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Thrift Savings Plan provides investment options for service members, civilians

By Robert Goetz | 502nd Air Base Wing Public Affairs | November 17, 2017

JOINT BASE SAN ANTONIO, Texas --

A government-sponsored retirement plan that allows participants to contribute as much as $18,000 per year will be the subject of a class from 1-2:30 p.m. Nov. 27 at the Joint Base San Antonio-Randolph Military & Family Readiness Center.

The Thrift Savings Plan offers uniformed service members and Department of Defense civilians a savings and investment plan similar to a 401(k), but with a few more advantages, said Courtney Waggoner, JBSA-Randolph M&FRC personal financial counselor.

“The cost of the plan is 38 cents for every $1,000 invested, while the cost of the average 401(k) is much higher,” she said. “In addition, there are no fees associated with the TSP.”

The class will cover topics such as how to enroll and make contributions, investment funds and options, pre-tax and tax-deferred options, and withdrawals and loans.

TSP investors have five funds to choose from, ranging from the low-risk G Fund, or government securities fund, to the I Fund, international stocks of developed countries, which carries a moderate to high risk. The L Fund, or Lifecycle Fund, is a professionally determined investment mix.

“The Lifecycle Fund is the most diversified, covering all five funds,” Waggoner said. “The G Fund is the default fund – it’s mostly securities with little risk.”

During the class, attendees will also learn how their money will grow with regular contributions to the TSP.

Someone who contributes as little as $30 per month will see their investment grow to nearly $14,000 in 20 years and nearly $60,000 in 40 years, assuming a 6 percent annual rate of return compounded monthly.  

Someone whose budget allows a greater contribution will see even more dramatic gains – nearly $500,000 in 40 years for a monthly contribution of $240.

Currently, the maximum amount a TSP investor can contribute is $18,000, but that amount will increase to $18,500 next year.

Service members may also contribute bonus pay, incentive pay and hazardous-duty pay to their TSP.

A big advantage of the TSP is that service members who are enrolled in it will have a retirement nest egg even if they separate from the service prior to 20 years, Waggoner said.

“If you decide not to serve 20 years and don’t participate in TSP, you leave with nothing,” she said. “If you participate, you take that balance with you and it will continue to grow.”

After their military service ends, members can keep their funds in the TSP, transfer their funds to an individual retirement account or other eligible plan or withdraw their funds.

DOD civilians who contribute to the TSP are entitled to a government match, Waggoner said.

“For the first 3 percent an investor contributes, the government will match it dollar for dollar,” she said. “For the next 2 percent, the government will contribute 50 cents to the dollar.”

When the DOD’s Blended Retirement System takes effect in January, new service members will automatically be enrolled in the TSP, Waggoner said. They will have to opt out to cease participation.

Service members will also be entitled to a DOD match, she said.

“They will receive a 1 percent DOD contribution automatically,” Waggoner said. “They will also receive a dollar for dollar match for the 3 percent default. In order to max the matching benefit, they will have to contribute 5 percent.”

For more information on the TSP class, call the M&FRC at 652-5321.

Thrist Saving Plan TSP