DoD civilians, others can now make Roth TSP contributions

Friday - 6/29/2012, 9:05pm EDT

After a two-month delay, all civilian employees at the Defense Department, as well as several other agencies, are now able to contribute to the recently rolled-out Roth option for their Thrift Savings Plans. This went into effect on July 1.

The Roth TSP allows federal employees to invest after-tax wages toward their retirement-savings accounts. Under the traditional TSP, feds invest tax-deferred dollars into their accounts, meaning the money isn't taxed until it's withdrawn.

DoD civilians have been able to set up Roth and make elections to the new system since June 24, when DoD's Employee Benefits Information System (EBIS) was fully updated to allow the Roth designations, a DoD spokeswoman told Federal News Radio.

However, the Defense Finance and Accounting Service, one of the largest federal payroll processors, will not begin processing those transactions until July 1.

Beginning then, DFAS, which acts a payroll processor for several civilian agencies too, will also begin processing contributions for civilian employees at Veterans Affairs, Health and Human Services, the Executive Office of the President, the Environmental Protection Agency and the Broadcasting Board of Governors.

The Federal Retirement Thrift Investment Board launched the Roth option May 7. DFAS needed more time to upgrade its system in preparation for the Roth option. The service has been phasing in implementation since then, starting with the Marine Corps in June.

Army, Navy and Air Force military members will have to wait until October to have their Roth contributions processed by DFAS.

The Air Force Personnel Center issued a release June 25, alerting civilian employees they could begin making elections, ahead of the official July launch. The elections, which will not become effective until July, will be reflected on employees' July 20 leave and earnings statements, according to the statement.

The TSP board has been planning for the Roth since it was authorized in June 2009. Account-holders are able to invest in both the traditional TSP as well as the Roth option, but the combined contributions cannot exceed annual limits — $17,000 for 2012. Agency matching contributions, however, will funnel solely into employees' traditional TSP accounts.

More Roth TSP resources

5 things feds should know about Roth TSP

DFAS schedule of Roth TSP rollout

TSP.gov's "Introducing Roth"

More TSP news