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Update 8 Oct 2014: Another email received from DFAS. See below for email #2. It appears this only applies to Active Duty Air Force personnel. You will need to redo your Roth TSP allocations in myPay in January to keep them going. Spread the word!
I received the following email from DFAS on 2 October 2014. I don’t know if this applies to other military branches as well or just the Air Force. I have not found any information on the DFAS website either. As I find more information I will continue to update this post.
According to this email, you will need to update your TSP elections by January 31, 2015 to ensure that your contributions are not interrupted. It looks like DFAS and the TSP are moving to a percentage based system, where you elect to contribute x% of your basic pay, bonus pay, etc, rather than a fixed dollar amount. This is how the traditional TSP is set up today.
I'm not sure if I like this system better or the fixed dollar amount. The fixed dollar amount is nice because you can elect to contribute exactly the monthly limit to maximize your contributions by the end of the year. On the other hand, there might be more participants in the Roth TSP program if you only need to elect a percentage of your pay, rather than chose a dollar amount.
This is a great opportunity to start investing in the Roth TSP if you haven’t already. Or, if you are investing in the traditional TSP, this could be a great time to switch to the Roth option, which is better for military personnel in most cases.
The email reads:
I would like to take this opportunity to advise you of an upcoming change to the ROTH Thrift Savings Program (TSP) that will require your involvement to allow your investment to continue without interruption.
Beginning February 2015, the Defense Finance and Accounting Service (DFAS) will implement capabilities that enable DoD to comply with Roth TSP requirements. In order to implement the changes, we will need you to submit new contribution elections.
Your current Roth TSP deductions will stop on January 31, 2015. If you want to continue contributing to Roth TSP after January 31, 2015, you will need to submit new elections as percentages of basic pay, special and incentive pay, and bonuses. Beginning January 1, 2015, you will be able to use myPay or hardcopy forms to select your new elections. Your new elections must be received by January 31, 2015 to ensure no interruption to your investment plans is experienced.
You can expect to receive additional information on this effort during November and December. We will be updating www.dfas.mil with the needed worksheets and instructions to assist you in making the new elections. We will also be providing periodic reminders about updating your contribution elections.
My POC for this effort Matthew Seyler at [email protected]
Bruce N. Keith
Director, Military Pay
Enterprise Solutions and Standards
Our records show that you participate in Roth TSP. If you wish to continue those contributions, you must submit a new Roth TSP election on myPay or submit a TSP election form to your finance office during the time period January 1-31, 2015. Otherwise, your Roth TSP contributions will stop after January 2015.
This requirement is due to pay system improvements that will more fully automate processing and provide better customer service to you.
Elections for Roth contributions for February 2015 will be accepted January 1 to 31, 2015. You may enroll online with myPay or submit the revised paper election form, TSP-U-1 to your finance office. The revised TSP-U-1 (1/2015) will be available on www.tsp.gov on January 1st.
More information as well as worksheets to help you calculate your contribution will be available on www.dfas.mil in early December. We'll remind you again of these changes in the coming months to make sure your financial plans continue.
Thank you for your attention. It's always a privilege to serve you.
My POC for this effort is Matthew Seyler at [email protected].
Bruce N. Keith
Director, ESS Military Pay