Military Thrift Savings Plan

The Thrift Savings Plan is basically the soldier's IRA.

Soldiers, Airmen, Sailors, Marines, Coast Guardsmen, and all service members have the opportunity to invest in the Thrift Savings Plan or TSP. The Thrift Savings Plan is essentially a U.S. government backed IRA (Individual Retirement Account) schematic that allows military and DoD (Department of Defense) personnel to set aside their pay in one of several different investment styles or schemes.

The Thrift Savings Plan is extremely easy to sign up for. It is located in the same place where many financial functions can be found: the MyPay website at Simply look through the navigation menu to find the TSP link once you have logged in. When clicked, TSP reveals some simple demographic information confirmation (home address for statement mailing purposes) and four pay boxes: basic, special, incentive, and bonus pay. For each pay type, you can indicate a percentage of that pay that you want to elect to contribute to TSP from zero percent to 100 percent. Most pay will clearly come through the base pay section, so you should focus most of your attention on this area.

For 2010, the maximum TSP contribution limit is $16,500 or $49,000 if you have been deployed to a combat zone. Most Active Duty soldiers in the grade of E-6 or above will have no trouble making the minimum contribution limit if they choose to. Very few Reservists or National Guardsmen, however, will be capable of maxing out the yearly contribution. The real benefit to the TSP is that it allows you to set aside the unneeded portion of your earnings in a secure area for future use. The brilliant thing about this idea is that your money is pulled out automatically, so you can live your life on slightly reduced pay without realizing that you are slowly building a financial safety net in the background. Then, when you have to take stock of your finances in an emergency situation or send a child to college, repair your house, or buy a car, the money that has been squirreled away is there for you.

The TSP contains several different funds that you can contribute to: G, F, C, S, I, and L. Each fund contains a different level of volatility, risk, and potential reward. Everyone is started off with the G fund when they make their first contribution; this fund contains the lowest level of risk and interest rate. An information packet with login information is then mailed to your house. You can change to any fund you want with your TSP login or the TSP help phone line. The latest fund is the L series fund; this fund contains a variable risk level that is designed to return the highest amount of money for a given target year. By the end of 2010, the L-2050 will have replaced the L-2040 as the longest-range target year.


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