Army Guard returning to state status from 18 months AD

[KathMorgan]

My son has just returned from a year in Iraq with the Louisiana Army National Guard and is doing his outprocessing next week. He will be remaining on orders and doing Hurrican Katrina relief for the next year but will be on state not federal orders. They are telling him he has 90 days to remove his TSP money and is no longer eligible to participate in the plan. I was under the impression that as long as he was in the military (active, reserve or guard) he could contribute. Am I wrong? If so, I never would have gotten him set up with TSP to begin with. Do I need to get him a rollover IRA set up or can he stay in the plan? Anyone able to point me to any references for him? Thanks for the help!



Kathy

[Spaf]

Kath,
Your post has been up with out a reply. Maybe, no one knows for sure?
His agency should be able to give him the correct information.
You could also ask at the TSP service office. See: www.tsp.gov (http://www.tsp.gov)


<knock> <knock> Anyone have some helpful info for Kath!

Kicking your post back to the top! :) Spaf

[rokid]

Kathy,

The following is from the Army National Guard web site http://www.ngb.army.mil/news/story.asp?id=1055 (http://www.ngb.army.mil/news/story.asp?id=1055)

"When service members leave active duty, they have several options. They can leave their money in TSP, allowing it to continue to grow, take a partial or full withdrawal, roll the money into another plan or an Individual Retirement Account, or purchase an annuity. They also could choose to make periodic distributions to themselves, Amelia said." The requirement to take the money out in 90 days just doesn't sound right.

Therefore, my guess is thatyour soncan leave his balance in TSP, but can't contribute any additional money unless he's on active duty. The TSP web site doesn't distinguish between service under state control and service under federal control.

If you're not successful tracking this down, call your congressman and have him check it out for you. Trust me, they can cut through the red tape and get the right answer for you. Constituent services! Good luck.

[Aggie76]

I don't have much to add.

There is a little more information located at link http://www.tsp.gov/uniserv/bulletins/05-u-2.pdf

Phone number to call 202-942-1460 to see if he can continue contributing based on Title 37 Section 37.

Footnote on first page:

1 The Department of Defense, in conjunction with the other uniformed services organizations, will define active duty and eligible reserve members of the uniformed services, and will be responsible for categorizing personnel accordingly for TSP purposes.

[rokid]

One more quote from the TSP site:

"If you do not want to withdraw your account when you leave the uniformed services, you can leave your entire account balance in the TSP. However, you must withdraw your entire balance (or begin receiving monthly payments from the TSP or from the TSP annuity vendor) by April 1 of the year following the year you turn 70½ (or following the year you separate, if you are already over age 70½ when you leave Federal service)."

Also, per TSP, if your account balance is less than $200, you have to withdraw it.

[pyriel]

HUH???? TSP was set up for all Armed Forces and that includes the NATIONAL GUARD. IDT soldiers (or weekend warriors) are allowed to set up a TSP account and they can contribute up to 10% of their income for this year and up to 15k of their income (from the Guard) starting next year. Not oncehave I ever read that they delineated Active Duty soldiers vs. the Reservist.If you look at all the brouchures or reading materials concerninTSP, they will always say service members instead of breaking it down to active duty Soldiers, National Guard soldiers, andArmy Reserve soldiers.

Tell your son to have them givehim the reg or TSP rules on that concerning TSP. You have to understand that TSP is a new concept within the military and many of them do not know the rules.Trust me,our personnel office, mobilization officeand finance office are clueless when it comes to TSP. So, if it is happening here at Guam Guard, then I am so sure that it is happening in Louisiana Guard as well...

[James]

It sounds to me like they have the TSP confused with the SDP. The Savings Deposit Program is a savings program for military members deployed in a combat zone. The account returns 10% APR interest and compounds quarterly. The account will continue to draw interest for 90 days after the member leaves the combat zone.

[pyriel]

By the way, next year, your son should be able to put in 100% of his base pay/ IDT pay. As long as he doesn't go over 15k then he will be ok.

[Birchtree]

I think I'd go back to Iraq just to be able to put my whole salary plus incentives to work in TSP. He could use any Dinars he picks up off of dead insurgents for his daily poker and cigarette money. The incentive is to kill as many radical insurgents as possible and invest the salary. I know this sounds harsh - but Iraq is a harsh reality.

[James]

During January and maybe February I intend to put all of my base pay and incentives in the TSP and pay my bills with my BAH, BAS (can't be put into TSP) and money I've saved up the last quarter of 2005.

[pyriel]

Hmm... Good idea... I think, i'll do the same...

[James]

Understand that I am deployed and will be in January and possibly Feb. So all that money that I contribute while I'm in the tax exempt combat zone doesn't count against the $15K limit. If that's the case then for the remaining 10 (or 11) months I will make equal contributions so that I max out the $15K. If it's 10 months then that will be $1,500/month.

[KathMorgan]

Thanks for all the help everyone. Found out two things, 1) the guy who was briefing my sons platoon was clueless and 2) he made it all a moot point by volunteering for 2 more years federal active duty doing hurricane rebuilding. So he will be on federal active duty for 4 years all told and eligible forever, which he would have been anyways like we all thought. Thanks again!

[pyriel]

sheasljj wrote:
Understand that I am deployed and will be in January and possibly Feb. So all that money that I contribute while I'm in the tax exempt combat zone doesn't count against the $15K limit. If that's the case then for the remaining 10 (or 11) months I will make equal contributions so that I max out the $15K. If it's 10 months then that will be $1,500/month.

But if you are in the combat zone next year, you are not bound by the 15k limit. You can actually put in all of your base pay for the remaining 10 (or 11) months... Why? IRS limit for 15k goes against your base pay that are taxable. Since your base pay in the combat zone is not taxable, this does not apply.

I know this is hard to do but for those that can do it, wow, that would be great. If someone thinks that I am wrong, I would like to hear it...

[James]

I should be returning from the tax exempt combat zone in Jan or Feb. So only the pay I contribute during Jan and/or Feb will be tax exempt. The rest of my pay, Feb or March on will be taxable and that will count against the limit.