Retirement plan opens to military
- By Colleen O'Hara
- May 04, 2001
Federal Retirement Thrift Investment Board
Starting Oct. 9, military employees will be able to join the Thrift Savings Plan, a 401(k)-style of savings account designed for federal employees.
In preparation, the Federal Retirement Thrift Investment Board issued a proposed rule Tuesday explaining how the members of the uniformed services can contribute to the TSP program. Contributions will begin in January 2002.
While civilian contributions come from basic pay that is subject to federal income tax, military accounts can include incentive and special pay and pay that is not subject to income tax. As a result, the TSP plans to maintain separate civilian and military accounts.
The proposed rule also describes how missed bonus contributions, withdrawals, death benefits and other legal actions would be handled for military accounts.
Military employees will be able to join TSP before the new — and delayed — TSP recordkeeping system is in place, which is scheduled for next year. The board is beefing up the existing system to handle the new participants in the fall and to make available two new funds introduced this month.
In its most recent update regarding the new recordkeeping system, the board said that almost 12,200 defects have been found in the system so far. Currently, 3,200 are unresolved.
The contractor, American Management Systems Inc., is conducting a comprehensive review of the new system design, and it should be completed by the end of this month, according to the board.