The Thrift Savings Plan Under the Blended Retirement System

How will the Thrift Savings Plan change under the Blended Retirement System?  In my article, “An Introduction to the Thrift Savings Plan,” I described the basics of how TSP works.  There is a significant difference between the plan under BRS and how it works for service members right now.

 

As you have already learned, there are no matching funds for contributions you make to the plan.  Under the Blended Retirement System, this will change and a total of up to 5% of base pay will be added to the contributions you make.

 

How does this work?  Well, if you are already a serving member and have at least two years of service, you will begin receiving an automatic 1% contribution to your TSP account if you switch to BRS.  The first 3% of base pay you contribute will be matched dollar for dollar.  After that, the next 2% of money you contribute will be matched at 50¢ per dollar.  The 1% automatic contribution plus the 100% match on the first 3% of your money plus the 50% match on the next 2% of your money equals a 5% total match.

 

These matching funds have a nice effect on your total investment.  That effect is an automatic 100% return on your investment.

 

For a visual representation of what I just described, see the BRS infographic I have posted in the description below.  There is an active and reserve component version of this graphic.

 

The 1% contribution will begin immediately for service members who switch to BRS.  It will begin after sixty days for new members.  The matching funds will begin once a member reaches two years of service.

 

I mentioned in my previous article that there are two version of the TSP, traditional and Roth.  Traditional contributions are not taxed now but are taxed when you withdraw the funds and their earnings at age fifty-nine and a half.  Roth contributions are taxed now but are not taxed when you withdraw the funds and their earnings at age fifty-nine and a half.  All matching funds go into a traditional account.  Your contributions can go to either or both of the two.

 

There will be a vesting requirement in order to keep the matching funds.  Vesting simply means your ability to keep that money (by that I mean the matching funds only, not your money).  If you have at least two years of service, you will be fully vested as soon as you switch to BRS.  If you have less than two years, you will be vested once you hit the two-year mark.

 

D.J, are the matching funds based on the active duty pay scale or my drill pay?

The matching funds are based on whatever amount of money you have earned for a particular month.  If you’re on a short tour of active duty, are drilling, or on annual training, your matching funds will be based on that amount of money.  The match will not be based a full month of base pay unless you have earned that much for the month.

 

Are matching funds also added if I contribute bonuses or incentive pay to the TSP?

No, the matching funds are based on your base pay only.  Don’t let this fact prevent you from contributing those funds to the plan if that is what you wish to do.

 

If I receive the career continuation bonus, can I contribute that to the TSP?

Yes, you can contribute all or a portion of that payment to the TSP.  It is also possible to receive career pay in four annual installments.  This means if you want to contribute as much of the continuation pay as possible and you are receiving more than the $18,000 per year limit then you can break up the payments and either pay less in taxes or be able to contribute more to the TSP.

 

You can set your preferences for what percentage of base pay, bonuses, and incentive pay you would like to go to the TSP through the MyPay website or through the Coast Guard Pay Portal. You can then manage how the money is spread across the various funds within TSP at the TSP website.  There are links to all of these sites in the description below.

 

Last month, I posted an announcement for a webinar which would describe some of the workings of TSP under the BRS.  I have not found the recording of that webinar on MilitaryOneSource.  I do however have a copy of the slides they used.  I have posted them to my website and include a link in the references below.  It is called “TSP Under the Blended Retirement System.”

 

Next week, I will talk about some of the other effects of the Blended Retirement System.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
RS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan


Podcast Episode 0018 – The Thrift Savings Plan Under the Blended Retirement System

 

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
RS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2


YouTube Episode 0020 – The Thrift Savings Plan Under the Blended Retirement System

https://youtu.be/aIfkfxk_C9E

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
RS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)
TSP Under the Blended Retirement System
Global Pay Self Service (Coast Guard)
MyPay
Thrift Savings Plan Website

Related YouTube Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Podcast Episodes:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan
Let’s Talk About the Funds in the Thrift Savings Plan – Part 1
Let’s Talk About the Funds in the Thrift Savings Plan – Part 2

Related Articles:
What is the Blended Retirement System?
What Will the Blended Retirement System Do to My Pension?
Myths About the Blended Retirement System
Career Continuation Pay Under the Blended Retirement Plan
An Introduction to the Thrift Savings Plan


Podcast Episode 0015 – Myths About the Blended Retirement System


Let’s bust some myths about the Blended Retirement System.

References:
Myths About the New Military Retirement Plan

Related YouTube Episodes:
Episode 0014 – What is the Blended Retirement System?
Episode 0015 – Calculating Retired Pay Under the Blended Retirement Plan

Related Podcast Episodes:
Podcast Episode 0012 – What is the Blended Retirement System?
Podcast Episode 0013 – Calculating Retired Pay Under the Blended Retirement Plan