilians can now elect to contribute all or parts of their TSP savings to the Roth option on an after-tax basis. The Air Force said that elections made on or before June 30 will be effective July 1, and will be reflected on employees’ July 20 leave and earnings statement.
Under the Roth option, participants pay taxes when they make contributions into the TSP. Those contributions then grow over time, and are not taxed when they are withdrawn years later. This differs from the standard TSP plan, in which participants make their contributions tax-free and pay their taxes when the money is withdrawn. The plan is expected to primarily benefit military service members — who usually have lower tax rates during their service years — and select groups of civilian federal employees, such as judges. Most civilians would not benefit from the Roth option.
Agency automatic and matching contributions will be deposited as regular TSP contributions, which are tax-deferred.
The Defense Finance and Accounting Service’s effort to roll out the Roth option has been complicated by the multiple, balkanized pay and personnel systems its customer agencies use. Marine Corps service members got the Roth option in June, and all other uniformed service members are expected to get it in October.
