Twice-Yearly TSP 'Open Season' Sessions Stop July 1
By Gerry J. Gilmore
American Forces Press Service
WASHINGTON, Feb. 17, 2005 Defense Department civilians and servicemembers building tax-free retirement accounts through the Thrift Savings Plan soon will be able to change their investment options at any time instead of just twice a year.
Current biannual TSP "open season" investment-choice windows will end July 1, said Army Lt. Col. Janet Fenton, executive director of the Armed Forces Tax Council. TSP participants, she noted, will be able to switch their retirement account options at any time.
"There's not going to be the two 'open seasons' during the year," Fenton explained, where people can sign up for the retirement savings/investment program, change their contribution levels, or change investment options.
Military people and civilians covered by the Civil Service Retirement System can contribute up to 10 percent of their paycheck to establish tax-free retirement accounts that grow from accumulated savings and investments in bonds, stocks and international funds. Employees covered by the Federal Employees Retirement System can contribute up to 15 percent in 2005. From 2006 on, no limit will apply to any military, CSRS or FERS participants in TSP.
Another TSP change also slated to start July 1 gives participants the choice of having a financial manager automatically adjust how funds are invested as market conditions change.
"They'll move you from equities to bonds when you need to," Fenton explained, noting such a practice should assist participants in maximizing their TSP contributions.
Servicemembers have been eligible to establish tax-free TSP retirement accounts since January 2002, Fenton said.
Establishing TSP accounts is a good idea even for those military members who don't serve long enough to qualify for a pension, Fenton pointed out. TSP funds accumulated during military service, she added, can be transferred to participating federal agency TSPs if a departing service member takes a government civilian job.
And, TSP savings can also be rolled into nongovernment civilian employers' IRA retirement accounts, Fenton said.