Don’t Ignore Retirement Planning

When facing a deployment, your immediate goal should be getting through the year of separation. It can be tempting not to look beyond the date when you’ll be back together as a family. But with a little planning, a deployment year can really pay off for your family’s financial future.

The Thrift Savings Plan is a retirement savings and investment plan offered by the U.S. Government. Participants can put part of their earnings into a retirement account, and can withdraw that money without penalty at age 59 1/2. Also, service members still in the military can take an interest-free USDA home loan  from their TSP before retirement.

The TSP offers enormous benefits to servicemembers who deploy,” says Michael Kothakota of Wolfbridge Financial. “Not only can they contribute to their retirement tax-deferred, but while they are deployed to a combat zone they can contribute money tax-exempt into a separate account.”

During a deployment, explains Kothakota, you can create two different accounts. One is a normal TSP account that is tax-deferred, meaning servicemembers don’t pay taxes on the money going in to the account now, but they will pay taxes on the money that comes out when they retire. The other is a separate, tax-free portion of the TSP. The money goes into the account tax-free, grows tax-free and when you withdraw it, it comes out tax-free.

Kothakota, who was an Infantryman in the Army, says if you’re deploying, you should see how much money you can put away during the year. “This is especially true for members of a Reserve component, who can use their deployment as an opportunity to enhance their nest egg.”

More information at the Thrift Savings Plan is available here.