A Guide to the Uniformed Services BRS

A Guide to the

Uniformed Services

Blended Retirement System

For Active-Duty, National Guard and

Reserve Uniformed Service Members

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Contents

Introduction ............................................................................. 5

Know the BRS basics

........................................................... 5

The BRS at a glance

...............................................................6

Defined benefit

........................................................................9

Defined contribution

............................................................11

Continuation pay

..................................................................15

Lump sum

............................................................................... 17

Understanding the TSP under the BRS

........................ 19

Resources

................................................................................24

Glossary

...................................................................................26

VERSION 3.0, JUNE 2020

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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One of the key benefits of serving in the uniformed services is the

retirement plan. The National Defense Authorization Act for Fiscal Year

2016 created a new retirement system for members of the uniformed

services. This system, called the Blended Retirement System, or BRS,

blends the traditional legacy retirement pension, also known as a defined

benefit, with government payments made into your individual Thrift

Savings Plan, or TSP, account, also known as a defined contribution.

This booklet is designed to be a reference for members of the uniformed

services on the key features of the BRS. The BRS represents one of the

most significant changes to the uniformed services compensation

system since World War II and becomes, for many, their first

opportunity for planning and saving for their retirement, regardless of

length of service.

You will find helpful facts throughout this booklet, with links to

additional training and resources on how to take action in your

uniformed services retirement plan.

YEARS

Defined benefit – Monthly retired pay for life after

at least 20 years of service

Defined contribution – Government automatic and

matching contributions of up to 5% of basic pay to

your TSP account

Continuation pay – A one-time, midcareer bonus in

exchange for an agreement to perform additional

obligated service

Lump sum – An option to receive a discounted

portion of your monthly retired pay as a lump sum

distribution at retirement

Know the BRS basics

The BRS combines elements of the legacy retirement system with benefits

similar to those offered in many private-sector retirement plans. This section

provides more in-depth information on these key features:

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

The BRS at a glance

Defined benefit

Defined benefit vesting 20 years of service, or YOS

Defined benefit multiplier 2.0%

Defined benefit working age annuity Active duty: Choice of full annuity or lump sum

option (50% or 25%) at retirement; National

Guard/Reserve: Lump sum based on annuity at

age 60 (or earlier with creditable active service)

Defined benefit retirement age Active duty: At 20 or more YOS; National Guard/

Reserve: After 20 or more qualifying YOS and age

60 (or earlier with creditable active service)

Defined benefit cost-of-living

adjustment, or COLA

Full COLA

Defined benefit disability retired pay Disability rating (minimum 30%) capped at 75%

or 2.0% multiplier

Defined contribution

Defined contribution, Department of

Defense, or DoD, contribution rate

1% automatic, plus up to 4% matching (Max=5%)

Defined contribution, DoD

contribution rate YOS

1% automatic: Begins at 60 days of service

through 26 YOS; Matching: Starts after two YOS

and continues through 26 YOS

Enrollment Automatic for members entering service on or

after Jan. 1, 2018; automatic re-enrollment every

January if member zeros out contributions

Defined contribution member

contribution rate

5% automatic; full DoD match requires 5%

contribution; default to Traditional TSP account,

Lifecycle, or L, Fund

Defined contribution vesting Always vested in service member contributions,

DoD matching and any earnings; vested in service

automatic (1%) contribution and any earning after

two years in service

Defined contribution forfeit

of DoD contributions

If you leave service before two years, you forfeit

the service automatic (1%) contribution and any

of its earnings.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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The BRS at a glance

Continuation pay

Continuation pay multiplier

(months of basic pay)

Active duty (including Active Guard Reserve, or

AGR, and Full Time Support, or FTS): Between

2.5 and 13 times monthly basic pay; National

Guard/Reserve: Between 0.5 and 6 times monthly

basic pay (as if on active duty)

Continuation pay commitment Any member who elects to receive continuation

pay will incur an additional service obligation of

not less than three years, as determined by the

member’s service.

