House committee OK’s Roth option for TSP

[unhappycamper]

House committee OK’s Roth option for TSP
By Stephen Losey - Staff writer
Posted : Wednesday Mar 18, 2009 17:54:24 EDT

The House Oversight and Government Reform Committee approved legislation Wednesday that would create a Roth option for the TSP, which experts say would be a boon to service members who participate in the program.

Under a Roth option, participants would pay taxes when they make contributions to their TSP retirement investment accounts. When they retire and withdraw those funds, they would not be taxed. That differs from the current tax-deferred TSP plan, where contributions are taxed at the time of withdrawal.

The Federal Retirement Thrift Investment Board, which oversees the TSP program, said service members are most likely to benefit from a Roth option, since their current tax rates are likely to be lower than future tax rates. Civilian employees usually will pay lower taxes in the future, which the board says makes a Roth option less beneficial for them.

The legislation also would automatically enroll new federal civilian employees — but not new service members — in the Thrift Savings Plan.

Title IV of HR 1256, the Family Smoking Prevention and Tobacco Control Act, originally would have automatically enrolled new service members in TSP. But an amendment attached to the bill by Rep. Darrell Issa, R-Calif., would leave it to the Pentagon to decide if troops should be automatically enrolled.


Rest of article at: http://armytimes.com/news/2009/03/military_tsp_enrollment_031809w/%2e