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Many military members opting for TSP’s Roth option

Oct. 10, 2012 - 10:42AM   |  
By STEPHEN LOSEY   |   Comments

Roughly 40,000 federal employees and Marines in the Thrift Savings Plan opened Roth accounts in the program’s first four months.

The Federal Retirement Thrift Investment Board told federal employee and military service member representatives Tuesday that TSP participants also deposited nearly $30 million in Roth accounts by the end of August. The board did not have September numbers available.

The new Roth investment option — which was launched May 7 — allows participants to invest after-tax earnings into funds that will grow without tax liability on future earnings. This differs from the standard TSP plan, where before-tax dollars are invested and taxed when they are withdrawn.

Interest in the Roth option appears to be growing quickly. The board said at its Aug. 27 meeting that about 20,000 participants had deposited roughly $13 million in the Roth plan.

Steven Galing, the Defense Department’s representative on the Employee Thrift Advisory Council, said that more Marines are signing up for Roth. He said that 356 Marines had Roth accounts in June — the first month it was open to the Marine Corps — and that more than 5,300 had signed up by the end of September.

“For the last two months, it’s almost been doubling every month,” Galing said.

He expects service members in the Army, Navy and Air Force will also quickly sign up for the Roth option. It was extended to them Oct. 1.

Kim Weaver, TSP’s external affairs director, said that all civilian employees — except a handful of state employees who have access to TSP but chose not to participate in Roth — now have access to the Roth option.

Military reservists are now the only TSP participants still waiting on Roth. They are expected to get it in late fall of 2013.

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