In February, we ran an article entitled Considering The New TSP Roth Option. You can review Jason Visner’s article to see if choosing the Roth option is something that you should consider in your retirement planning.
One question that has come from many readers is “When will this new option be available?”
The date was unknown and we advised our readers that “the Roth option will be available in the second quarter of this year (April – June).”
Start Date for Roth Contributions
Now, however, the TSP has announced a specific date: May 7, 2012 is the date that the TSP will begin to accept Roth TSP contributions.
As many readers know, a Roth TSP allows federal employees and military personnel to contribute after-tax dollars into the account. Under current law, all contributions and the earnings can be withdrawn tax-free as long as all Internal Revenue Service criteria have been met.
All Agencies May Not Be Ready
According to the TSP, while information has been distributed to agencies since December 2010 in order to allow them to prepare their software and payroll systems to accept Roth contributions, some agencies are not yet ready to accomplish this. If you happen to be working in one of these agencies, you will have to wait until your agency has completed the changes necessary to accept the contributions.
TSP Funds Available for the Roth
Your Roth TSP contributions can go into any of the Thrift Savings Plan funds including the lifecycle funds. There is approximately $308 billion now invested in the TSP for about 4.5 million participants.
You will need to check with your servicing human resources or your payroll office to find out if you agency is ready to start accepting Roth contributions on May 7, 2012.