One of the best ways to save up for retirement is by investing in the stock market. In fact, the S&P 500 is up nearly 92% over the past five years.
There are many different ways to invest in stocks. Some people trade individual stocks while others rely on the performance of mutual funds. For military members and government civilians, the Thrift Savings Plan (TSP) provides an attractive investment option.
Read on to learn all about the military Thrift Savings Plan. Explore why the TSP is a valuable part of the military benefits program.
What Is the TSP?
Before diving into TSP updates, it is important to describe what the plan is about. TSP is a savings plan structured similarly to a 401k.
Instead of being administered by a private and profitable company, TSP is managed by a government agency. The agency is called the Federal Retirement Thrift Investment Board.
The TSP provides service members with a mechanism to save money. All military branches are eligible to participate in the TSP and take advantage of its many benefits.
The TSP offers different funds that you can allocate your contributions to. How your savings plan grows depends on the performance of each individual fund.
For example, there is C-fund is pegged to the performance of the S&P 500. The I-fund is pegged to a Morgan Stanley Capital fund that is derived from international stocks.
What Are the TSP Updates for 2022?
There are a number of major changes for the TSP in 2022. For instance, there is a new annual contribution limit imposed by the Internal Revenue Service (IRS). Now, the annual limit is up to $20,500.
It is important to keep this limit in mind. If you exceed the IRS-imposed limit, the Department of Defense is going to stop matching your contributions up to 5%.
Another change is the launch of a new TSP mobile app. This is a great way for users to make quick changes to their TSP allocations. You can perform an interfund transfer at a moment’s notice.
The brains behind the TSP also made it easier to communicate and resolve issues. There is now a virtual chat feature that sets you up with an assistant.
Another interesting update is the availability of a new mutual fund. Dating back to 2009, Congress authorized the use of mutual funds in the TSP. However, their availability as an investment option has been limited due to regulatory hurdles.
To invest in TSP mutual funds, account holders need more than $40,000 in savings. The minimum initial transfer is $10,000. At the same time, you cannot allocate more than 25% of your portfolio to mutual funds.
Summarizing the Military Thrift Savings Plan
When people ask why join the military, benefits are one of the most frequently cited reasons. Service members love the health insurance, pension plans, and access to the TSP.
There are exciting new updates to the TSP in 2022. You can now use the mobile app to check your account status on the go. If you need help with the military Thrift Savings Plan, visit Military OneSource, where you can connect with an official financial counselor.