Someone tell me how this TSP election works and when is it mandatory?

2016-02-19T19:03:12-05:00

I have looked to no avail.

Response by SFC Daniel Faires made Feb 19 at 2016 7:04 PM

2016-02-19T19:04:16-05:00

Are you trying to draw it ?

Response by MAJ Private RallyPoint Member made Feb 19 at 2016 7:28 PM

2016-02-19T19:28:48-05:00

What do you mean TSP election? Are you talking about the new retirement system?

Response by CAPT Kevin B. made Feb 19 at 2016 7:34 PM

2016-02-19T19:34:23-05:00

I hope I'm stabbing at the question correctly. TSP is essentially a 401 plan. When you turn 60, you can start pulling from it. You can either take a lump sum, pay the big tax bill, or pull it as an annuity over time. Another option is to roll it into something that will perform better in the commercial sector. TSP has about 35 mix/match options. Commercial has tens of thousands. So at 59 1/2, I rolled it out, and then the residuals when I retired. Use that as one of your money streams to meet your needs.

If you're talking about TSP contributions under the new MIL retirement, there will be a mandatory contribution that you can select from the 35 configurations. Most young folk will likely go for one of the longer term horizon plans which have more risk now and then tapers off later. There's a matching component where it's a no brainer to chip in for as that gives you 100 percent return every payday. Compared to civilian plans, it's pretty good. I recommend contributing 10 percent.

Response by Sgt Aaron Kennedy, MS made Feb 19 at 2016 7:49 PM

2016-02-19T19:49:12-05:00

http://www.militarytimes.com/story/military/benefits/retirement/2015/11/23/reiterment-changes-choices/76049640/

Jan 1, 2018 is when NEW people become MANDATORY. Those who have MORE than 12 years at that point "may" swap with a waiver (Limited benefit).

Keeping things relatively simple:

Government "Matches" (not exactly, but sort of) a what people put into a Retirement Fund. You get Longevity Bonuses at Reenlistment, which "if" (not going to happen) you "Invest" back into Retirement Fund, you will end up with "more" than traditional retirement (40%+ base pay). This makes it more comparable to a Civilian Retirement scheme.

For those with less than 12 years, it's a good deal. It's a good deal because you walk away with SOMETHING if you get out before retirement as opposed to nothing. It slowly shifts us away from the "coercive vesting" process.

Retirement changes mean tough choices for troops ... eventually

Troops will have two years to get ready for the massive overhaul of the military retirement system.

Response by Capt Tom Brown made Feb 19 at 2016 7:49 PM

2016-02-19T19:49:13-05:00

Here is another familiar website's explanation of the program which is pretty good when compared to civilian sector plans. https://en.wikipedia.org/wiki/Thrift_Savings_Plan

"As of August 1, 2010, new employees will be enrolled in the TSP with a 3% deduction from their gross pay being deposited into the G Fund unless they make another choice.[2][3][4] Prior to this date, there was no automatic participation."

Thrift Savings Plan - Wikipedia, the free encyclopedia

The Thrift Savings Plan (TSP) is a defined contribution plan for United States civil service employees and retirees as well as for members of the uniformed services. As of December 31 2013, there were approximately 4.6 million participants, and nearly $407 billion in assets under management.[1]

Response by SSG William Rhodes made Feb 20 at 2016 3:00 AM

2016-02-20T03:00:11-05:00

TSP mandatory? I was under the impression that TSP was an elective voluntary choice. After, I got out I rolled mine over to an IRA with USAA. Filled out a few forms and it was transferred. You can either roll it to a Roth IRA or a traditional IRA. I believe the max you can invest on the TSP is either 10k or 15k or you can invest a certain Percentage of your pay that will be deducted from your gross pay before taxes and you can choose a percentage to go to each fund of your choosing. All the info is at TSP website and if you have other questions I would recomend you talk to an investment or financial advisor.

Response by MAJ Private RallyPoint Member made Feb 20 at 2016 5:16 AM

2016-02-20T05:16:39-05:00

MAJ Ken Landgren - Under the new system, on January 1, 2018, every Servicemember that doesn't already contribute to TSP will automatically have a TSP account set up for them.

At that time, the government will automatically begin contributing an amount equal to 1% of that Servicemember's base pay into the TSP account monthly. Every Servicemember is still allowed to make the same maximum annual contributions that they are allowed now or they can make no personal contributions at all. However, after three years time-in-service, they government matching will raise from 1% to 5% (possibly 6% if new Congressional efforts are approved).

Response by MAJ Ken Landgren made Feb 20 at 2016 3:31 PM

2016-02-20T15:31:02-05:00

This is what I was looking for from SGT Kennedy:

This is what I was looking for, thanks:
Not everyone will shift to the new model; it will cover all troops who enter service after Jan. 1, 2018, but anyone already in the ranks or who signs up in the next 24 months will be grandfathered into the traditional, 20-year retirement system

However, troops who entered service after Jan. 1, 2006, will be given the choice of opting into the new 401(k)-style system — creating some complex financial decisions for midcareer service members once 2018 arrives.

Troops who entered before then — who will have served more than 12 years once the new system launches — could opt in with a special waiver, but lawmakers believe most people in this group would see little financial benefit in switching.

That’s because the automatic investments are designed to grow over time. So an individual with substantial time in uniform already who will reach 20-year retirement in just a few years could lose thousands in pension payouts in the coming years by making the switch.