Proposal: Add Roth IRA to Thrift Savings Plan
Published in General
It was announced today that the Pentagon supports proposed changes to the Thrift Savings Plan that would automatically sign up troops for the TSP as well as offer the Roth IRA as an investment option. The first proposed change, automatic sign-up, was recently instituted in the private sector and has resulted in increases in employee participation. It’s thought that automatic sign ups for TSPs would increase participation as the main reason people don’t sign up is due to inertia, it takes effort to.
The second proposed change involves introducing Roth IRA as an option in the TSP which would result in significant savings for deployed troops since they do not pay taxes on their earnings or bonuses while they are in war zones. With a Roth IRA, you contribute after-tax dollars and appreciation is tax free. Troops in a combat zone are in the 0% tax bracket, so they benefit tremendously from the Roth IRA option.
Those troops who are not in combat zones also benefit from the Roth IRA option because it gives them tax diversification.
DoD backs automatic TSP enrollments [Air Force Times]