MARINE CORPS AIR STATION IWAKUNI, Japan -- Individuals looking for another investment option for their future financial security will have until June 30 to take advantage of the Thrift Savings Plan.
The program that first became available to service members last October, recently reopened again for enrollment. If service members do not sign up now they will have to wait until November 15 for their next chance to enter the program.
The program is similar to other retirement savings plans in that the money invested is tax deferred and saves money in the long run.
"The TSP is a defined contribution plan," said Stephanie Sutton, financial fitness counselor. "What that means is it's a pre-tax program, so the maximum amount you can contribute is seven percent of your base pay, and that comes out before federal and state taxes are taken from your earnings."
This allows individuals to lose much less on taxes once they use the money for retirement.
"If your base pay is $1,000 and you want to contribute seven percent, they take out that $70 and you only pay taxes on $930 a month," said Sutton. "Then at the end of the year you're not going to pay income taxes on that as well. The implications are you are saving money on taxes now, and then when you are older and in a lower tax bracket, you pay fewer taxes."
Once someone enrolls in the program, there are varieties of places their money can go.
The TSP has five different funds that an individual can invest in. The first is the Government Securities Investment Fund, or G fund.
"The G fund is basically like a saving account," Sutton said. "It is federally insured and is no risk but has a lower return."
The next is the Federal Income Index Investment Fund, which is not federally insured so the risk is slightly higher, she added.
"The C fund, Common Stock Index Investment Fund, invests in the big stocks you see on Wall Street," Sutton said. "The Small Capitalization Stock Index Fund is a riskier type fund, but they are more trendier type of funds."
The final fund the TSP invests in is the International Stock Index Investment Fund. It invests in foreign markets, which can be volatile, Sutton noted.
Once the money is invested, individuals can manage and move their money using the Internet.
"It goes into a plan you can watch grow online," she said.
Although the program may seem like a good idea to many, it is only open to certain groups of individuals.
"The program is only for military members and civilian employees," Sutton explained. "A military member that is separating can still sign up, but once they separate they can no longer contribute to the program.
However, if someone separates from the military and takes a federal civilian job they can still maintain their account and continue to contribute.
All it takes is one form submitted to the Instillation Personnel Administration Center or an online application.
"It's very easy," said Lance Cpl. Vernell Schumaker, IPAC separations and retirements chief. "The paperwork will only take about five minutes to fill out."
For more information on the TSP contact the Personal Financial Management Office at 253-6352 or IPAC at 253-2323.