Thrift Savings Plan for Military Members (Uniformed Services)

It’s like a private company’s employer-sponsored 401(k) plan. With the Thrift Savings Plan (TSP), you save for retirement and supplement your military retirement pay.

Eligibility:

Uniformed members of the Army, Navy, Marines, Air Force, Coast Guard, Public Health Service and the National Oceanic and Atmospheric Administration serving on active duty and members of the Ready Reserve or National Guard of those services (as applicable) in any pay status are eligible to take part in the TSP.

The basics:

• Maximum contribution limits increase over time
• Contribute up to 100% of special pay and bonuses
• Pre-tax contributions
• Choice of investments
• Options for borrowing against plan while on active duty
• Participation in the TSP does not affect your ability to make IRA contributions (depending on your income and that of your spouse)

The immediate advantages:

• With the “before-tax” contributions, the money you contribute is taken out of your pay before taxes are calculated
• You pay less tax now

The long-term advantages:

• Federal taxes are postponed until you withdraw the money in retirement (when your tax bracket may be lower)
• Your money accrues interest
• The money in your plan grows tax-deferred

Enrollment periods:

• May 15 through July 31
• November 15 through January 31

TSP contributions limits are now more generous as a result of the new tax law changes – see table below.

Matching contributions from the government (your Service) …

are allowed under the law that extended the TSP to the uniformed services. The law permits each Service Secretary to designate critical specialties for contribution matching. But to date, no matching contributions have been authorized by any of the Services.

Administrative and Investment Expenses …

are funded largely by the earnings from each participant’s account. Each fund's monthly earnings are reduced by the fund's proportionate share of net accrued administrative expenses. F, C, S, and I Fund earnings are also reduced by investment management fees. Each fund's net earnings are then allocated to individual accounts in proportion to the amounts the participant has invested in each fund. As a result, the actual return on investments to participants will generally be less than the total rates of return for the securities in which the various funds are invested.

To enroll …

simply complete and submit a TSP election form (TSP-U-1) to your Service (during open enrollment periods – May 15 through July 31 and November 15 through January 31 of each year) – held each year.

• Decide what percent of your base pay you want to contribute: 1% minimum to 7% maximum for 2002 (maximum increases by 1% each successive year to 10% in 2005)
• If you contribute from base pay, you may also contribute from incentive, special or bonus pay: minimum of 1% to a maximum of 100%.
• Consider the elective limit: the maximum annual dollar limit for 2002 is $11,000 (increases by $1,000 each year to $15,000 in 2006). Members of the Ready Reserve who may already contribute to an employer-sponsored 401(k), 403(b), or 457 plan or a Federal civilian TSP must consider their aggregate contributions to ensure they do not exceed the elective limit for the year.
• Allocate your contributions to any one, or a combination of the five investment funds (listed in order from most conservative to most aggressive):
  Government Securities Investment (G) Fund
  Fixed Income Index Investment (F) Fund
  Common Stock Index Investment (C) Fund
  Small Capitalization Stock Index Investment (S) Fund
  International Stock Index Investment (I) Fund
  

  G Fund (Government Securities Investment Fund) is invested in special issues of U.S. Treasury securities.
  F Fund (Fixed Income Index Investment Fund) is invested in the Barclays U.S. Debt Index Fund, which tracks the Lehman Brothers U.S. Aggregate bond index.
  C Fund (Common Stock Index Investment Fund) is invested in the Barclays Equity Index Fund, which tracks the S&P 500 stock index.
  S Fund (Small Capitalization Stock Index Investment Fund) is invested in the Barclays Extended Market Index Fund, which tracks the Wilshire 4500 stock index.
  I Fund (International Stock Index Investment Fund) is invested in the Barclays EAFE Index Fund, which tracks the EAFE (Europe, Australasia, Far East) stock index.
  

For complete information, visit www.tsp.gov or call Navy Federal Financial Group (NFFG), toll free: 1-877-221-8108.

Registered representatives of and securities offered through Navy Federal^® Brokerage Services, LLC (NFBS), member FINRA/SIPC. Investment Advisory Services offered through Navy Federal^® Asset Management, LLC (NFAM), an SEC registered investment advisor. NFBS and NFAM operate under the marketing name of Navy Federal^® Investments & Insurance. Insurance sold through licensed insurance representatives of various companies. Nondeposit investment products are not federally insured, not obligations of the credit union, not guaranteed by the credit union or any affiliated entity, involve investment risks, including the possible loss of principal, and may be offered by an employee who serves both functions of accepting member deposits and selling nondeposit investment products. NFBS and NFAM products are not offered, recommended, sanctioned or encouraged by the Federal Government. Office of Supervisory Jurisdiction, 12851 Worldgate Drive, Herndon, VA 20170; phone 1-877-221-8108; fax 703-206-1510.