Comments on: 2012 Thrift Savings Plan Contribution Limits

By: Ryan Guina

Ryan Guina — Wed, 28 Mar 2012 15:20:24 +0000

Adrienne, the Roth TSP hasn’t officially been released yet, so you can’t change it over while you are deployed. However, since you will be in a tax free zone, your contributions will be from tax exempt pay, which will automatically be tracked by the Thrift Savings Plan and your tax free TSP contributions will show up at the bottom of your statements. These tax free contributions are similar to the Roth, as they can be withdrawn without paying taxes when you are in retirement. However, it is only the contributions which can be withdrawn tax free, and not the earnings from those contributions.

After you separate from the military, you will be able to decide what to do with your TSP, including leaving it in the TSP, rolling it into a civilian TSP or a 401k plan, or rolling it into an IRA. If you choose to roll your TSP into an IRA, then you can leave your regular contributions in a Traditional IRA, and roll your tax-exempt contributions into a Roth IRA.

By: Adrienne

Adrienne — Wed, 28 Mar 2012 00:28:23 +0000

I want to change my TSP to roll over into a ROTH or IRA while I am in a tax free zone. I was told I could do this online. However, how do they know I am actually in a tax free zone?

By: Ryan Guina

Ryan Guina — Tue, 17 Jan 2012 16:30:43 +0000

That's a great question, David, but the answer, so far as I am aware, is no. Contributions must be made during the calendar year. You may still be able to open a Traditional IRA to reduce your tax obligation. You have until the tax deadline to fund an IRA for last calendar year. Here are some good options for opening an IRA.

By: David

David — Tue, 17 Jan 2012 16:14:05 +0000

Ryan,
Do you know if the TSP allows military members to make contributions for the previous tax year before the tax deadline as other retirement account types do? For instance, I do not currently have a TSP but am interested in opening one and contributing a lump sum for 2011 contributions in order to reduce my 2011 taxable income while also investing.
Thanks!

By: Ryan Guina

Ryan Guina — Thu, 16 Jun 2011 21:01:04 +0000

Mike, I’m not 100% certain, but I believe there are rules regarding how contributions are made, and in which order they come from your pay. I recommend contacting someone at DFAS or the TSP.

By: Mike

Mike — Thu, 16 Jun 2011 20:19:34 +0000

Ryan – why does DFAS refuse to let deployed members earning more than the tax free base pay cap make deferred contributions – DFAS insists the first dollars of TSP contributions come from tax free pay! Only if you elect like 100% TSP deduction can I get to my taxable pay!

This seems anti-service member as some of us are trying to lower our AGI so we can enjoy certain deductions and credits.

By: Andrew

Andrew — Sat, 13 Nov 2010 19:06:52 +0000

Unfortunately no change from 2010. But in this low inflation/COLA environment that is not surprising.