Thrift Savings Plan to Offer New Roth Option

By Karen Parrish

American Forces Press Service

WASHINGTON, April 13, 2012 – Service members and Defense Department civilian employees who are eligible for the Thrift Savings Plan will soon have a new Roth option for retirement savings under the program, defense finance officials announced today.

The change will allow participants to contribute after-tax dollars to the federal government-sponsored retirement savings and investment plan, according to a Defense Finance and Accounting Service statement released today.

As with traditional and Roth individual retirement accounts, the TSP’s two options will now allow plan participants to invest either before- or after-tax dollars, although limits on annual contributions, catch-up contributions and agency matching funds will remain the same, officials said.

The plan, which is similar to a 401(k), is open to federal civilian employees and military members. For 2012, the maximum contribution is set at $17,000. Catch-up contributions, available to participants 50 or older, are capped at $5,500 over the standard limit.

Only civilian employees are eligible for agency matching contributions.  All eligible civilian employees receive one percent in agency matching funds. Eligible plan participants receive a dollar-for-dollar agency matching contribution for the first three percent of pay they contribute, and 50 cents on the dollar for contributions of between three and five percent. Contributions above 5 percent of pay are not matched.

The current plan treats all contributions as pre-tax dollars – participants do not pay taxes on pay they put into the plan, but will pay deferred taxes when they receive those funds in retirement.

The new Roth option will allow contributions that are taxed in the year they are made, but will be tax-free in retirement, TSP officials said.

Greg T. Long, TSP executive director, urged in a letter to participants that they carefully consider whether Roth TSP would be to their advantage.

“As with all tax matters, you should seek the advice of a qualified tax or financial advisor for information pertaining to your specific tax situation,” Long wrote.

He added the plan’s website will soon offer a Roth calculator, and other website content including forms and publications will be updated in May to include information about the Roth feature. 

Defense finance officials said the Roth option will be available on a phased basis by military service from June to October. Officials said the schedule will allow service finance employees to complete and thoroughly test the complex changes needed to the various payroll systems.  

Defense finance officials said more specific deployment dates on Roth TSP elections will soon be available on www.dfas.mil.

Officials said service members and their families may contact Military OneSource at 800-342-9647 to schedule an appointment with a financial consultant.

Latest Survey Shows NEX Customers Continue to Save Money

By Kristine M. Sturkie, Navy Exchange Service Command Public Affairs

VIRGINIA BEACH, Va. (NNS) -- The Navy Exchange Service Command (NEXCOM) received the results of its annual market basket survey Jan. 13.

The latest results show customers continue to save an average of 22 percent below civilian retail prices, not including sales tax, when they shop at their NEX.

"We hire an outside company, RetailData, to do a price survey in different areas of the United States to obtain an average percentage number for how much our customers save when they shop at a NEX," said Tess Paquette, NEXCOM senior vice president, chief merchandising officer. "Once again, the NEX has verified we save our customers money. We are excited that we were able to maintain this 22 percent savings for our customers, especially during these tough economic times."

To determine the percentage of savings, the same products were surveyed from region to region. The items included major appliances, consumer electronics, furniture, clothing, housewares, sporting goods and more. The different stores shopped for comparison prices included discount stores, mass merchants, full-line department stores and category-killer stores.

The survey compared prices on approximately 350 branded items in the NEX inventory against major retailers across the continental United States and Hawaii. The survey proved NEX customers saved 10.87 percent over WalMart; 35.72 percent over J.C. Penney; 25.93 percent over Dick's Sporting Goods; 32.08 percent over 7 Eleven; and 25.26 percent over Office Max.

Departments with some of the highest savings were domestics at 45.10 percent; stationary at 40.77 percent; boys clothing at 37.07 percent; girls clothing at 23.36 percent; infant clothing at 31.12 percent; men's clothing at 30.13 percent; and sporting goods at 26.76 percent.

The survey also determined customer savings in each of the eight different areas of the country surveyed:

- Pearl Harbor, Hawaii, save 26.41 percent;

- Everett, Wash., save 22.87; percent

- Great Lakes, Ill., save 22.64 percent;

- Bethesda, Md., save 22.10 percent;

- San Diego, Calif., save 21.84 percent;

- Jacksonville, Fla., save 20.95 percent;

- Norfolk, Va., save 20.31 percent

- Pensacola, Fla., save 19.96 percent.

