Roth option for TSPs available this year Published May 6, 2012 By Scott Prater Special to 310th Space Wing SCHRIEVER AIR FORCE BASE, Colo. -- Military members and government-employed civilians have some new choices to make when it comes to planning for their retirement. The Federal Retirement Thrift Investment Board has announced that the Thrift Savings Plan will soon begin accepting Roth Individual Retirement Account contributions. "The Roth IRA creates an advantage for people who prefer to pay taxes on their contributions at the time they make them," said Christina Stump, financial counselor at the Schriever Airman and Family Readiness Center. "The reasoning seems logical: Why not pay taxes now, while you're still working and can better afford it, versus when you're retired and your income declines?" The distinction between a traditional and a Roth IRA involves contributions as they relate to federal tax withholdings. With traditional IRA's, contributions are made before federal taxes are withheld. Whereas, with the Roth IRA, contributions are made after taxes have been withheld. The Thrift Savings Plan may be familiar to a majority of Airmen and government civilians. It is similar to many private companies' 401k plans. Employees contribute a portion of their current income into an investment account they hope will grow while they spend their working years earning. Once they reach retirement age, they can then withdraw the funds they've contributed. But, if they have contributed funds into a traditional IRA, they'll need to pay federal income taxes on any money they withdraw [called a distribution] along with taxes on any gains they've made through the years. Stump explained that many TSP customers have been calling for a Roth option for several years, something not lost on the FRTIB. The agency's Executive Director, Greg Long, focused on providing options to TSP customers in a news release announcing the change. "This is a new tool for federal civilian employees and uniformed service members in managing their retirement income," Long said. "It provides greater flexibility in the tax treatment of contributions now and in the future." Long noted that the FRTIB will continue to provide TSP participants with materials to help them understand the new option. Meanwhile, administrative agencies at bases around the world are busy preparing to meet the demand of TSP customers who may want to contribute to Roth IRAs in their TSP accounts. The change is slated to take effect May 7, but these administrative agencies will require additional time to modify their payroll systems, according to the FRTIB. Implementation should begin this June with Marine Corps members, followed by federal civilians in July, and Army, Navy and Air Force members in October. At Schriever, the 50th Comptroller Squadron will be handling the transition for TSP customers in the future. Maj. Steve Gray, 50 CPTS commander, explained that it's too early to provide exact dates as to when customers can begin making changes to their TSPs and that people should stay tuned for more information. "In the meantime, I recommend individuals contact the Airman and Family Readiness Center to get an appointment with a financial counselor to discuss their specific situation, such as their retirement horizon, tolerance for risk, tax situation and other factors," Gray said. The competing IRA structures present investors with drastically different tax implications, which may cause TSP customers to fear their decision process. "Whenever you're looking at building your retirement portfolio it's important to talk to someone who has experience in that field, whether it's someone at Airman and family or a financial advisor through Military One Source," Stump said. "There are a lot of resources and financial assistance out there for folks." For more information on TSPs, IRAs and saving for retirement, visit or call the A&FRC at 567-3920.