[Congressional Record (Bound Edition), Volume 154 (2008), Part 5] [Extensions of Remarks] [Page 6093] [From the U.S. Government Publishing Office, www.gpo.gov]INTRODUCTION OF THE ROTH TSP ACT OF 2008 ______ HON. THELMA D. DRAKE of virginia in the house of representatives Tuesday, April 15, 2008 Ms. DRAKE. Madam Speaker, today is tax day. This is a day when all Americans are reminded of the federal government's treatment of their hard-earned money, investments, and retirement savings. Our servicemembers in Iraq and Afghanistan think about these issues as well. I firmly believe it is time to improve the options at their disposal to secure a comfortable retirement after their service to our Nation. Currently, two common options available in the private sector used as retirement savings tools are the Individual Retirement Account (IRA) and a 401(k), which is an employer-sponsored retirement plan where the employer matches the employee's contributions up to a specified limit. Both can be structured as either a ``Traditional'' or ``Roth'' plan. Many are familiar with the Roth and Traditional IRA options as Roth IRAs have been around since 1998. However, a Roth 401(k) is a fairly new option that is similar to the Roth IRA in that it allows after-tax contributions to fund tax-free retirement income. The Roth 401(k) option was established as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and went into effect on January 1, 2006. The Pension Protection Act of 2006, signed into law by President Bush on August 17, 2006, makes the Roth 401(k) permanent, removing the December 31, 2010 expiration date that previously was in force. Traditional IRA and 401(k) plans are funded through tax-deferred contributions or ``before-tax'' contributions, which means the money contributed is taken out of a person's pay before Federal and, in almost all cases, state income taxes are withheld. Any earnings are also tax-deferred. This means that an individual does not pay income taxes on contributions and earnings in their IRA or 401(k) account until their money is withdrawn, usually at retirement. With a Roth plan, an individual does not receive the tax deduction for their contribution, but all the money in the account grows tax-free and can be withdrawn tax-free subject to certain criteria. For many, the Roth is the better deal. As such, more and more companies have started to offer Roth 401(k)s since they were allowed to start doing so two years ago, and many firms that don't yet provide this option are considering adding it in the future. However, in a glaring omission, this same option has not been extended to the federal Thrift Savings Plan (TSP), which is the federal government's in-house 401(k) retirement savings plan for the federal workforce and our men and women in uniform. That is why today I have introduced the Roth TSP Act of 2008. This bill will simply provide the same 401(k) options available in the private sector to participants in the TSP. Currently, there are 3.9 million account holders in the TSP. These include civilians who are employed by the U.S. Government and our military personnel. Our men and women in uniform and the federal workforce may find the option to structure their retirement plans as a Roth TSP to be a better deal. My legislation will place the same options available in the private sector at their disposal and provide another option when considering their long term financial and retirement planning. Allowing this option could provide greater growth potential and greater return on investment for their retirement savings than under the traditional TSP structure. Consider the potential benefit to our military. If military personnel serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all military pay received for military service in that month is excluded from their gross income. For commissioned officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received. With a Roth TSP, these individuals could earn this pay tax-free, grow their investment in their Roth TSP, and then withdraw it all tax-free after age 59\1/2\, having never been required to pay taxes on the invested money. The men and women of our military worry about consequences on a day- to-day basis that most Americans never even consider. The least we can do in return is provide our service members with choices and options that will allow them to plan for their future and help to ensure that they never have to worry about a secure retirement. ____________________