P 221840Z MAY 12
FM DFAS CLEVELAND OH
TO AIG 4730
AIG 4676
AIG 4678
SUBJ/IMPLEMENTATION OF THE ROTH THRIFT SAVINGS PLAN (TSP) FEATURE//
MILITARY PAY ADVISORY 19/12//
REF/A/TSP ENHANCEMENT ACT OF 2009/JUNE 22, 2009//
REF/B/WEBSITE/WWW.TSP.GOV//
REF/C/DOC/TSP BULLETIN 11-U-8// 
NARR/REF A IS THE TSP ENHANCEMENT ACT AUTHORIZING THE TSP ROTH 
FEATURE. REF B IS THE OFFICIAL TSP WEBSITE. REF C IS THE REVISION 
TO IMPLEMENTATION OF THRIFT SAVINGS PLAN ROTH CONTRIBUTIONS//
POC/BARBARA BLOCK/CODE JFLQ/TEL:216-204-4308//
RMKS/1. THIS MILITARY PAY ADVISORY IS BEING ISSUED TO EXPLAIN 
THE NEW TSP ROTH FEATURE AND DATE OF IMPLEMENTATION. 
2. OVERVIEW. AS INDICATED IN REF A, TSP WILL BEGIN OFFERING 
UNIFORMED SERVICE MEMBER’S THE OPTION TO MAKE AN ELECTION FOR 
ROTH TSP. 
3. DUE TO DJMS PAY SYSTEM CONSTRAINTS THE ROTH TSP OPTION WILL 
NOT BE AVAILABLE UNTIL OCTOBER 1, 2012. ROTH CATCH-UP WILL NOT 
BE AVAILABLE AT THAT TIME. SPECIFICATIONS FOR INPUT WILL BE 
RELEASED AS SOON AS THEY BECOME AVAILABLE. 
4. ROTH CONTRIBUTION DEFINITIONS.
A. TRADITIONAL TSP REFERS TO TAX-DEFERRED AND TAX-EXEMPT 
CONTRIBUTIONS.
B. ROTH CONTRIBUTIONS REFERS TO CONTRIBUTIONS WHICH ARE MADE ON AN 
AFTER-TAX OR CZTE BASIS. ROTH CONTRIBUTIONS ARE MAINTAINED AS A 
SEPARATE BALANCE WITHIN THE MEMBER’S TSP ACCOUNT. ROTH CONTRIBUTIONS 
DEDUCTED FROM PAY SUBJECT TO THE CZTE ARE SUBMITTED ON THE SAME ROTH 
TSP RECORDS AND THEREFORE ARE COMBINED WITH ROTH CONTRIBUTIONS 
DEDUCTED ON AN AFTER-TAX BASIS IN THE MEMBER’S ROTH BALANCE.
C. TAX-EXEMPT CONTRIBUTIONS ARE TRADITIONAL CONTRIBUTIONS FROM PAY
SUBJECT TO CZTE.
D. RECHARACTERIZATION REFERS TO THE PROCESS OF MOVING CONTRIBUTIONS 
THAT WERE SUBMITTED AS TRADITIONAL (TAX DEFERRED) TO TRADITIONAL 
(TAX-EXEMPT) AND VISA VERSA. THE PROCESS DOES NOT APPLY TO ROTH 
CONTRIBUTIONS AND WILL REMAIN UNCHANGED UPON IMPLEMENTATION OF ROTH 
TSP.
E. REDESIGNATION REFERS TO THE PROCESS OF MOVING CONTRIBUTIONS WHICH
WERE ERRONEOUSLY SUBMITTED (DUE TO SERVICE ERROR) AS TRADITIONAL TO
THE ROTH BALANCE OR VISA VERSA.