"Offering our customers savings every day reinforces our NEX brand and the benefit of shopping the NEX," said Paquette. "We want NEX customers to be confident they can save money every day when they shop the NEX, not just for sale items. Our mission is to provide quality goods and savings, and to support Navy quality of life programs. That is what we do and the reason we exist."

For more news from Navy Exchange Service Command, visit www.navy.mil/local/nexcom/.

New Rule Limits 'Predatory' Loans to Servicemembers

By Sgt. Sara Wood, USA
American Forces Press Service

Sept. 28, 2007 - The Defense Department is instituting new protections that will help defend servicemembers against high-interest emergency loans that can lead to a dangerous cycle of debt. A new regulation included in the 2007 National Defense Authorization Act limits the annual percentage rate on payday loans, vehicle title loans and tax refund anticipation loans to 36 percent for active-duty servicemembers and their families. The change takes effect Oct. 1.

This is a big change, as the interest rates on these "predatory" loans can run as high as several hundred percent, said David S.C. Chu, undersecretary of defense for personnel and readiness. Troops and their families have often fallen victim to these loans when they come up short between paychecks, and they can lead to serious problems, he said.

"It's a big problem for commanders, because what happens is often these households get themselves in over their heads," Chu said. "They're $200 short between now and next payday, but they're no better off when payday comes, so they need a bigger loan, and it just goes downhill from there."

The 36 percent limit in the regulation includes all fees and charges, and the rule prohibits contracts requiring the use of a check or access to a bank account, mandatory arbitration and unreasonable legal notice, Chu said. The regulation makes it a criminal offense for lenders to knowingly charge a higher interest rate to servicemembers, so it is essential that military members be honest about their status when applying for loans, he said.

"One of the things that we're a little worried about is people may be tempted, in order to get this old product that is now off limits, to answer this question in a non-factual way," Chu said. "They need to be honest."

It is the states' responsibility to enforce the regulation, Chu said, and already 27 states have stepped forward and agreed to enforce restrictions on the financial institutions. The department has received the assurance of federal regulators that they will oversee the institutions they regulate, he said.

In addition to implementing this new regulation, the Defense Department also is stepping up efforts to educate servicemembers about financial planning and where to go for help in an emergency, Chu said. Many times, servicemembers can go to their bank or credit union directly and ask what loan products they have available, he said, or they can go to their military aid societies or the family community support centers.

In addition, most institutions that troops would owe money to, including the Internal Revenue Service, often are willing to work with clients to defer payments. Servicemembers also can go to the online resources Military OneSource and Military Homefront for information on financial planning.

"The first defense here ... is good education for our people so they understand better how to manage their finances wisely, so they don't get themselves in trouble and so they don't come up short at the end of the month or the end of the pay period," Chu said. "But if they do, they know where to turn and how to get help."

This regulation is important because financial readiness directly affects mission readiness for military members, Chu said. If a troop is worried about an unpaid credit card bill, a needed car repair, or any other financial crisis, he won't be able to focus on the mission. Chu said commanding officers from around the military have applauded the Defense Department's efforts in this arena, because individual financial problems often cause unit readiness problems.

"As commanders, even at the division level, they are dealing with the fallout among their people from these kinds of payday loans," Chu said. "They want to get this problem off the screen; they want to solve the problem too. I think we have a whole community that's ready to move forward."

The Federal Deposit Insurance Corporation, which guarantees deposits by commercial banks, has agreed to work with the Defense Department on this regulation, because it is a chance to promote emergency small loans for servicemembers, as well as other citizens in the United States, Chu said.

"We are perhaps at the leading edge of a national movement, trying to put better financial management on everyone's screen, military and civilian, and of course ultimately, that is the goal -- that our people are better equipped to deal with financial issues," he said.

'EagleCash' Helps OIF-Deployed Troops Manage Money

By Gerry J. Gilmore
American Forces Press Service

July 24, 2007 - Thousands of servicemembers deployed overseas in support of Operation Iraqi Freedom have found it easy and convenient to use "EagleCash" cards when making financial transactions, officials said. Also known as stored-value cards, EagleCash cards are issued at no charge to servicemembers before deployment for use at overseas military exchange stores, postal facilities and vendor concessions, officials said. The cards are electronically-linked to users' stateside banking accounts.

