Things I Learned from The Military Guide about the Blended Retirement System

by | 19Nov2017 | Blended Retirement System | 6 comments

One of the best things about the blogging community is the opportunity to learn from each other. The Military Guide recently had a very informative post called Tricky Details Of The Military Blended Retirement System. Despite having taken a fairly deep dive on the new Blended Retirement System (BRS) and creating our BRS Resource Center, I still learned a few things from The Military Guide’s post:

  1. If you opt in to the BRS during the first half of January and contribute at least 5% of your base pay to your Thrift Savings Plan account, then the DoD will also start contributing 5% in January.
  2. At 0001 EST 1 January 2018 you’ll be able to opt in to the BRS in MyPay, Marine OnLine, or Direct Access.
  3. Your TSP matching contributions will also vest immediately. Those matching contributions are yours and they’ll stay in your TSP account even if you leave the military on 1 February. This is only for those who opt in to the BRS– everyone else who joins the military in 2018 has a two-year vesting period on their TSP contributions. Those two situations are covered in paragraph 7.b.(8).(b) of the BRS implementation guidance and in federal law Title 5 U.S. Code section 8432(g)(2).
  4. Most of the services process their payrolls during the third week of the month. If you wait past 15 January to opt in then you’re jeopardizing your January match.
  5. So far all of the services require signing up before 12 years of service for an obligation of four years in order to receive the continuation pay (CP). The rates can be found at this link. I hadn’t seen them in any official capacity up until now.
  6. The CP timing is different from the BRS. If you’re eligible to opt in to the BRS on 31 December 2017 then you have all of 2018 to opt in. However you have to sign up for CP before you reach 12 years of service. If you’re at 11 years and 11 months of service on 31 December then you’re eligible for the BRS, but you’d only have one month to sign up for CP.
  7. You have to make sure that you still have room to contribute at least 5% of your base pay to the TSP every month of the rest of the year. If you hit the TSP contribution limit too soon ($18,500 in 2018) by contributing a lump-sum bonus, like your CP, then your DoD match will stop for the rest of the year.
  8. The CP amounts could change as the services tailor the payments for various communities and specialties. CP will be used as a retention incentive.

Thanks to The Military Guide for such an informative post.

6 Comments

  1. Phil

    Does the government “match” count towards the annual contribution limit? If a service member is currently contributing the maximum allowed for the year ($18,500 for 2018) will said member have to reduce their contribution by 5% to allow for the government match portion?

    Reply
    • Still In

      No, government contributions are above/beyond the $18.5K limit.

      Reply
      • Phil

        That’s great news. How will you be calculating the percentage required to max your annual investment in the TSP? If one wants to max their TSP contribution and ensure receiving the full match, the contribution percentage will need to be recalculated / submitted every year to insure the annual TSP cap isn’t reached before the end of the year. My son spent 8 months deployed to a very forward base in 2016 and couldn’t take advantage of the savings deposit program because no one from finance ever travelled to his area of operations, I’d expect the same frustration if he needed to change his TSP contribution.

        Reply
        • Still In

          Here’s what I do:

          1. I take the total maximum contribution ($18,500 in 2018) and divide it by 12. So for 2018…$18,500/12 months = $1,541.67/month I want to put in the TSP.
          2. I divide $1,541.67 by my base pay to figure out what percentage I of my base pay I need to put in my TSP each month. I ROUND UP to the nearest whole percentage make sure I’m putting in as much as I can.
          3. I elect that percentage starting 1 JAN 2018.
          4. I leave it alone for the whole year (unless my base pay changes).
          5. After I get my NOV 2018 LES I’ll subtract what I’ve contributed so far for the year from the maximum.
          6. Take $18,500 and subtract your contributions as of NOV to see how much you can contribute in DEC without going over the $18,500 limit.
          7. I divide this amount by my base pay, but ROUND DOWN so I don’t go over the $18,500 limit. If you exceed the limit, it won’t make the contribution. Found this out the hard way.

          Make sense?

          As for the deployment issue, if he has on-line access he can do this. If he has access in JAN but doesn’t expect to in DEC, then you just round down in step #2 above and leave it alone all year. This’ll get you 99% of the way there.

          If he’s at a FOB and has little/no internet access, yeah, none of this is easy. You could always share your usernmame/password with a trusted family member to do it for you.

          Reply
          • Phil

            That’s good advice. Thanks for taking the time to post the answer to my questions. This wouldn’t be an issue if the DOD would still allow setting an actual monetary amount on the deposit election form rather than a percentage. Very frustrating.

            Currently he just sets a percentage that causes him to hit the cap by about September and then he directs excess from higher checks for the rest of the year to a taxable brokerage account. I’m just frustrated that this will take some of the “automaticness” out of the equation and I’m a firm believer in being able to “set it and forget it” to maximize investment contributions and returns.

            You hit the nail on the head ref: the FOB. That cost him the ability to participate in the SDP during his last deployment. I think he can manage this to get pretty close to the caps in conjunction with a Roth IRA. Just frustrating that it will cause a good bit more work that he wont always be in a position to take care of himself. Again, thanks for your taking the time to post.

          • Still In

            Happy to help, and thanks for reading.

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