F. QUALIFIED DISTRIBUTIONS REFERS TO THE TWO REQUIREMENTS FOR
TAX-FREE WITHDRAWALS OF ROTH EARNINGS. IN ORDER FOR THE EARNINGS
COMPONENT OF A ROTH DISTRIBUTION TO BE TAX-FREE, THE WITHDRAWAL MUST
BE MADE AFTER THE END OF THE 5TH CALENDAR YEAR IN WHICH THE FIRST
ROTH CONTRIBUTION WAS MADE TO THE ACCOUNT AND AFTER ATTAINMENT OF
AGE 59 ½, DEATH, OR DISABILITY. THE TSP MAINTAINS THE START DATE FOR
THE PERIOD AND DETERMINES WHETHER A WITHDRAWAL IS A QUALIFIED 
DISTRIBUTION.
5. ROTH CONTRIBUTION RULES.
A. ROTH CONTRIBUTIONS ARE MADE ON AN AFTER-TAX OR CZTE BASIS FROM
BASIC PAY, INCENTIVE PAY, SPECIAL PAY AND BONUS PAY. THE CURRENT 
RULE THAT THE MEMBER MUST ELECT TO CONTRIBUTE FROM BASIC PAY
(WHETHER THE ELECTION IS MADE AS A TRADITIONAL OR ROTH CONTRIBUTION)
IN ORDER TO ALSO ELECT AND CONTRIBUTE FROM THE OTHER FORMS OF PAY
HAS NOT CHANGED.
B. TRADITIONAL CONTRIBUTIONS WILL BE DEDUCTED BEFORE ROTH 
CONTRIBUTIONS. 
C. ROTH CONTRIBUTIONS MAY BE MADE IN ADDITION TO, OR IN LIEU OF
TRADITIONAL CONTRIBUTIONS.
D. ROTH CONTRIBUTIONS ARE SUBJECT TO THE ELECTIVE DEFERRED LIMIT
(CURRENTLY 17000.00 FOR TAX YEAR 2012) EVEN IF THEY ARE CONTRIBUTED
FROM PAY SUBJECT TO CZTE. ALL ROTH CONTRIBUTIONS MUST BE COMBINED
WITH ANY TRADITIONAL TAX-DEFERRED CONTRIBUTIONS IN DETERMINING
WHETHER THIS LIMIT HAS BEEN MET.  ROTH CONTRIBUTIONS MUST ALSO BE
COMBINED WITH TRADITIONAL TAX-DEFERRED AND TAX-EXEMPT CONTRIBUTIONS
FOR THE PURPOSE OF THE ANNUAL 415(c) LIMIT (CURRENTLY 50,000.00 FOR 
TAX YEAR 2012).
E. FINANCIAL HARDSHIP NON-CONTRIBUTION PERIOD HAS BEEN EXPANDED TO
INCLUDE ROTH CONTRIBUTIONS. THEREFORE IF THE PARTICIPANT TAKES A
FINANCIAL HARDSHIP WITHDRAWAL, ALL TRADITIONAL, ROTH, AND CATCH-UP
CONTRIBUTIONS MUST BE TERMINATED FOR THE 6 MONTH NON-CONTRIBUTION
PERIOD. ONCE THE NON-CONTRIBUTION PERIOD HAS ENDED THE PARTICIPANT
WILL HAVE TO ELECT TO CONTRIBUTE AGAIN.
F. THE TSP PROCESSING RULES ARE THE SAME AS FOR THE TRADITIONAL
CONTRIBUTIONS.  ONE NEW FUNCTION IS THE REDESIGNATION RECORD. THIS
ALLOWS PAYROLL OFFICES TO REDESIGNATE ROTH CONTRIBUTIONS TO
TRADITIONAL CONTRIBUTIONS WHEN, DUE TO A SERVICE ERROR 
CONTRIBUTIONS WERE DESIGNATED INCORRECTLY. MEMBERS CANNOT REQUEST
TO HAVE A CONTRIBUTION REDESIGNATED FOR ANY OTHER REASON. 
G. DETAILED INFORMATION ABOUT THE ROTH TSP RULES CAN BE FOUND IN 
REF C, AVAILABLE AT WWW.TSP.GOV. 
6. REQUEST WIDEST DISSEMINATION POSSIBLE.