"The EagleCash card is better than cash," Army Col. Stephen J. Riviere, commander of the 13th Finance Group, said in a recent news release. The Army is encouraging Middle East-deployed soldiers to use EagleCash, since use of the card precludes their not having to wait in long lines to cash their paper paychecks.

EagleCash recently celebrated its one-year anniversary in the Operation Iraqi Freedom theater-of-operations. More than 300,000 EagleCash transactions have been made in the past 12 months.

EagleCash is a cooperative effort between the U.S. Army's Finance Command and the U.S. Department of the Treasury's financial management service. Officials said use of the cards reduces the amount of U.S. currency in circulation overseas and also cuts the number of military financial specialists deployed in theater. This frees up servicemembers for other duties.

Card users can access specially-equipped kiosks to check their balances, transfer funds or access cash.

There are now more than 100 EagleCash kiosks and 1,200 sales transaction points across Multinational Corps Iraq's area-of-operations, Army Lt. Gen. Raymond T. Odierno stated in a recent announcement to MNC-I troops.

Odierno requested that servicemembers, government civilians and contractors assigned to his command who use Army finance office services obtain EagleCash cards by August 1.

Thanks to EagleCash, "the military finance office is no longer the only location where individuals can access their funds to meet their financial needs," Odierno said.

"I ask leaders at every level to ensure our servicemembers and civilians are properly educated on all the benefits and capabilities of the EagleCash SVC program," he said.

Fort Dix Hosts Servicemembers' Financial Planning Seminar

By Gerry J. Gilmore
American Forces Press Service

Jan. 31, 2007 – More than 400 servicemembers learned how they can eliminate their debts and achieve financial security at a free Defense Department-sponsored seminar held here today. The Defense Department has initiated a program called "Military Saves" to change the culture within the military so that servicemembers better manage their money, Brenda McDaniel, DoD project officer for financial management seminars, said at the day-long event at the Timmermann Conference Center.

Military readiness is greatly enhanced if servicemembers aren't distracted by financial problems, McDaniel explained. DoD is kicking off the new, ongoing program during "Military Saves Week," observed Feb. 25-March 4.

The Fort Dix event featured a seminar by financial management expert Kelvin Boston, host of the PBS television series, "Moneywise." Boston provided credit management and savings tips, as well as investment advice.

Boston said anyone concerned with achieving financial security should save something from each paycheck, eschew hefty credit card bills and avoid costly unnecessary purchases.

"You should save your credit for big-ticket items," Boston said, such as when purchasing a car or a home.

It was Boston's second such seminar conducted for the military out of a series of five planned at different installations. In September, Boston conducted his first seminar for servicemembers and their families at Walter Reed Army Medical Center, Washington, D.C.

"Money Wise in the Military" and 'Military Saves' are vital parts of DoD's overall financial readiness campaign, McDaniel pointed out.

"Military Saves" is a component of "America Saves," a nationwide campaign in which nonprofit, corporate and government groups assist individuals and families save and build wealth.

"Military Saves" campaign director Sarah Shirley met with soldiers, sailors and airmen and provided planning worksheets for savings and debt-reduction. "Military Saves" is co-sponsored by the Consumer Federation of America, she explained, noting the initiative partners with about 30 other consumer-assistance organizations.

"Military Saves" recommends that servicemembers save between $500 and $1,000 monthly in an emergency savings account and pay off their credit card and other debt, Shirley said.

"We can change our environment so that it becomes totally cool to have money in the bank," Shirley declared.

The event also featured consumer information booths and additional seminars about credit reports, fraudulent and predatory lending practices, bankruptcy, personal financial planning, savings accounts, investments, home ownership and other topics.

Army Reserve Staff Sgt. Denise James, 35, said she plans to buy a home in the future. Boston's presentation was very informative, James noted.

"It encouraged me to save more money than I am presently," she said. "Your credit (rating) is very important, so you have to stay on top of your spending."

Navy Seaman Craig Charbonneau, 21, from the Naval Air and Engineering Station at Lakehurst, N.J., also appreciated the seminar.

"It motivated me to save some money," Charbonneau said.

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