New FORWARD Act Lets Retired Military Keep Contributing to TSP, But Without the Match

The aptly named Financial Opportunities for Retirees and Warriors Advancing Retirement Development Act, or the FORWARD Act, is looking to give a specific group of former service members more flexibility with their retirement savings. In short, this bill changes who can put money into the Thrift Savings Plan (TSP) once they’ve hung up the uniform and started collecting military retirement pay.

The TSP Door Stays Open

Under current rules, once you leave federal service, your ability to contribute new money to your TSP account generally stops. This bill changes that for two specific groups: those receiving military retirement pay (under chapter 71 of title 10) and those receiving 100 percent disability compensation (under section 1114 of title 38). If you fall into either category, the FORWARD Act allows you to keep making contributions to your existing TSP account, even though you’re no longer actively serving or working for the federal government. Think of it as a way to keep utilizing that tax-advantaged savings vehicle during retirement.

The Fine Print: What’s Not Included

Now, here’s the crucial detail that every eligible person needs to know: The government will not match any of these contributions. If you’re used to the generous matching contributions the government provides while you’re employed, forget about it under this new provision. You’re simply allowed to put your own post-service money into the account, just like a regular IRA contribution, but through the TSP structure. The bill is clear that you’ll be making the decision on how much to contribute, following the existing rules for TSP members (Sec. 2).

Who Gets to Play?

This isn't a free-for-all to open a new TSP account. Eligibility is strictly limited to those who already had a TSP account established before they left the military or federal service. If you never opened one while you were working, this bill doesn't allow you to start one now. The intent here is to allow continuity for those who were already saving through the program, not to create a brand new entry point. For the system to work, the Federal Retirement Thrift Investment Board, the Department of Defense, and the Department of Veterans Affairs have 180 days after the bill becomes law to write up the official regulations, which will outline exactly how this process rolls out.

For eligible retired and disabled service members, this bill offers a useful, if limited, new tool for financial planning, allowing them to continue building their nest egg in a familiar, tax-advantaged account.