Members of the uniformed services became eligible to participate in the Thrift Savings Plan with the signing of the 2001 National Defense Authorization Act.
Any member of the ANG, Ready Reserve, IMAs, unit reservists and participating members of the Individual Ready Reserve receiving pay are eligible to participate in the retirement and savings investment plan that has been available to civilian employees of the federal government since 1987. The purpose of TSP is to provide a retirement income. TSP offers participants the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
TSP allows participants to save a portion of their pay in a special retirement account administered by the Federal Retirement Thrift Investment Board.
TSP differs from the military retirement system in that participation in the TSP is optional and not automatic. Airmen must sign up to participate. Airmen contribute from their own pay on a pretax basis. The amount they contribute and the earnings attributable to their contributions belong to them.
The restrictions of having only two open seasons each year for civilian and military members to enroll, stop, resume or change their contributions has ended. Members can now enroll or change selections at any time.
Public Law 108-469 eliminated restrictions on contribution elections that have always been tied to TSP open seasons. Any percentage of pay or even a specific dollar amount per pay period can be chosen until reaching the IRS Elective Deferral Limit of $18,000.
There is also a catch-up contribution allowed of an additional $6,000 for those individuals age 50 and older. Therefore, if members turned age 50 or older in 2016, they can contribute up to $22,000 to the TSP. These figures are limited if contributing to a separate 401(k) at a civilian job. The combination of all TSP, 401(k) and 403(b) accounts cannot exceed the IRS Elective Deferral Limit of $18,000 ($24,000 if age 50 or older).
If serving in a combat zone and receiving a Combat Zone Tax Exemption, contributions to the TSP are still authorized. Furthermore, these contributions do not count against the $18,000 Elective Deferral Limit ($24,000 if age 50). However they do count against the 415(c) Annual Additions Limit.
The Annual Additions Limit is set each year by the Internal Revenue Service and affects participants who contribute tax-exempt earnings to the TSP while deployed in a designated combat zone. This limit remains at $51,000 for 2016. Contributions made from pay attributable to the CZTE are tax exempt, and therefore do not count toward the Elective Deferral Limit, $18,000 for 2016.
The Annual Additions Limit, however, includes all employee contributions to the TSP, both tax-exempt and tax-deferred, and any agency contributions if a FERS Civil Servant. Over-50 Catch-up contributions, up to $6,000, do not count toward the Elective Deferral or the Annual Additions Limit. When a participant reaches the Annual Additions Limit in his or her uniformed services account, the TSP cannot accept any more tax-exempt or tax-deferred contributions.
Enrollment forms and additional information are available via the TSP website at www.tsp.gov. Reservists submit TSP enrollment forms to their Reserve Pay Office for processing.