A new retirement investment option for military members — the TSP Roth — continues to gain popularity since its creation last spring.
By December of last year, 24,695 military members had Thrift Savings Plan Roth accounts. That figure is almost quadruple what it was in November 2012 when there were 6,364 enrollees in the TSP Roth, according to the Federal Retirement Thrift Investment Board.
Army, Navy and Air Force members weren’t able to contribute to Roth accounts until November, making the number of enrolled service members that much more impressive.
Including all federal employees, more than 101,000 enrollees have opened TSP Roth accounts since the Roth option became available in May 2012. In December 2012 alone, the number of TSP Roth account holders increased 38 percent from November 2012.
This Roth option gives participants the chance to invest after-tax earnings. Then, when the money is withdrawn, it won’t be taxed as income again. The standard TSP invests money that hasn’t been taxed yet, so the participants pay tax on their withdrawals. By design, the TSP Roth is most beneficial to service members and federal employees who expect to be in a higher tax bracket when they retire.
Due to its popularity, the TSP Roth may be something in to which military members are automatically enrolled. In the future, service members may enlist and be enrolled in the program shortly thereafter. In 2009, Pentagon officials expressed an interest in automatically enrolling new service members only if the TSP had a Roth option.