Readers of Tom Philpott’s Military Update column sound off.

Military Savers Should Consider Roth IRA Over TSP 

I do not agree with statements made by Gregory T. Long, executive director of the Federal Retirement Thrift Investment Board, concerning the use of the Thrift Savings Plan by soldiers, fine sailors, airmen and Marines.

Since there are no matching funds put into the accounts by the government, as it does for federal civilian employees, most of our brave soldiers would be far better off investing in a Roth IRA. Unless you are a very senior NCO or senior officer, the reason is this: taxes.

When you are “growing” your TSP, you will have to pay taxes on
what you take out. You are “growing” tax revenue for the government as
well as yourself until retirement!  With a Roth IRA you are taking after-tax income and putting it to work and you will never pay tax on it again! Never, nada, not!  And at some later date you can even take out the money to buy a first home under certain rules.

I advise service members to check out the benefits of a Roth, and of the TSP, and make their own decision.

BOB KRAMER
Pirmasens, Germany

The Thrift Investment Board last year studied the idea of asking Congress to allow a Roth IRA option within the TSP program. Saver surveys showed that a Roth would be particularly popular with younger military members.

In the end, the board elected to wait at least a few more years before recommending the change.

“We need a couple years of experiencing the marketplace to see how well Roth is adopted in the private sector before we go spend a boatload of money on building it in the TSP,” Long said. “I need to know that, if we spend upwards of $10 million on building a Roth capability, I’m going to get more than two percent [of TSP savers] using it.”

But Long believes a will Roth IRA option will appeal to “people on both ends of the income spectrum.”

“If you’re not making much money, which unfortunately most people who wear the uniform don’t, then you pay very little federal tax anyways. So the tax deferral from a 401(k) contribution is less valuable to them then to somebody who makes $75,000 a year,” Long said.

But federal judges also are “screaming” for a Roth option, Long said.  That’s because their incomes often don’t fall when they retire, so the advantage of having a 401(k) plan because you can withdraw funds in retirement at a lower tax rate, doesn’t hold.

“Even for people at the highest end of income, the Roth makes sense,” Long said.  So someday they might be available to TSP savers. – Tom Philpott

I’m in the Texas Army National Guard and participate in the Thrift Savings Plan program. I think it’s ten times better than 401(k) plans. More soldiers would participate, however, if our contributions were matched by the government.

I still contribute because I see the difference in my 401(k) and the TSP. My 401(k) has employer matching and I still have more money in my TSP account, which I've had for one year, than I do in my 401(k) which I’ve had for two years.

I’m thankful for this great opportunity.

SAMETRIUS THOMAS
Via e-mail  

RETIRED PAY DIFFERENCES

When considering retired pay differences tied to basic pay at year of retirement, don't forget those World War II and Korean War retirees never received promised free lifetime medical benefits.  The legal challenge went all the way to the Supreme Court.  The court decided it was for the legislature to fix.

Our generation of retirees received a pittance for active duty wages.  We also are the ones paying Survivor Benefit Plan premiums six years longer than anyone else.

I have written dozens of letters to senators and representatives, and was a part of the Class Act lawsuit led by retired Air Force Col. Bud Day.   If it had not been for the war with Iraq, the military still would be considered unimportant, and the government still would be claiming they were never promised benefits. I do not approve of this war but it did bring attention to some injustices.  

HELEN TUCKER
Fayetteville, N. C.

Take Action: Tell your public officials how you feel about this issue.

WARRANT ANNUITIES

I retired as an Army warrant officer in April 1977. I would like to see my retired pay raised to equal that of a warrant officer retiring in 2008. After all, I am buying goods and paying the same prices as he or she is paying.

WAYNE HASTY
Via e-mail

You don’t provide your precise rank at retirement or the number of years served. However, to make a pay comparison based on warrant officer year groups, I’ll assume you retired as a W-3 with 24 years of active duty.

If that were true, your monthly gross retired pay today would be about $2091. Your counterpart retiring this year, in the same pay grade with the same number of years served, will receive $2814 a month. The difference is that warrant pay raises, particularly in recent years with special targeted raises to warrant ranks to smooth out the basic pay table, have outpaced retiree cost of living adjustments which are tied to inflation. – Tom Philpott  

I firmly believe that anyone with the same rank and years of service should be receiving the same monthly retirement pay, regardless of the year they retired.  There should be a pay scale chart for retirees that would work the same as the one for active duty members.

CATHY BENNETT
Via e-mail

Letters may be edited for clarity or length.  Write to Military Forum, P.O. Box 231111, Centreville, VA  20120-1111, send e-mail to militaryforum@aol.com or visit www.militaryupdate.com.