Washington – A former Navy pilot known as R-Va has left the military. Recently introduced legislation by Senator Jen Kigugan allows for the first time that 100% disabled veterans can contribute to military-sponsored retirement accounts, known as recycling savings plans.
This bill facilitates veterans in advancing financial options for retirees, enabling them to allocate portions of their monthly benefits from the Bureau of Veterans into savings plans established during their service.
Under this law, veterans are now able to maintain a savings plan, referred to as a TSP account, after departing from military service. However, they won’t be able to set aside additional income in their retirement account.
According to the federal government’s savings plan website, the TSP account provides a variety of investment options, which range from short-term U.S. Treasury securities to index funds made up of both domestic and international stocks.
The legislation allows qualified veterans to continue contributing to their savings plans using either their monthly retirement pension or disability payments. Generally, service members qualify for retirement and military pensions after 20 years of service.
“For those who have served 20 years and are rated 100% disabled, it’s only fair they can keep contributing to the savings plans they’ve built over time,” Kigugan commented. “They shouldn’t have to start from scratch when they’re already invested in something that works for them.”
Air Force veteran Robert Tizon expressed his regret for not contributing to a savings plan during his time in service. “Back then, the recycling savings plans were new, and I didn’t know much about them,” said Tizon, a retired Master Sergeant from Virginia who served for 25 years.
Tizon joined the military straight after high school and retired in 2013, having served tours in the Philippines and Iraq.
The Recycle Savings Plan was originally established in 1986 to help federal employees save for retirement. These Thrift Savings Plans are categorized as “Defined Contribution Plans,” meaning that individuals build up investments over time by contributing a portion of their earnings during their working years.
In 2001, lawmakers opened up access for service members to participate in the Thrift Savings Plan as a retirement tool.
Kigugan mentioned, “Currently, the federal law applies to TSP. As someone who was a Navy pilot for ten years from 1993, I understand the challenges our service members face when transitioning to civilian life.” He’s married to a retired naval fighter pilot, and they have a son training to become a pilot.
Tizon began contributing to a savings plan for his retirement once he joined the Department of Defense as a civilian post-military. “I wish I had started earlier,” he reflected.
Rep. Wesley Bell, who co-sponsored the bill, stated that veterans deserve the opportunity to use retirement plans to secure their futures. “Retired service members and disabled veterans are cut off from existing plans the moment they retire. The Forward Act aims to eliminate that barrier.”
The government’s contribution to the savings plan resembles a 401(k) structure, with automatic contributions and matching funds. However, the bill does not allow for consensus contributions from the military.
Although the hearing schedule for the bill has yet to be determined, Tizon pointed out that he joined the military at just 18 years old, and retirement savings weren’t a priority back then. “TSP was so new. No one guided me about it,” he said.
In the last 12 years, however, he has prioritized retirement savings through a recycling savings plan while working for the Department of Defense. “I’m vigilant about my funds, and it’s paid off. I’ve accumulated a significant amount, and it’ll aid my retirement in the next five to ten years,” he noted.
