WASHINGTON, D.C., –
The Federal Retirement Thrift Investment Board recently announced that May 7 will be the day the Thrift Savings Plan will begin accepting Roth TSP contributions.
The Roth TSP was authorized by the Thrift Savings Plan Enhancement Act of 2009, which was enacted June 22, 2009, and will allow Federal civilian employees and members of the uniformed services to contribute after-tax dollars into the TSP for the first time. Both the contributions and their earnings will be tax-free when withdrawn, as long as IRS requirements are met.
According to Greg Long, executive director of the agency, "the Roth TSP option offers an important new tool for Federal civilian employees and uniformed service members in managing their retirement income by providing greater flexibility in the tax treatment of contributions now and in the future."
Long noted that the agency will continue to provide participants and agencies with educational materials to help them understand this new option but, as with all tax matters, participants should seek the advice of their qualified tax or financial advisers for answers to questions pertaining to their specific tax situation.
The agency has been sharing Roth TSP planning bulletins with agency and service payroll and personnel representatives since Dec. 2010 to provide them with the information they require to be able to program their payroll systems to accept and transmit pre-tax and after-tax money. The agency is aware that not all agencies or services have completed the technical and programmatic modifications of their payroll systems required to implement Roth TSP. These agencies or services will require additional time to modify their payroll systems and will be able to begin participation in Roth as soon after May 5 as possible.
With the addition of the Roth TSP option, participants can choose to invest pre-tax or after-tax dollars in any of the TSP funds, up to the Internal Revenue Code limits.
Additional information can be found at www.tsp.gov.