Although military members often earn lower incomes than their civilian colleagues, it does not exclude them from having the opportunity to save for the future. The military did not give a 401k level. Instead, it has a special savings program called the Savings Plan that basically works in the same way.
TSP has many of the same functions as 401k, such as matching employers and automatic, pre-tax payroll deductions. TSP contribution income is also not taxable. Military members who retire or separated and then participate in Federal service can automatically transfer TSP contributions. Withdrawals without penalty may occur at age 65 and a half.
Military members can contribute between 1% and 100% of their income, according to TSP.gov. However, contribution limits vary annually by internal revenue code. The 2010 limit was $16,500. The U.S. government will match the dollar to the first 3 percent of member contributions. For the next 2 percent of contributions, the government will support 50 cents per dollar. It is possible to make contributions to traditional 401k packages before performing military service.
Lifecycle Fund (L) is a type of TSP investment fund. L funds that target investments among all types of TSP funds may have the most favorable maturity period at a target date. This allows military members to invest according to their expected withdrawal date, usually at retirement age. For example, there are L funds for 2010, 2020, 2030, and 2040. A 35-year-old serviceman in 2010 may consider investing strongly in the L2040 fund.
Fund G is a government securities fund that offers small returns but is guaranteed never to be negative. However, low risk also means low traditional profits. Fund G makes a profit from Treasury securities specially issued to TSP. Monthly reset interest rate.
Other personal funds
Some individual funds are also available with TSP. Fund F is a fixed income investment based on the Total Amount of Barclays Capital U.S. Fund C represents Ordinary Stock Funds under the Standard and Poor’s 500 index. Small-Cap Stocks (S funds) track non-fund C small and medium-sized stocks, while the International Securities Index Investment Fund (Fund I) is conducted using shares in the Morgan Stanley Capital International Index.