Opting for Thrift Savings Plan smart idea, says leader

| August 8, 2018 | 0 Comments

David Vergun
Army News Service

WASHINGTON — One of the wisest financial choices a Soldier can make is to
opt in for the Thrift Savings Plan program, said Henry Manning.

Manning, operations officer for the assistant secretary of the Army for
Manpower and Reserve Affairs, said that TSP is somewhat like the highly
popular 401K plans offered at many civilian jobs, but is actually much
better.

A Soldier browses a Thrift Savings Plan readout that shows a breakdown in how the funds are distributed. (Photo Credit: U.S. Army photo by David Vergun)

A Soldier browses a Thrift Savings Plan readout that shows a breakdown in how the funds are distributed. (U.S. Army photo by David Vergun)

Like the 401K, the TSP is a way for income to be tax-deferred, he said. The
good part about TSP is that unlike some other plans, there are no management
fees tagged on and TSP has had a strong performance record over the years.

Perhaps the biggest advantage of TSP is that the government will match a
Soldier’s contribution, up to 5 percent, he said.

Also, TSP can be customized to meet the Soldier’s individual needs, which
could be a specified mix of stocks, bonds and/or the more conservative
savings fund. He noted that the customization can be altered without penalty
at any time.

The drawback of not opting for TSP, Manning said, is that after separating
from the Army, Soldiers will not have those retirement savings to fall back
on and no money to show for their valued service.

Manning disclosed that he has had a TSP account for a number of years and
other Army personnel he knows take advantage of it as well.

STEPS TO TAKE

Manning suggested speaking with a financial counselor at Army Community
Services who can help Soldiers customize where their TSP funds are directed.
That’s why beginning the process now is important in order to more quickly
take advantage of this.

Thrift Savings Plan logo

Thrift Savings Plan logo

He emphasized that opting in to TSP isn’t automatic. Each Soldier needs to
individually enroll and specify the percentage of contribution.

For Soldiers who came in the Army Jan. 1, 2018 or after, the government will
match 1 percent of contributions after 60 days of service. After two years,
the government will match up to 5 percent of contributions, he said, noting
that Soldiers who entered the Army prior to this year can immediately get up
to 5 percent matching once they enroll in TSP.

Sgt. Laura Martin, who has a TSP account, showed how easy it is to enroll.
She pulled up her MyPay account, which has a TSP option to select with
instructions on enrolling either in a traditional TSP, which is
tax-deferred, or a Roth TSP, which is not tax-deferred. Martin’s husband,
also a Soldier, has a TSP account as well. She said the two of them took out
a TSP loan, which is interest free, to pay cash for a house they intend to
live in upon retirement.

Manning concluded: the vast majority of Soldiers do not stay in for 20 years
to take advantage of a traditional retirement pension. That’s why enrolling
in TSP makes perfect sense.

(Follow David Vergun on Twitter: @vergunARNEWS)

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