Continuation pay eligibility Eligible for continuation pay when complete

between eight, but no more than 12, YOS calculated

from Pay Entry Base Date, or PEBD

Lump sum

Lump sum options May choose a lump sum of either 25% or 50% of

the discounted present value of future retirement

payments in exchange for reduced monthly retired

pay until full Social Security retirement age, which

for most is age 67.

Lump sum election Active duty: Lump sum election must be made

no less than 90 days before retirement; National

Guard/Reserve: No less than 90 days before receipt

of retired pay

Lump sum eligibility Active duty: At retirement after 20 or more YOS;

National Guard/Reserve: Upon becoming eligible to

begin receiving retired pay at age 60 or earlier with

creditable active service

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Defined benefit

YEARS

Defined benefit on retirement

You’re eligible for this benefit after 20

years of qualifying service and at age

60, or earlier if you perform certain

qualifying active service since the

beginning of 2008.

NATIONAL GUARD AND RESERVE

Calculation of non-regular retirement

for BRS eligibility

You’re eligible for a non-regular retirement

defined benefit at age 60 — or as early as

age 50 — if you have 20 qualifying years of

service, including creditable active service

performed since the beginning of 2008.

To calculate active years of service, divide

your accumulated retirement points by 360.

Given that the military considers one

month as 30 days for pay purposes, each

day is worth 1/30 of a month, making 12

months equal 360 days. Therefore, if you’re

in the National Guard or Reserve with, for

example, 4,860 retirement points, you have

13.5 equivalent years of active service.

NATIONAL GUARD AND RESERVE

13.5

Equivalent years

of service

Reservist with

4,860

retirement points

Total retirement points

Key aspects

The multiplier. This is the percentage

of your basic pay that you receive for

each year of service.

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Defined benefit under the

BRS: 2.0% x years served x

the average of your highest 36

months of basic pay

The longer you serve, the higher the

benefit. If you retire from active duty

at 20 years under the BRS, you receive

40% of the average of your highest

36 months of basic pay as your

defined benefit — and that percentage

increases by 2% for each additional

year of service.

Keeps up with inflation. The COLA

for the BRS is based on changes in

the Consumer Price Index for Urban

Wage Earners and Clerical Workers, as

measured by the Department of Labor.

No split multipliers. If you opted into

the BRS during the opt-in period of

Jan. 1-Dec. 31, 2018, monthly retired

pay is calculated using the BRS

formula — there are no split multipliers

for years served under the legacy

retirement system.

The BRS provides a defined benefit, which is a monthly pension

payment for life, after 20 years or more of active-duty service.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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The gray area for retired pay

If you’ve served in the National Guard or Reserve for 20 qualifying years, but are

not yet at the age to receive your retired pay, you’re in what’s called the “gray area.”

The gray area is the time between separation and receipt of retired pay, which for

most is age 60, but can be earlier based on creditable active service. Regardless

of when you entered the gray area, your retired pay is usually the average of the

basic pay for the highest 36 months for your pay grade and years of service. This is

derived from the pay tables in effect for the 36 months immediately preceding the

date that retired pay begins.

NATIONAL GUARD AND RESERVE

Defined contribution

The BRS’s defined contribution component is a way for you, as a member of the

uniformed services, to save for your retirement, whether you plan to serve for two

or 20 years. The BRS provides government benefits toward retirement through

your TSP account, which offers access to a mix of investment funds through

contributions to a Traditional (pretax) retirement account, a Roth (after-tax)

retirement account or a combination of both (see the “Understanding the TSP

under the BRS” section for more information).

Key aspects

TSP account creation. Your TSP account will be set up for you by your service,

generally within 60 days of service. You will be automatically enrolled with a

5% contribution into the L Fund closest to your full retirement year. Or, you may

create and begin contributing to your TSP account before 60 days of service

by completing the TSP Form U-1: TSP Election, located on the TSP.gov website,

and turning it in to your personnel servicing office. Once your TSP account

is created, you can visit your service’s online pay portal to make contribution

changes. Additionally, you can access your TSP account online at https://www.

tsp.gov to move your money into any of the TSP fund choices or to allocate

future contributions to your TSP fund choices.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Contributions. You can immediately elect to contribute any whole percentage

of your pay, up to the annual limits set by the Internal Revenue Service, or IRS.

