Some of you may have received an email about the Roth TSP changes, and it is a little confusing. Let me try to make it simple.
The Defense Finance and Accounting Service has recently posted a notice about changes to Roth TSP elections. It says this:
Important Notice for Army, Navy or Air Force active component members and Navy reserve component member serving more than 30 days on active duty who elect to contribute to Roth TSP:
If you elect Roth TSP and wish to continue those contributions, you must submit a new Roth TSP election on myPay or submit a TSP election form to your finance office during the time period January 1 – 31, 2015. Otherwise, your Roth TSP contributions will stop after January 2015.
This requirement is due to pay system improvements that will more fully automate processing and provide better customer service to you.
Currently, you may elect Roth or traditional TSP contributions, or both. If Roth is elected, the election must be in a dollar amount that includes your combined elections (basic pay, incentive pay and special pay; and a separate dollar amount election for bonuses). The main change will be that you will be able to elect separate basic pay, incentive pay, special pay and bonus percentage elections for Roth TSP. As with traditional TSP, any elections for pays not currently received will be maintained on your account and applied if you receive those pays.
Elections for Roth contributions for February 2015 will be accepted January 1 to 31, 2015. You may enroll online with myPay or submit the paper election form, TSP-U-1, available on www.tsp.gov to your finance office.
Here’s the short story: In the past (and through 31 January 2014), contributions to Roth TSP accounts were made by designating a dollar amount that you wanted contributed. Beginning 1 January 2015, those same Roth TSP contributions have to be made as a percentage of each of your pays, including basic pay, incentive pay, and special pay. You can still make a dollar amount election for bonuses.
The important part is that you have to make the changes in January 2015, or Roth contributions will stop effective 1 February 2015. It’s not a big deal, and I’ll remind you again come the beginning of January.
myPay‘s updated Roth TSP election function will go live Jan. 1, 2015. The updated TSP form (TSP-U-1) will also be available on that date. Check back later for up-to-date information and links.