1. When will the Thrift Savings Plan (TSP) start?
Before members of the uniformed services can participate in the TSP, the law requires the President to propose and Congress to enact legislation that would offset the offset tax revenue losses through 2009 caused by member participation in the TSP. DoD estimates that about $480 million in offsetting legislation must be enacted in order to let members participate in the TSP. Until offsetting legislation is enacted, uniformed members will not be able to participate in the TSP.

2. Who will be eligible?
All active duty members and Ready Reserve members in a pay status will be able to participate in TSP, if the appropriate offsets are enacted.

3. Is TSP a bank account or a mutual fund?
The current TSP for civilian employees of the Federal government includes three optional investment funds. Money may be divided among the three. One consists of special Government bonds, another a bond mutual fund, and the third is an index mutual fund that tracks the stock market S&P 500 index.

4. What interest is drawn on the TSP?
The TSP does not have a fixed interest rate. The TSP is a set of mutual funds that you may allocate money between. Over the past 10 years the funds have had the following returns: Government Securities Investment G Fund, 7.27 percent; Common Stock Index Investment C Fund earned, 19.13 percent; and Fixed Income Index Investment F Fund, 9.01 percent.

5. Is it similar to the Federal Employee Thrift Savings Plan?
Uniformed members will participate in the same TSP used by Federal civilian employees. Although many civilian employees receive a matching contribution from the government (because TSP is their retirement program), military members will usually not receive matching contributions.

6. How much may I put in my TSP?
You may put up to 5% of your basic pay and any amount of your special and incentive pays may also be deposited. Notice that this is basic pay only; allowances are not included. The total may not exceed the IRS limit, which will be $10,500 in 2000.

7. I'm in the Reserves. How much may I put in my TSP?
You may put up to 5% of your basic pay and any amount of your special and incentive pays may also be deposited. However, if you also have a 401k or 403b plan from your private-sector employer, the total of your TSP and 401k or 403b may not exceed the IRS limit, which is $10,500 in 2000.

8. Can I put my career retention bonus in the TSP?
As long as your total contributions for the year (to include contributions from your career retention bonus) don't exceed the $10,500 cap, you may deposit as much as you like of your bonus into the TSP.

9. Can I contribute to an Individual Retirement Account and the Thrift Savings Plan, in the same year?
Yes. Participation in a TSP does not affect your ability to contribute to an IRA.

10. Some critical career fields may get matching funds, how will that work?
The Secretaries of the military departments will be able to name the career fields that will receive matching funds. Members in those critical fields must agree to remain in that specialty for at least six years. If they do, the government will match their contributions up to 5% of basic pay. In other words, if you put in 5%, the government will put in another 5% -- for a total of 10% of basic pay throughout the commitment period.

11. Do I deposit money monthly or annually?
Money will be deposited through a payroll deduction each month.

12. Can I stop/start/change at any time?
Details are not finalized yet, but you will likely be limited to starting, stopping or changing (for example, redistributing your money among the different mutual funds) to "open seasons" once or twice a year.

13. When can I take it out, without penalty, before age 59 ½?
When you leave the Service, you may "roll" the account into an IRA (Individual Retirement Account) or other qualified retirement plan. Other than that, you can not withdraw it without paying taxes and penalties before age 59 ½. You may, however, borrow against your TSP accounts at very favorable rates. These loans may be used to pay for cars, purchase a home, or meet a personal need for extra cash.

14. Is there any impact on retirees? Can part of retired pay be put into TSP?
No, retired pay may not be put in TSP.