Officials announce Thrift Savings Plan open season

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RANDOLPH AIR FORCE BASE, Texas (AFPN) --  Civilian and military employees can sign up for, or change, their Thrift Savings Plan contribution amounts during the "open season" April 15 to June 30.

"TSP is a long-term retirement savings plan, which everyone should consider," said Jackie Holland, task manager at the Air Force Personnel Contact Center here. "It's a great supplement to military and civilian retirement plans.

"It's also important to note that TSP is not limited to investing in stocks," Ms. Holland said. "People can choose safer government securities as well."

This open season applies only to regular TSP contributions. It does not include TSP catch-up contributions, as they are not tied to open seasons, said Janet Thomas, of Air Force Personnel Center’s civilian benefits and entitlements service team.

TSP offers investors the chance for lower taxes each year they contribute while not having to pay taxes on earnings until they reach retirement.

"Eligible employees can take out loans and make in-service withdrawals from their TSP accounts," Ms. Thomas said. "And you can keep your account, even if you leave military or federal civilian service."

Investment money is deposited directly from each paycheck "so you never have to think about it," Ms. Holland said. "That makes it easy to 'pay yourself first' while only investing what you deem appropriate."

The five TSP funds are: the Government Securities Investment (G) Fund; the Common Stock Index Investment (C) Fund; the Fixed Income Index Investment (F) Fund; the Small Capitalization Stock Index Investment (S) Fund; and the International Stock Index Investment (I) Fund.

TSP officials said they also hope to make "Lifecycle" funds available mid-2005. Lifecycle funds are “target asset allocation portfolios” that will hold a mix of the five funds currently available. The mix of funds is chosen based on the date the employee expects to need money for retirement. More information is available online at www.tsp.gov/curinfo/specint/LFC-Qs&As.html.

"As with any individual retirement account, the sooner you begin contributing, the better," Ms. Thomas said.

Contribution elections and/or changes made between April 15 and June 11 will take effect June12, for servicemebers and civilians. Changes made on or after June 12 will become effective at the beginning of the pay period following the one in which the election is made for civilians and the following month for military.

Public Law 108-469, signed into law Dec. 21, will eliminate TSP open seasons. The Federal Retirement Thrift Investment Board is implementing this law July 1. As a result, beginning July 1, civilian employees and servicemembers may start, change, stop or resume contributions at any time. For civilians, the elections will be effective at the beginning of the pay period following the one in which submitted, and for military members elections will be effective the following month.

Some of the specifics of the program include:

Military

-- Servicemembers can contribute as much as 10 percent of their base pay, as long as the annual total of tax-deferred investment is not more than $14,000 for 2005. Airmen also have the ability to invest all or part of their bonuses or special pay.

-- Those serving in tax-free combat zones are allowed up to $42,000 in annual contributions.

-- Airmen can enroll through the Defense Finance and Accounting Service Web site at www.dfas.mil/emss/. They can also enroll by filling out a form TSP-U-1 at local military personnel flights, finance offices and family support centers.

-- Contribution allocations (how an employee chooses to invest money among the five funds) can be made by calling the TSP automated ThriftLine at (877) 968-3778 for people in the 50 States, Virgin Islands, Puerto Rico, Guam, American Samoa and Canada, or (504) 255-8777 for people elsewhere, or on the TSP Web site at www.tsp.gov/. For general TSP questions, call the Air Force Personnel Contact Center at (800) 616-3775.

-- Specific TSP information is available for Airmen at www.afpc.randolph.af.mil/mpf/TSP/thrift_savings_plan.htm.

Civilian

Contribution limits are based on which retirement system an employee has. For the current open season, the following contribution rates apply:

-- Federal Employees' Retirement System employees may contribute as much as 15 percent of basic pay each pay period. Once eligible, the government provides matching funds of up to 4 percent as well as an automatic 1 percent each pay period, whether the employee contributes or not, making the government's contribution 5 percent.

-- Employees covered by the Civil Service Retirement System may contribute as much as 10 percent of basic pay, but do not receive any agency contributions.

-- Beginning in December, there will no longer be percentage limits on how much FERS and CSRS employees may contribute each year. Contributions will be restricted only by the Internal Revenue Code's annual limit, which is $15,000 for 2006.

-- Specific information is available for civilian employees from the Thrift Savings Plan Web site and the BEST home page at www.afpc.randolph.af.mil/dpc/BEST/menu.htm.

-- All Air Force-serviced civilian employees will make their TSP contribution elections or changes electronically through the Web-based Employee Benefits Information System at www.afpc.randolph.af.mil/dpc/BEST_GRB/EBIS.htm or through the BEST automated phone system at (800) 616-3775. Hearing impaired employees may contact BEST by calling TDD (800) 382-0893 or commercial (210) 565-2276 within San Antonio. Overseas employees can dial the direct-access number for the country they are calling from and then enter (800) 616-3775. Counselors are available weekdays 7 a.m. to 6 p.m. CDT.

-- Contribution allocations (how an employee chooses to invest his or her money among the five funds) are made via the "Account Access" section of the TSP Web site, or by calling the ThriftLine at (877) 968-3778 for employees in the 50 States, Virgin Islands, Puerto Rico, Guam, American Samoa and Canada; (504) 255-8777 for employees elsewhere.

More information about the Thrift Savings Plan can be found in the booklet "Summary of the Thrift Savings Plan" on the TSP home page under civilian or uniformed services TSP Forms and Publications. (Courtesy of AFPC News Service)