ROTH TSP FOR RESERVE/GUARD
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To participate in Roth TSP, you must have elected a minimum of one percent of your basic pay for either traditional or Roth TSP contribution.
The Roth TSP option uses after-tax pay and bonuses to start and maintain contributions. Information on this and traditional TSP can be found online at www.tsp.gov. You may also find information from your command or installation personal financial counselors, or your finance office.
For members 50 years and older, the Roth TSP Catch-Up allows contributions above the IRS annual limit.
Know the contribution limits!
Each year, the IRS sets the Internal Revenue Code elective deferral limits establishing maximum contributions to both traditional and Roth TSP accounts. For 2013, these limits are:
Roth TSP contributions come from pay available AFTER payroll taxes and deductions have been computed. We've developed a worksheet to help you discover the amounts of pay eligible for Roth TSP contributions.
WARNING: Electing a contribution percentage that does not allow for existing deductions will cancel the Roth TSP elections and funds will not be deposited in your Roth TSP account. Deductions include payroll taxes (Social Security, Medicare, etc.) as well as forfeitures, federal and state income tax withholding, SGLI and FSGLI premiums, debts, garnishments, bankruptcies, tax levies, alimony, child support and fines. Visit your financial office if you have any questions about deductions from your pay.
Once you have determined the percentages of each pay category to be contributed to your regular and/or Roth TSP account, myPay is available to start, change or stop traditional TSP and Roth TSP contributions. (See Roth TSP Catch Up for details on eligibility and procedures.)
If you do not have access to myPay, a completed and signed Thrift Savings Plan Election Form TSP-U-1 must be submitted to your finance office for processing.
Want to contribute from a bonus or one-time payment?If you will be receiving bonuses or other one-time payments, you may wish to contribute all or part to your Roth TSP account. Like other Roth TSP contributions, elections must be stated in percentages rather than dollar amounts.
Many regular payroll deductions can be determined using your current LES; federal and state tax withholding of bonus or other one-time payments will require a little math.
The federal supplemental rate for withholding is set at 25 percent. State supplemental rates vary state to state. Current rates are available at taje Take a look at your state's current supplemental rates..
Multiply the amount of the gross bonus or one-time payment by the combined federal and state withholding percentages to get an estimate of your tax liability. Add this to your other deductions and subtract from the payment amount. If, for instance, all of your deductions equal 40 percent of your one-time payment, you cannot make an election of more than 60 percent for Roth TSP contribution.
Changing your Roth TSP electionsLife, and your financial needs and goals change. Whether you need to reduce your contribution elections to balance your home budget or increase them to meet your future goals, you MUST enter contribution percentages in all pay categories when submitting changes either via myPay or a TSP-U-1. For example, if you are satisfied with most of your current elections, but wish to increase the percentage of basic pay, you must repeat your current elections in each pay category along with the increased percentage for basic pay.
Failure to submit the correct percentage in each pay category will cause your contribution elections for unmarked categories to be recorded as zero percent.
Reserve and Guard ActivationArmy and Air Force reservists and Guard members continue to be paid from the same system whether in a drill status or activated for active duty service. Your TSP and Roth TSP elections will continue unaffected by the change in pay status.
For Navy reservists: Pay computation for members who serve on a period of active duty of more than 30 days is transferred to the pay system that supports active duty members. To continue traditional or Roth TSP, new elections must be submitted via myPay or a TSP-U-1 form. Following transfer back to the reserve pay system, your previous TSP elections may be restored. See your finance office to verify whether a new election is needed.
Roth TSP Catch-UpThe IRS allows TSP and Roth TSP participants 50 years of age and older who contribute the maximum amount for the year to Roth and/or traditional TSP combined, to contribute additional money each year to their traditional and/or Roth TSP accounts.
You may begin catch-up contributions anytime during the calendar year in which you reach your 50th birthday. Note: you may begin catch-up contributions before you have contributed the max in a year (but plan to), and your max contributions will not only be computed on the total of your traditional and Roth contributions, but also on the total of your Reserve duty and civilian TSP contributions (if eligible to TSP in your civilian employment).
Catch-up contributions to your TSP or Roth TSP accounts must come from your basic pay. If you are serving in a designated tax-exempt combat zone, your catch-up contributions can only be applied to your Roth TSP account and not your traditional TSP account.
If you are eligible for catch-up contributions, you can get started by using myPay or submitting a TSP-U-1-C to your finance office. Changing or stopping catch-up contributions require you to submit a new TSP-U-1-C election form to your finance office.
Updated Sept. 23, 2013