Service members who do not make a contribution election will automatically be

enrolled to contribute 5% of their basic pay. You may opt out of this automatic

enrollment but, by law, will be re-enrolled each calendar year. You will receive

the service automatic (1%) contribution, and service matching contribution

proportionate to your basic pay contributions.

Matching contributions. Under the BRS, you may receive up to 4% in service

matching contributions at the beginning of your 25th month of service, on top of

the service automatic (1%) contribution based on the below chart. Automatic and

matching contributions continue through the end of the pay period during which

you reach 26 years of service.

Service Contributions to Your Account

Your service puts in:

You put in:

Automatic

(1%) Contribution

Service Matching

Contribution

And the total

contribution is:

0% 1% 0% 1%

1% 1% 1% 3%

2% 1% 2% 5%

3% 1% 3% 7%

4% 1% 3.5% 8.5%

5% 1% 4% 10%

More than 5% 1% 4% Your contribution +5%

Vesting. Being vested means having ownership. You are always vested in, or

entitled to, your own contributions and their earnings. However, to become vested

in the service automatic (1%) contribution, you must have completed two years

of service. All service members who have completed two years of service are

considered fully vested.

Type of Contribution When Started When Vested

Your contribution When deposited

1% auto match When enrolled 60 days After two years of service

1-4% match 25 months of service When deposited

Portability. Your TSP account is a portable retirement benefit. This means that

when you leave service, you can have TSP transfer part or all of your account

into an Individual Retirement Account, or IRA, or an eligible employer plan (for

example, the 401(k) account of a new employer). In addition, transfers can be

made into TSP both before and after military retirement from IRAs and civilian

jobs using form TSP-60 and TSP-60R. Your TSP can remain open after your

service has ended as long as the balance remains over $200.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Eligibility

This one-time payout is available if

you’re a National Guard or Reserve

service member in a pay status who

is able to enter into an agreement to

perform additional obligated service.

Amount

You may receive from 0.5 to 6 times

the monthly basic pay of a member of the

same pay grade, as if serving

on active duty.

NATIONAL GUARD AND RESERVE

Continuation pay

Uniformed service members are eligible to receive continuation pay, a one-time,

midcareer bonus payment, in exchange for an agreement to perform additional

obligated service. Your service will determine the commitment, but it must be a

minimum of three years. Continuation pay is payable between the completion of

eight years of service, but before the completion of 12 years of service from your

Pay Entry Base Date. It may be paid at any time during this period as determined

by your service. This one-time bonus payment is in addition to any other career

field-specific incentives or retention bonuses you may receive or otherwise be

eligible to receive.

Key aspects

Eligibility — active duty. This one-time payout is available if you’re an active-duty

service member. For continuation pay purposes, this includes AGR and TFS who

are able to enter into an agreement to perform additional obligated service.

Amount — active duty. If you’re an

active-duty service member, including

AGR and FTS personnel, you may be

eligible for continuation pay from 2.5 to

13 times your regular pay.

Pay rates. Pay-rate multipliers may be

based on service-specific retention

needs, specialty skills and hard-

to-fill positions, similar to career

field incentives and re-enlistment

bonuses. Each service determines

and publishes its own guidance on

continuation pay rates.

Investing. Continuation pay and other

specialty pay, bonuses and incentives

can be invested along with basic pay in your TSP account up to the annual

maximum allowed by the IRS. Note that if you hit the maximum before the end of

the calendar year, you could lose out on matching contributions.*

Taxes. Your taxable continuation payment may place you in a higher income

bracket. You may elect to receive continuation payments in up to four equal

installments over a four year period. This may help reduce your tax liability.

