While you do not have to pay taxes on the contributions portion (the amount you paid in to the TSP) of any withdrawal, you will have to pay taxes on the earnings portion of the withdrawal, plus a 10 percent penalty if the withdrawal is considered non-qualified. To be considered qualified, your Roth TSP account must have been opened for at least five years, and you must be either 59½ or older or permanently disabled. Qualified withdrawals, however, are tax-free. Roth: Roth contributions to the TSP come from after-tax income, which reduces your take home pay and does not reduce the gross income reported to the IRS. Use our Savings Calculator to see how much your contributions can grow over time. For instance, contributing $350 pre-tax twice a month only lowers each paycheck by $262.50, but adds up to $8,400 in contributions by the end of the year. And since the savings is pre-tax, the impact on your take-home pay is less than the full contribution amount. Investing a little bit with each paycheck makes saving more manageable. The money invested lowers your taxable income (adjusted gross income) now and grows tax-deferred until you withdraw it in retirement. Traditional: Traditional contributions are made before taxes are taken out. You can choose between two different tax treatments for your TSP: Traditional or Roth. ![]() If you are a member of the uniformed services not covered by the Blended Retirement System (BRS), you may sign up for the TSP through your service’s electronic payroll system (typically myPay or Direct Access). And after two years of service, you are eligible for matching contributions. Your service also automatically begins deducting a portion of your basic pay each pay period from your paycheck for deposit into your TSP account. ![]() This “Service Automatic Contribution” does not come out of your pay but is a retirement benefit. At that time, your service contributes an amount each month equal to 1 percent of your basic pay into a traditional TSP account in your name. If you are member of the uniformed services and participating in the Blended Retirement System (BRS), you are automatically enrolled in the TSP after completing 60 days of service. Here's how to make the most of your TSP retirement savings opportunity. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP. The TSP makes it easy to invest automatically from your pay, provides important tax benefits and charges lower average net expenses than most private sector 401(k) plans. Among the many benefits of working in the military, service members have access to the Thrift Savings Plan (TSP), which is like a 401(k) retirement savings program for members of the military and federal employees.
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