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BEGINNING IN OCTOBER, CHANGES ARE BEING MADE TO THE THRIFT SAVINGS PLAN FOR FOR SERVICE
MEMBERS. LIEUTENANT GERALD HENDERSON, DIEGO GARCIA'S COMMAND FINANCIAL SPECIALIST, EXPLAINS.
"THE TRADITIONAL TSP IS WHERE YOUR MONEY IS TAKEN OUT AND PUT IN THE TSP BEFORE TAXES
SO IT LOWERS YOUR TAXABLE INCOME AND WITH THE ROTH TSP IT'S TAKEN OUT AFTER THE TAXES
SO YOU'RE TAXABLE INCOME IS GOING TO BE LIKE IF YOU WEREN'T EVEN INVESTING IN THE TSP BUT
THE BIG HERE IS THAT WITH THE TRADITIONAL TSP WHEN YOU TAKE THAT MONEY OUT DOWN THE
ROAD IT'S TAXED. WHEN YOU'RE TALKING ABOUT HIGHER TAX BRACKETS IN THE FUTURE, IF YOU'RE
TAKING OUT 300,000, 400,000, 500,000 A MILLION, TWO MILLION, YOU KNOW YOU COULD HAVE A LOT
OF MONEY IF YOU INVEST IT IN THE TSP, YOU COULD BE HIT WITH A FAIRLY SIZABLE TAX BILL
BUT WITH THE ROTH TSP YOU WON'T BE HIT WITH A TAX BILL BECAUSE YOU'VE ALREADY BEEN TAXED
ON THAT MONEY SO ALL OF THAT COMPOUNDED EARNINGS JUST STAYS IN YOUR BANK ACCOUNT."
SAILORS AT DIEGO GARCIA RECEIVED TRAINING ON THE THRIFT SAVINGS PLAN AND THE NEW ROTH
OPTION AT INDOCTRINATION UPON ARRIVAL TO THE ISLAND.
"THE BIGGEST ADVANTAGE FOR SAILORS IS AVOIDING A LARGE TAX BILL IN THE FUTURE SO IF THEY'VE
INVESTED A LOT OF MONEY IN THE ROTH TSP AND SAY THAT GROWS TO ABOUT TWO MILLION DOLLARS
OR 1.5 MILLION DOLLARS IN THE FUTURE WHEN THEY'RE 59 AND A HALF AND THEY WANT TO WITHDRAW
IT THEY WON'T BE TAXED ON IT AT ALL WHERE AS WITH THE TRADITIONAL TSP THEY WOULD BE
TAXED ON IT. IF YOU HAVE A VERY LOW TAX BRACKET NOW, LET'S SAY YOU HAVE A WIFE OR A HUSBAND
AND TWO KIDS AND YOUR TAXABLE INCOME IS ACTUALLY YOU KNOW BELOW ZERO AND YOU ACTUALLY GET MONEY
BACK, THEN YOU KNOW HAVING THE ROTH TSP AND INVESTING IN THAT IS A GREAT WAY TO AVOID
THE TAX MAN LEGALLY. THERE A NUMBER OF OPTIONS AVAILABLE FOR EACH SAILOR TO FIND OUT MORE
INFORMATION ABOUT THE TSP. THEY CAN EITHER GO TALK TO THEIR COMMAND FINANCIAL SPECIALIST
OR THEY CAN GO VISIT THE WEBSITE WWW.TSP.GOV.
*** ANDREW LAVIN, DIEGO GARCIA.