*See page 25 Resources - IRS contribution limits.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Lump sum

Under the BRS, service members may be eligible to elect to receive a discounted

portion of their retired pay up front. The decision to elect a lump sum at retirement

is entirely up to you. If you do not choose the lump sum option, you’ll receive your

full retired pay upon eligibility. If you opt for a lump sum, you will need to decide if

you want 25% or 50% of your future retirement payments at retirement. You may

receive one lump sum payment or annual equal payments, one a year, for up to

four years. Monthly retired pay reverts to the full amount at full Social Security

retirement age, which is age 67 for most individuals.

Key aspects

Trade-offs. When you take either 25% or 50% in a lump sum, your monthly

paycheck will then be 75% or 50% of the full value of your monthly retired pay until

you reach full Social Security age, which is age 67 for most individuals.

Cost. The lump sum of 25% or 50% is discounted to the present value based on

an annual DoD discount rate published in June of each year. Note that a lifetime of

equal, personal monthly payments is usually worth more.

Timing — active duty. If you’re choosing the lump sum option, you must notify

your service no less than 90 days before retirement date. Funds are paid no later

than 60 days from the date of retirement.

Taxes. Your taxable lump sum payment may place you in a higher income bracket.

You may elect to receive lump sum payments in up to four equal installments over

a four year period. This may help to reduce your tax liability.

Survivor benefits. You may still fully

participate in the Survivor Benefit Plan

even if you elect the lump sum option.

Disability payments. If you expect

to receive a disability rating from

the Department of Veterans Affairs,

disability compensation could be

offset dependent upon your rating.

Timing

If you’re choosing the lump sum as a

National Guard or Reserve service member,

you must notify your service no less than

90 days before receipt of retired pay.

NATIONAL GUARD AND RESERVE

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Understanding the TSP under the BRS

The TSP is a defined contribution retirement savings and investment plan for

federal employees and members of the uniformed services. It offers the same

types of savings and tax benefits that many private corporations offer their

employees under 401(k) salary deferral plans.

The retirement income you receive from your TSP account will depend on how

much you and your service contribute to your account during your working years

and the earnings that accumulate over that time.

Key aspects

Growing your TSP account. TSP retirement income depends on how long you

make contributions, how much you and your uniformed services employer

deposit into your account during your working years (see the “Defined

Contribution” section for more information), and how much your account grows

through the investment options you select:



Contributing basic pay, special pay and bonuses. Under the BRS, your

service provides a service automatic (1%) contribution to your TSP

account. Additional service matching contributions of up to 4% may also

be earned, as long as you contribute the proportionate amount of basic

pay. You can grow your TSP account by contributing more of your basic

pay and by contributing from 1% to 100% of special bonus and incentive

pays, as long as you do not exceed the annual elective deferral limit as set

by the IRS.



Contributing pay earned while serving in a Combat Zone Tax Exclusion, or

CZTE, area or Direct Support Area, or DSA. These assignments provide the

following opportunities to grow your TSP accounts through tax breaks and

higher contribution limits:

•

First, the money you contribute to your Traditional or Roth TSP account

while on these assignments is invested tax-free.

If contributed to your Traditional TSP account, your contributions,

but not their earnings, are also tax-free when you withdraw them.

If contributed to your Roth TSP account, your contributions and their

earnings are tax-free when you withdraw them if you satisfy the

regular requirements for a Roth withdrawal.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

•

Second, you can contribute more than the annual elective deferral limit

to your Traditional TSP account.

Even if you’re in a designated CZTE area or DSA, the amount you

can contribute to your Roth TSP account is limited by the deferral

amount set by the IRS.

To continue making contributions once you hit the limit, you would

need to switch your contributions from a Roth TSP to a Traditional

TSP. Since both the Roth contributions and earnings would be tax-free

when withdrawn — if you satisfy the regular requirements for a Roth

withdrawal — most members will conclude it is smartest to contribute

to their Roth TSP account first when serving in a CZTE or DSA.

