Page 5 - Luke AFB Thunderbolt 3-11-16

Thunderbolt
http://www.luke.af.mil
Benefits of TSP outweigh savings sacrifice
by Senior Airman
CORY GOSSETT
56th Fighter Wings Public Affairs
Planning for retirement can be an intimi-
dating task as there are many variables to
consider. Luckily, both military and civilian
government employees have the benefit of
starting a Thrift Savings Plan.
“The TSP is a federal retirement savings
and investment plan similar to a 401k
plan found in the private sector,” said Cory
Carmichael, 56th Force Support Squadron
Airman and Family Readiness Center com-
munity readiness specialist. “The TSP even
allows federal and military employees to
automatically allocate money to their re-
tirement plan directly from their paycheck.”
The TSP has many advantages including
some control on how the income contribu-
tion is invested. TSP contributions can be
placed into different funds that vary in risk
depending on what the individual wants.
Investors not only have the choice in what
funds to invest in but how they want their
investment to be taxed.
“With the TSP, taxes are deferred until
withdrawal,” Carmichael said. “This means
you will pay a larger percentage of tax on
each withdrawal when the time comes.”
Another plan available to federal and
military members is the Roth TSP.
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NEWS March 11, 2016 5
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7KH7KULIW6DYLQJV3ODQ what’s best for them, whether they want
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DNOLNHVDYLQJVSODQ until it’s time to withdraw.”
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WRFRQWULEXWHWRLWSUHWD[ TSP plans also give federal employees
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ORQJWHUPWD[GHIHUUHG ceive any fund matching at this time. When
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ZKLFKFDQVXSSOHPHQW are many options available for transferring
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&RXUWHV\SKRWRLOOXVWUDWLRQ FHQWDJHRIEDVLFSD\ “When leaving the service you don’t
lose the money you contributed,” Griffin
“With Roth TSP, the taxes are paid now has some drawbacks. said. “You will still have your TSP or Roth
but the funds and earnings will be tax-free Paying for the taxes upfront means your TSP and can always transfer the money to
upon qualified withdrawals,” said Robert another plan without suffering additional
Griffin, 56th FSS community readiness ‘take-home’ pay will be lower than it would taxes for doing so.”
specialist. “This is especially beneficial be under a regular TSP. For low-income
for those who are young and in lower tax individuals, this could create a financial Regardless of what plan you choose, start-
brackets.” burden or might discourage them from ing a retirement plan brings many benefits.
starting a savings plan.
Another benefit of a Roth TSP occurs “I’ve never heard of an elderly person
when a military member is deployed in a While many may have trouble choosing saying, ‘I’ve saved too much money’ or, ‘I
combat zone. Military pay is not taxed and between Roth TSP and TSP, Carmichael started saving too early in life’,” Carmi-
therefore any money contributed to the stresses the importance of starting to save chael said. “With a little planning and the
Roth TSP during the deployment is also as soon as possible. discipline of contributing steadily to their
not taxed. plan, retirement should be much easier for
“Both plans have many advantages,” our military and government employees.”
While Roth TSP has many benefits, it also Carmichael said. “They both have very low
fees, but it’s up to the individual to decide For more financial savings information
on TSP plans and retirement services, call
the A&FRC at 623-865-6650.
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