When you are enlisting in the Military one of the Benefits that you have available to you is a retirement supportive government savings plan. This plan is called the Thrift Savings plan, and it is one that is specifically designed for Servicemembers to use and benefit from. Congress and the United States Government created it for members of the Armed Forces of the United States. The TSP program has several million investors, and is a strong government insured type of savings program that can be very lucrative to participate in. As of the month of July 2007, the Federal Thrift Savings plan had over 224 billion dollars in assets with nearly 3.77 million individual and group investors.
The Thrift Savings Plan is a contribution defined plan that is ran by the Federal Retirement Thrift Investment Board. The actual operation of the TSP plan is much like the civilian 401 (k) type retirement savings plan. The actual benefits for the investor from the Thrift Savings plan depends on how much the individual devotes of their paycheck or income, and how much of that amount is matched by the agency or service that the individual belongs to.
The nice part about the Thrift Savings Plan is the military service or the Federal Government will make matching and automatic type contributions to the individualâ€™s savings plan based on the rules and the amount of the employee contribution. The more that the individual contributes, up to a certain level, the greater is the contribution of the government toward the individuals savings account. The amount that is the maximum is not limited by the TSP or your service, but rather by the IRS. You can contribute any amount of your basic pay to the TSP, and it has tax-deferred advantages to it. But the IRS caps the amount that is available to receive matching funds at 5%.
The bank handles the record keeping for the TSP or savings institution that your Thrift Savings plan is kept with. You do not have to worry about any of the record keeping; it is all done for you. The Thrift Savings plan is a great way to save for retirement, and the savings account is tax deferred, when you retire you will likely move into a different, normally lower tax bracket, and it is when you retire and begin to receive benefits from the TSP that you will have to pay taxes on the account not before.