The monthly CZTE/DSA compensation for officers is limited to the maximum

enlisted pay amount, plus the amount of Hostile Fire/Imminent Danger Pay

payable to the officer for the qualifying month. The monthly CZTE/DSA

compensation for enlisted members/warrant officers is unlimited.*



Contributing to multiple TSP or 401(k) accounts. It is important not to

exceed your annual contributions across multiple TSP and/or 401(k)

accounts. Unless you’re serving in a combat zone/direct-support area or

contributing catch-up funds, the annual elective deferral limits still apply. If

you reach the limit before the final pay date of the year, you could lose out on

service matching contributions.



Contributing more by catching up. If you’re age 50 or older, grow your

TSP account beyond the maximum with catch-up contributions on a

Traditional (pretax) or a Roth (after-tax) basis. This is allowed as long as

you don’t exceed the IRS dollar-amount cap. This is in addition to the annual

elective deferral limit. If you’re eligible to make tax-exempt-pay catch-up

contributions (i.e., because you’re deployed to a combat zone), these funds

can go into only a Roth TSP.

What if I have a military and civil service TSP or other salary-deferred plan?

If you’re in the National Guard or Reserve and have both a military and civil

service TSP or if you have a retirement private-sector plan, you’re generally

subject to the same total annual elective deferral limit for all your plans on a

cumulative basis.

NATIONAL GUARD AND RESERVE

*See page 25 Resources - IRS contribution limits.

A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Let’s say your basic pay is

$2,000 per month

and you

save 5%

in your TSP account.

That

makes

$100

each month.

If you leave the uniformed

services after

10 years,

you could have more than

$17,300.

Even if you never add any

more money, that $17,300

could grow to almost

$100,000

in 25 years.

And consider this: if you are contributing 5% of

your basic pay, then under BRS you are receiving

automatic and matching contributions from the

government for a total of

10%.

That’s the power of compounding!

That means you could have almost $200,000.

*Figures based on the L 2050 Fund’s projected long-term returns. Returns are not guaranteed

and may be substantially less. Visit TSP.gov to learn more.



Compounding. Another way to see your TSP account grow is through

the power of compounding. This allows you to make money on the

contributions you make to your retirement account from your basic pay,

from receipt of any government-provided contributions and from the

money earned by those contributions. With compounding, even your pocket

change has power. Using an example borrowed from TSP.gov, the U.S.

Securities and Exchange Commission’s investment information hub, look at

the power of compounding at work:

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

Assessing and managing risk. The contributions that go into your TSP

are deposited among your choice of individual investment funds or L

Funds. Unless you invest in U.S. Treasury bonds or put funds in a federally

guaranteed savings account, most investments carry risk from year to year.

Take these steps to create a retirement savings plan that works for you:



Think about your retirement needs. Consider how much income

you want and need in retirement, when you expect to retire and stop

working, and the mix of funds likely to be available at retirement along

with the TSP (e.g., pension, Social Security or other savings).



Determine your horizon for investing. Assess how much time you

have until you will withdraw retirement funds, sometimes referred to as

your time horizon. If you have a longer 30-year time horizon, you could

take more risk with your TSP investments early on and shift to a more

conservative approach as retirement nears. (TSP L Funds do this for

you. See the “Fund Choices” subsection for more information.)



Consider index investing. TSP offers several index funds, which are

funds structured to mimic the performance of a certain market index.

The TSP Common Stock Fund, or C Fund, for instance, is structured to

match the performance of the Standard & Poor’s 500 Index, which is

made up of stocks of 500 large to medium-sized U.S. firms in finance,

health care, information technology, retail and other industries.



Diversify. The cliché “don’t put all your eggs in one basket” sums up

this action. If you spread your contributions among the different types

of investment classes available through TSP funds, you’re more likely

to see a higher rate of return over time, as higher-performing assets

balance out lower-performing ones.



Take it with you. With portability under the BRS, you can take the funds

in your TSP with you after you separate, even if it’s before 20 years. You

can move the money to another retirement account, reinvest the funds

into a qualifying employer’s retirement program or convert the funds

into another qualifying investment. You can also choose to leave the

money in your TSP and see it compound long after you’ve left service.



