Access to New TSP Roth Delayed

According to a report in the Federal Times, servicemembers and federal civilians whose pay is handled by DFAS will have to wait to begin using the Thrift Savings Plan’s new Roth option.

Unlike the other TSP investment programs which invest payroll dollars before they are taxed, the TSP Roth option allows members to invest after-tax dollars. Roth investments are popular because they offer investors the chance draw on their retirement dollars tax-free. This option can be especially attractive to those servicemembers who currently have a lower tax rate.

The TSP Roth will be made available to most federal employees on May 7, however, DoD civilians who are paid through DFAS won’t be able to enroll until July. Marines will be able to enroll in June. Soldiers, Sailors, and Airmen won’t be able to to take advantage of the new TSP Roth investing option until October.

According the Coast Guard Pay and Personnel Center, Coast Guard personnel will be able to submit TSP Roth enrollment/contribution requests on May 7. CG Roth TSP deductions can be managed in Self Service (after PPC establishes the initial deduction), just like Traditional TSP deductions.

David McDermott, DFAS deputy director of operations, told the Federal Times that the delay is due to the fact DFAS has to make sure it keeps pre-tax and post-tax investments separate as it works with computer systems throughout the Defense Department and a handful of other agencies,.

When the Roth option becomes available, service members will be able to use the MyPay system to select the TSP Roth option.

About the Author

Terry Howell
Before becoming the Managing Editor for, Terry served 20 years in the U.S. Coast Guard as an Aviation Electrician’s Mate and aircrewman. In his final role in the Coast Guard, Terry served as a Career Development Advisor, where he provided career, finance, education, and benefits counseling to servicemembers and their families. Since retiring from the Coast Guard, Terry has authored the book, The Military Advantage, managed the content for TurboTap, the DoD's online transition program and VAforVets, the VA's transition assistance website. Terry earned both his Bachelor's and MBA at Corban University using Military Tuition Assistance and his GI Bill benefits to help cover the cost.
  • Hickelbilly

    AMERICA’s, UNITED STATES I….R….S….. would be a great help to DFAS. They do much more than just collect taxes.

  • CanopybowStars

    Don’t panic! First max out your personal ROTH IRA contributions for 2012 then put aside the money you’d like to deposit into the ROTH TSP later. When DFAS is ready to go, contribute up 100% of you pay into the account and pay your bills with your cash savings. By the end of the year you’ll contribute as much as you’d like, and will have funded the accounts properly (personal IRA first, THEN TSP).

  • Daemoniumm

    which one is better? the normal TSP or Roth?

    • retiree

      It depends on circumstances. Normal is pre-tax, but you pay tax at the end when you withdraw. Roth is post-tax, but the income is tax-free when you withdraw.

    • Saver

      You want to have both. For those of us making upwards of $109K or so we can’t invest any money into a Roth IRA but we can invest in the Roth TSP. So for some of us, this is the only way to keep contributing into a Roth plan.

      I will be splitting my savings between the two with the majority going into the normal TSP in moderate risk to lower risk funds. Then in the Roth TSP I will invest in the funds which pose the most risk, and the most gain. The reason for this is normal TSP reduces your taxable income in the year you contribute, but the gains are taxed. So contribute lots into that, and make sure the gains are steady and dependable. For the Roth TSP there is no tax savings on your contributions, so contribute a smaller percentage to this but invest those contributions into the funds that are riskiest and provide the most potential gain. That’s because your gains are tax-free in the Roth TSP. So if you distribute your TSP in the various G, F, C, S and I funds I would consider the money you have in G, F and C to stay in normal TSP, and put your S and I money into Roth TSP. That may not be right for you, so use a strategy that is right for you but play to the strengths that each plan has to offer.

  • guest

    More waiting. Roth TSP was promised to us a while ago, and they keep on post poning it! Very disappointing

  • northwestIL

    So, how about telling all of the military retirees about what they need to do and the specific time constraints for Tricare Prime or Standard for those who just ended up with Tricare for Life?

  • alfredo,ramirez

    I am close to retirement. question: how does Roth differ between civilian and TSP invest stocks. How many years to mature?