Apologies, I made some assumptions from your profile. My points still stand. To ensure max ROI in your case, consult a psychic
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Blended Retirement System
- Thread starter Segs
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Apologies, I made some assumptions from your profile. My points still stand. To ensure max ROI in your case, consult a psychic
Man, the training pipeline is really screwed up!
That is a good point. From what I have heard, most civilian aviation jobs are ok with the reserves, but it can be problematic in other careers.
Here's what I've been advising the LT's in my command and then the ENS/LTJG SNAs...
For the LTs: The 8-10 year mark is really the break even point if you plan on staying in. The math stops working in the BRS favor at approximately 23+ years of service (especially with the cutoff for matching funds at 26) and making O-6. However, BRS could yield more on the day of (actual) retirement (vice working military retirement at age 42). The government, however, will be paying less overall, but it's your call to determine what works for you.
For the ENS/LTJGs: While the government will pay less overall to you as the member, you stand to gain more money overall in the BRS. For the non-prior ENS/LTJGs, I have yet to find a scenario where the member contributes at least 5%, gets the 5% matching, and gets a 5% return through age 65 that has a worse result than the legacy High-3 system.
If you want the excel spreadsheet I am using, PM me. Note that the sheet doesn't take into account withdrawals.
Also, talk to your CFS or go on the JKO or NKO (or MNP now I think is what we are calling it) and find the official calculator (which is still in a beta version, but is ok).
For the LTs: The 8-10 year mark is really the break even point if you plan on staying in. The math stops working in the BRS favor at approximately 23+ years of service (especially with the cutoff for matching funds at 26) and making O-6. However, BRS could yield more on the day of (actual) retirement (vice working military retirement at age 42). The government, however, will be paying less overall, but it's your call to determine what works for you.
For the ENS/LTJGs: While the government will pay less overall to you as the member, you stand to gain more money overall in the BRS. For the non-prior ENS/LTJGs, I have yet to find a scenario where the member contributes at least 5%, gets the 5% matching, and gets a 5% return through age 65 that has a worse result than the legacy High-3 system.
If you want the excel spreadsheet I am using, PM me. Note that the sheet doesn't take into account withdrawals.
Also, talk to your CFS or go on the JKO or NKO (or MNP now I think is what we are calling it) and find the official calculator (which is still in a beta version, but is ok).
Let's just hope they contribute the 5%. I have a hunch the designers of this plan hedged some bets that a good percentage of folks won't, and as such the DoD will have even less financial obligations long term.
Certainly it was designed with saving DOD money, but the current structure, if someone actually does contribute 5% can gain significant benefits over the legacy system. I'm going to switch, and I'll be at the 8 year LT mark, but I also have serious doubts about my ability to make LCDR, so it's a no-brainer for me.
Smart plan that I hadn't thought about. For those, like you, that feel O-4 is a bridge too far, switch now and max it out while you're still in. Then, leave either with a severance check or on your own accord and still have some money in your pocket.
So what happens if you elect to switch? Do you get some sort of credit for the previous 8yrs of service?
As a guy who was never certain if I was going to stay past my MSR I wish the blended system had been an option.
If it's like the FERS system the % is a % of your pay not of your total allowable contribution in to TSP. So if your pay is $100 and you contribute 5% and the govt matches the 5% you'll get a TSP contribution of $10. If you contribute 3% and the govt matches then you'll get a TSP contribution of $6. If you contribute 10% the govt will do 5% and you'll get $15 in your TSP.
If I understand your question correctly: No - sort of. Neither the 1% DoD auto-contribution nor the 4% match count towards your annual contribution limit of $18,000, but it does count towards the less common $54,000 annual limit. From TSP.gov:
Elective Deferral Limit $18,000
Applies to combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay, and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone.
Annual Addition Limit $54,000 IRC §415(c)
An additional limit imposed on the total amount of all contributions made on behalf of an employee in a calendar year. This limit is per employer and includes employee contributions (tax-deferred, after-tax, and tax-exempt), Agency Automatic (1%) Contributions, and Matching Contributions.
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/contributionLimits.html
None of the official training I have taken addresses that question, but I can't imagine they will back-credit me. I plan on electing January 1st, 2018 - the first day of eligibility.
And, mods, suggest a possible new thread, but does anyone know of what the implications are if one switches to BRS and intends on working with the Federal Government and want to buy into the FERS retirement (Am I even using the right terms? Can someone who has been there done that explain how this process even works?)
Was curious/bored enough to do some googling, here's the answer from militarypay.gov:
"No, TSP matching is not retroactive and there is no “buy-back” option. If you opt into BRS, you will receive the automatic 1 percent of your basic pay and up to an additional 4 percent government matching beginning the first pay period after opting in. If you already have a TSP account, these contributions can be added to your current account and they can continue to grow together in the same account. "
It's a Bummer, but makes sense. From what you've posted on here about your career I think I'd take the BRS and get something if you end up leaving the Service. Better to leave with something rather than nothing. But I say that as a guy who left with nothing and who had zero stomach for the reserves.