Withdraw funds at retirement. TSP funds are meant to grow into a large

nest egg to use as income at retirement. That’s why TSP withdrawals

are only penalty-free once you reach age 59 1/2. Before you consider an

early TSP withdrawal, research how much money you could lose to added

taxes, tax penalties, contribution restrictions and other ramifications.

A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Fund choices. The TSP offers multiple investment approaches:



L Funds – Choose to invest through one of 10 professionally designed

portfolios of stocks, bonds and government securities. The 10 L Fund options

range from L 2025 to L 2065 with additional L Funds offered in five year

investment-horizon increments. With L Funds, the work of rebalancing your

investments based on your time horizon is done for you.



Individual funds – Choose your investment mix from among these TSP

individual funds: Government Securities, or G, Fixed Income, or F, Common

Stock, or C, Small Cap, or S, and International, or I.



Account choices. TSP offers both a Traditional and Roth account. You’ll need

to decide whether to invest in one or both.You can contribute according to

IRS limits and adjust your TSP account online at any time.* All government

automatic and matching contributions are based on the total amount of

money — Traditional and Roth — that you contribute each pay period.

•

Traditional (pretax) – You defer paying taxes on your contributions and

their earnings until you withdraw them. If you are a uniformed services

member making tax-exempt contributions in a CZTE location, your

contributions will be tax-free at withdrawal, but your earnings will be

subject to tax.

•

TSP Roth (after-tax) – You pay taxes on your contributions as you make

them, unless you are making tax-exempt contributions, and your earnings

are tax-free at withdrawal as long as you meet certain IRS requirements.

This option may be preferred if you’re starting retirement investing in a

lower tax bracket and expect to retire in a higher income bracket.

If you want to make contributions, you must submit a contribution election to tell

your service what portion of your pay you want to contribute and how you want to

designate them between Traditional and Roth. You cannot convert any portion of

your existing Traditional TSP balance to a Roth balance.

You can make both Traditional and Roth contributions if you want. You can

contribute in any percentages you choose, subject to IRS limits, and change your

election at any time.

Your service matching contributions are based on the total amount of money

—

Traditional and Roth — that you contribute each pay period. All service contributions

are deposited into your Traditional balance.

NOTE: Roth TSP is not the same as a Roth IRA. Annual contribution limits for a

Roth TSP are the same as a Traditional TSP account.

*See page 25 Resources - IRS contribution limits.

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

Resources

Use these resources and tools to build your knowledge of the BRS.

LEARN MORE ABOUT YOUR RETIREMENT OPTIONS.

Personal Financial Manager/Counselor

Get no-cost, personal support from an accredited personal financial manager/

counselor at your installation’s Family Center, or search at

https://installations.militaryonesource.mil.

Helpful websites

Visit the BRS website at https://militarypay.defense.gov/BlendedRetirement or

the Defense Finance and Accounting Service at

https://www.dfas.mil/militarymembers/payentitlements/sdp/.

CHANGE TSP CONTRIBUTIONS OR UPDATE YOUR INFORMATION.

Army, Navy and Air Force MyPay

https://mypay.dfas.mil/mypay.aspx

Marine Corps Marine Online

https://www.mol.usmc.mil

Coast Guard and NOAA Direct Access

https://hcm.direct-access.us

ADDITIONAL RETIREMENT PLANNING RESOURCES.

