Many Servicemembers work hard doing their duty in military service and are frugal stewards with their money, but often they do not participate in a program that is available for them to use. The Thrift Savings plan is a tax deferred savings program that is open to all military Servicemembers, both enlisted and Commissioned, as a method of setting aside money in savings on a tax deferred basis. The Federal Government sponsors it as an option for federally supported retirement and personal Servicemember Savings. Because it is tax deferred it is a plan that is seen as an advantage for retirement savings purposes. It lets members contribute funds to their own private 401k-type savings plan. It allows matching funding to benefit Servicemembers in some cases.
The TSP program was created in 1986 and set up to be a federal and military sector type savings plan that would allow similar advantages for military personnel that are enjoyed by private citizens involved in 401k type private savings retirement plans. It is a defined specific contribution plan that is decided by how much money that the Servicemember decides to contribute. It is a voluntary program that allows a person to set aside any amount of funding from their basic pay that choose to, up to the IRS limit of $15,500 dollars a year toward their TSP retirement savings account. The limits that are allowed are raised each year slightly for the year 2007 the amount allowed is $15,500 dollars per year. The Thrift Savings Plan is a wise plan of investment that because of the Tax differed status. The savings can accelerate and it is especially advantageous for Servicemember over age 50. If a Servicemember is over 50 years or older there is a process for accelerating benefits and payments to help achieve the maximum savings possible. If a person is under age 50 years old it is still a great retirement savings plan because in that case you simply have more years to save and take advantage of compounded interest.
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Financial Hardship-There are times that financial hardship or emergencies arise, and in that case sometimes it is possible to borrow from the TSP benefit plan, but there are tax penalties in that situation. The TSP plan also allows a person to designate where your benefits are paid if you should pass away suddenly.
j lopez says
how can I find out if I was enrolled in TSP program