January 2014 Thrift Savings Plan (TSP) Monthly Returns
Not a good month for the Thrift Savings Plan, except for the F and G Funds:
L Income: (0.42%)
L 2020: (1.57%)
L 2030: (2.04%)
L 2040: (2.35%)
L 2050: (2.71%)
G Fund: 0.21%
F Fund: 1.58%
C Fund: (3.45%)
S Fund: (1.91%)
I Fund: (4.03%)
Information About the Thrift Savings Plan for US Military Servicemembers
The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan. The National Defense Authorization Act for Fiscal Year 2001 extended participation in the TSP, which was originally only for Federal civilian employees, to members of the uniformed services, and members began enrolling on October 9, 2001.
The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under so-called “401(k)” plans. The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions. For more information on the TSP, visit the official TSP website at www.tsp.gov.
The Thrift Savings Plan (TSP) is a good vehicle for savings because it is tax-deferred in pretax dollar savings. This means that contributions come out of a member’s income and they are not taxed on it until they use that money later, hopefully in retirement.
Many service members take advantage of TSP because it is an attractive investment option with unique benefits for military members. These benefits include saving for retirement and the ability to complete tax-deferred or tax-exempt retirement investments first.
Military members can contribute to TSP as soon as they become a member of the uniformed services. They may elect to contribute any percentage (one to 100 percent, subject to mandatory deductions) of your basic pay. However, annual total tax-deferred contributions cannot exceed the Internal Revenue Service limit, which is $15,500 for 2008.
Deployed troops have different limits in TSP because their income is tax-exempt and the IRS has a separate limit for that category.
Those who are contributing to TSP from their basic pay are allowed to contribute from one to 100 percent of any incentive or special pay, including bonus pay. Elective deferrals are tax-deferred amounts that participants contribute to TSP instead of receiving it as pay. The contributions are not considered taxable gross income for the year in which they are contributed.
Catch-up contributions are supplemental tax-deferred contributions available to TSP participants age 50 or older who are already contributing the maximum amount of regular TSP contributions for which they are eligible up to the maximum IRS elective deferral limit. Catch-up contributions have their own annual limit of $5,000 in 2007. Catch-up contributions are invested in the TSP funds according to the most recent contribution allocation.
Some new Army recruits who enlist in critical military occupational specialties areas may also be entitled to receive a matching contribution. Participants in the TSP Matching Funds Pilot Program receive matching contributions on the first five percent of pay that is contributed each pay period of their initial term. The first three percent of pay that is contributed is matched dollar-for-dollar; the next two percent is matched at 50 cents on the dollar.
Another major benefit is that the expenses on the accounts are very low, about one-tenth of the average private mutual fund. TSP also has a loan program for special situations such as a first home purchase, where participants can borrow money from their own account and then pay it back at a market interest rate. Finally, the money in TSP can also be rolled over to another IRA account.
Service members who leave active duty and join the National Guard or Reserve will still have TSP because they can invest in it whenever they’re on active duty. They can even contribute a percentage of their weekend active duty pay.
(Source: US Department of Defense)