By Abigail C. Reid, Federal Retirement Thrift Investment Board
If you are an active duty member of the Army, Air Force, or Navy making dollar-amount Roth contributions to your TSP account, these deductions will stop on January 31, 2015, unless you act.
How your election requirements will change:
An upcoming change in myPay will require you to designate your Roth contributions as a percentage of your pay, not a dollar amount. If you don‚Äôt comply with this change, then the Defense Finance and Accounting Service (DFAS) will not be able to process your Roth contributions. This change affects your Roth contributions only; your traditional contributions are already designated as a percentage of pay.
When the change will take place:
The new requirement will take effect January 1, 2015. You will have 30 days to change your Roth election from a dollar amount to a percentage of your pay. If your new Roth election is not received by January 31, 2015, then DFAS will not be able to process your Roth contributions until you update them.
How to make the change:
Starting January 1, 2015, you can make the change in myPay. You’ll see a special TSP section called ‚ÄúTraditional TSP and Roth TSP‚Äù‚Äîclick there. Then, in the ‚ÄúContribution from Roth TSP‚Äù section, you can enter the percentage of your pay that you‚Äôd like to contribute (10%, for example). Finally, click ‚ÄúSave‚Äù at the bottom of the screen.
Why Roth contributions might be good for you:
When you make Roth contributions, you pay taxes on the money you save before it goes into your TSP account. So you pay no income taxes when you take it out, and your earnings can also be tax-free if you have reached age 59¬Ω or have a permanent disability and five years have passed since the year of your first Roth contribution.
As a member of the uniformed services, you can make Roth contributions from tax-exempt pay, basic pay, incentive pay, special pay, and bonus pay. If you make Roth contributions from tax-exempt pay earned in a combat zone, you won‚Äôt pay taxes on your contributions, and you‚Äôll have the opportunity for tax-free growth.