By Tom Philpott
Two of three military members who separate or retire do so without having opened a government-run Thrift Savings Plan account, a benefit that has been available to service members since 2002.
Those who depart without an account leave behind a valuable tool they could use over and over again to dampen their costs while investing for retirement, said Gregory T. Long, executive director of the Federal Retirement Thrift Investment Board that oversees federal TSP accounts.
Veterans and military retirees with TSP accounts can’t continue to make tax-deferred contributions unless they become federal civilian employees or contribute income earned as drilling reservists.
However, Long said, TSP veterans who move from job to job in the private sector, building 401k accounts as they do, can roll those nest eggs into their TSP account where expenses are far lower than other rollover account.
Individual Retirement Accounts also can be transferred at any time.
Because so many TSP-eligible military members and federal civilians don’t take full advantage of the benefit, the investment board has asked Congress to pass legislation to require automatic enrollment for new federal employees or service members. They could opt out immediately, however.