New recruits in critical specialties eligible for matching TSP funds
WASHINGTON (Army News Service, April 17, 2006) – The Army announced April 14 that new recruits who are willing to fill critical specialties may receive matching funds when enrolling in the Thrift Savings Plan.
The pilot program runs through Sept. 30, at which time the results of the recruitment incentive will then be studied to determine whether the program should become a permanent part of the Army’s recruiting policies.
The incentive is available to all non-prior service enlistees electing to serve five or more years on active duty in critical specialties. Critical specialties are based on the needs of the Army, are subject to change and will be designated by the Secretary of the Army.
Matching funds will be made on the first five percent of pay contributed each pay period of the Soldier’s initial term. The first three percent of contributions will be matched dollar for dollar, the remaining two percent will be matched 50 cents on the dollar.
The Thrift Savings Plan is a government sponsored savings and investment program. It provides Soldiers a vehicle to invest their salary while offering tax deferred advantages similar to 401 (k) plans in the civilian sector.
“It’s never too late to start saving, but when you have time on your side, you have the ability to take that time and use it to your advantage. That’s where you truly reap the significant benefits of compounding interest,” said Giselle Goethe, education program manager for the Federal Retirement Thrift Investment Board.
Currently, Soldiers may contribute any percentage of their basic pay, incentives, special or bonus pay up to the IRS annual tax-deferred limit of $15,000. Soldiers pay no taxes on the money until it is withdrawn.
A special feature of TSP is that money contributed while in a combat zone will never be taxed, even if it is withdrawn early. Additionally, the only taxes paid on combat zone contributions are on the earnings rather than the balance.
Soldiers who serve short terms may reinvest or transfer their TSP contributions and earnings to retirement programs offered by private sector employers.
“What TSP is really about is taking care of Soldiers,” said John P. McLaurin III, deputy assistant secretary for the Army for Human Resources.
(Editor's note: Information provided by the Army G1 Public Affairs Office.)
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