washingtonscene
On the other hand, congressional cut that number in half by June 2010
leaders have spent the past three years and to near zero by March 2011.
opposing fee hikes proposed by the Bush For servicemembers who were stop
administration. It would be awkward lossed in FY 2009, DoD plans to pay a new
for them to do an about-face on that stop-loss special pay of $500 a month to
subject, but the nation shouldn’t under- help ease the effects of being involuntarily
estimate the pressures on a democratic extended on active duty.
Congress to support whatever budget The $500 monthly payments will be
initiatives end up being offered by a new paid retroactive to October 2008.
democratic president.
We might not get any further indica-
tion until the formal defense budget sub- Roth TSP in
mission to Congress, which is expected
around the fi rst of May. Troops’ Future?
As this article was being written, MOAA
Plan would give tax-free
was generating an e-mail campaign to urge
the secretary of Defense and the White
retirement income.
House not to resume the previous adminis-
tration’s efforts to raise TRICARE fees but
rather to work with MOAA and The Mili-
tary Coalition on alternative ways to reduce T
he Family Smoking Preven-
tion and Tobacco Control
Act (H.R. 1256) introduced
DoD health care costs without imposing un- by Rep. Henry Waxman (D-Calif.) in-
fair fees or reducing access for benefi ciaries. cludes a provision that would offer
currently serving servicemembers and
Stop Loss
federal civilians a “Roth” option under
the Thrift Savings Plan (TSP). MOAA
Stopping
long has supported establishing a Roth
option for the TSP.
New plan ends the practice
In contrast to the existing pretax TSP
by 2011.
option, Roth accounts would allow service-
members to save after-tax dollars and with-
draw that money tax-free in retirement.
I
n mid-March, DoD made public a The tax-free retirement income under
two-phase plan to end “stop loss” — the the Roth option can be particularly attrac-
practice of involuntarily retaining ser- tive for military people, because only part
vicemembers on active duty when their of their military pay is subject to taxes. It’s
unit is scheduled for deployment within six also attractive for young people who usu-
months, even if their service obligation will ally are in a lower tax bracket.
expire before the end of the deployment. Further, those who serve until retire-
Starting this fall, Army Reserve and ment and subsequently earn a retirement
National Guard units being mobilized from a second career can fi nd themselves
will not impose stop-loss rules on indi- with substantial taxable income when
vidual soldiers in those units. The same they fi nally retire from working.
policy change will be applied to active Roth plans have other advantages for
duty Army units deploying after the fi rst older people as well, because there are no
of the year. mandatory distributions at age 70½. This
Currently, 13,000 soldiers are affected means money in Roth accounts can be
by the stop-loss policy. DoD’s goal is to passed tax-free to heirs.
3 0 M I L I T A R Y O F F I C E R M AY 2 0 0 9
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