Investing while at the Academy / Thrift Savings Plan TSP Question

[KiloCharlieKilo]

I have read that cadets are not allowed to participate in and make contributions to the Thrift Savings Plan (TSP) while at a service academy.
Is this correct?
If so, does anyone know the reason for the prohibition?
Thank you.

 

[Stealth_81]

Cadets are not eligible to participate in the Thrift Saving Plan (TSP). 37 USC 211 allows members to participate in TSP IAW 5 USC 8440e. In 5 USC 8440e, members of the uniformed services may participate in TSP when “base pay” is payable under 37 USC 204. Cadets receive “base pay” under 37 USC 203 and therefore ineligible to participate in TSP. When cadets are commissioned they may participate in TSP.

Frequently Asked Questions

Effectively communicate and support this new chapter of your cadet’s life! Here are the frequently asked questions (FAQ) from parents.

www.usafa.edu

Stealth_81

 

[AA787DRIVER]

Gift your kid the $6,000 to max out their ROTH IRA. They have the earned income to allow a full contribution to the ROTH.

 

[KiloCharlieKilo]

Great replies! I'm much obliged and very thankful for the answers. Thanks so much.

 

[Peter2025]

Gift your kid the $6,000 to max out their ROTH IRA. They have the earned income to allow a full contribution to the ROTH.

Or teach your kid to save/invest their own money...

 

[Falcon74]

Even if you could invest in the TSP as a Cadet, why would one want to given the Roth alternative? The Roth alternative effectively takes the same money and makes it tax free (unlike the TSP investment) for the rest of the Cadet's life. To clarify, Cadets essentially pay no taxes because their income is so low. Therefore, making the Roth investment takes money (taxes paid and due of $0) and places that money in an account that will never generate taxes unless Congress changes the law.

 

[AFrpaso]

Roth TSP is a thing.

 

[Capt MJ]

Roth TSP came into being some years back.

https://www.tsp.gov/making-contributions/traditional-and-roth-contributions/

 

[AA787DRIVER]

Take the 401K to the match, max out the Roth, then back to the 401K to max then start looking for other places to save. My kids get my money once I drop, why not save as much taxes as you can, I already have been taxed on my income once. Smart Estate Planning is a great way to help future generations.