Department of Defense

DoD policy: Implementation of BRS

https://militarypay.defense.gov/BlendedRetirement

FINRED Career Ready Portal

https://finred.usalearning.gov/planning/CareerReadyPortal

FINRED Estate Planning webpage

https://finred.usalearning.gov/assets/downloads/FINRED-EstatePlanning-FS.pdf

FINRED Spending Plan worksheet

https://finred.usalearning.gov/assets/downloads/FINRED-Spendingplan-TK.pdf

Retirement Cost-of-Living Adjustments webpage

https://militarypay.defense.gov/Pay/Retirement/Cola.aspx

TSP Savings Ballpark Estimator

https://www.tsp.gov/PlanningTools/Calculators/index.html

A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

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Thrift Savings Plan

Thrift Savings Plan website

https://www.tsp.gov

IRS Contribution Limits

https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/

contributionLimits.html

Establishing Your TSP Account

https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/

establishingAccount.html#BRS

Retirement Planning Along Career Phases

https://www.tsp.gov/PlanningTools/RetirementPlanningPhases/index.html

Summary of the Thrift Savings Plan

https://www.tsp.gov/PDF/formspubs/tspbk08.pdf

Thrift Savings Plan Investment Options video series

https://www.youtube.com/

playlist?list=PLz_6hPnw1Qq5W5U3hZiD0c05gZKkFStT1

U.S. Securities and Exchange Commission

Investor.gov website

https://www.investor.gov

Investor.gov Before You Invest video series

https://www.investor.gov/additional-resources/specialized-resources/public-

service-campaign

Investor.gov Leaving the Military webpage

https://www.investor.gov/additional-resources/specialized-resources/

military/leaving-military

U.S. Social Security Administration

Retirement Planner: Military Service

https://www.ssa.gov/planners/retire/veterans.html

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A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM

Glossary

Defined benefit – A retirement account your service maintains to give you a

fixed payout when you retire, predetermined by a formula based on the service

member’s tenure and average of the service member’s highest three years of

basic pay.

Defined contribution – A retirement plan under which the service member and

service contribute to an individual account in the Thrift Savings Plan that invests

in equities and bonds. Benefits are based solely on the amount contributed to the

participant’s account, plus investment earnings on the money in that account.

Discounted rate – The discount rate is published by DoD each year for

administration of the lump sum provision. It is based on the Department of

Treasury published market rate, plus a factor that accounts for the unique

aspects of military service.

Lifecycle Fund – L Funds are professionally determined investment mixes

that are tailored to meet investment objectives based on various anticipated

retirement horizons. The objective is to strike an optimal balance between the

expected risk and return associated with the fund.

Personal Financial Manager/Counselor (PFM)/(PFC) – Accredited managers

or counselors who provide information about the Blended Retirement System

and the Thrift Savings Plan while offering strategies to support positive financial

choices. This service is available at no cost to active National Guard and Reserve

service members, their families, and survivors.

Portable retirement benefit – A transferable account when you retire or separate

from the uniformed services.

A GUIDE TO THE UNIFORMED SERVICES BLENDED RETIREMENT SYSTEM



Service Automatic (1%) Contribution – Once a service member has served

60 days, the member’s service will contribute an amount equal to 1% of the

member’s basic pay each pay date to the member’s Thrift Savings Plan account.

The member does not need to be making contributions to receive the service

automatic (1%) contribution.

Service Matching Contributions – Contributions made by your service to the

Thrift Savings Plan accounts of members who contribute their own money to

the TSP. After completion of two years of service, the first 3% of the service

member’s contribution is matched dollar for dollar by the service and the next

2% is matched 50 cents on the dollar. This means that if a member contributes

5% of his or her basic pay to the TSP, the service will contribute another 4% to the

member’s TSP account.

TSP Traditional (pretax) account – The service member defers paying taxes on

their contributions and their earnings until they withdraw them. If they are making

tax-exempt contributions in a CZTE area or a DSA, their contributions will be tax

free at withdrawal, but their earnings will be subject to tax.

TSP ROTH (after-tax) account – The service member pays taxes on their

contributions as they make them, unless they are making tax-exempt

contributions, and the earnings are tax-free at withdrawal as long as they meet

certain IRS requirements. This option may be preferred if the service member is

in a lower tax bracket now and expects to retire in a higher income bracket.

Vesting – Vesting is the right a service member has to keep the money and the

interest earned on that money the service contributed to their retirement account.

Under the BRS, vesting is based on the length of time the service member is in the

uniformed services. Once vested, that amount of money in the service member’s

retirement account is theirs to keep, and the service cannot take it back.

For more information, visit the

Office of Financial Readiness website:

https://finred.usalearning.gov

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