Will I Continue To Get Service Matching Contribution After I Leave The Military

The Thrift Savings Plan is a great investment opportunity for military service members and eligible ceremonious service members working for the Us government. The TSP offers the opportunity to save in a traditional or Roth retirement business relationship. And while the TSP doesn't offer as well many investment options, it offers amidst the lowest price investment funds you will notice anywhere.

Thrift Savings Plan Matching Contributions The Thrift Savings Programme is almost identical for military machine members and civil service members, merely there are some minor differences you should be aware of.

The first is that they are actually housed nether different plans. You tin accept a military TSP account and a civil service TSP account, but they will exist separate accounts. You tin be eligible for both accounts if you worked for one agency and so another, or even if you lot work for both at the same time (this is common for many Guard or Reserve members who are dual status technicians).

Yous also cannot combine these accounts if you are notwithstanding eligible to contribute to both of them. You tin only combine them after you are no longer eligible to contribute to one or both of them. (Even then, you lot may non wish to combine your military TSP account if you accept contributions that were made in a tax-free zone).

Another big departure is that ceremonious service members have an automated bureau matching contribution added to their account. In fact, matching contributions are automatic for new employees.

This was not the example for armed services members until January ane, 2018, and only if the member had either opted into the Blended Retirement System or joined the armed forces after January 1, 2018, and were automatically enrolled in the BRS.

Matching TSP Contributions for Military machine? But in the Composite Retirement System

Equally a general rule of thumb, war machine members who are in the High 3, or High Pay, or REDUX retirement plans are not eligible for matching TSP contributions. This has inverse for those who participate in the Blended Retirement System.

Let's accept a look at bureau matching contributions, then dive into why military members don't get them.

Austerity Savings Plan Matching Contributions

This chart shows how Thrift Savings Plan matching contributions are made for civil service employees who autumn under the Federal Employee Retirement System (FERS). Federal employees nether the Civil Service Retirement System (CSRS) system are not eligible for agency contributions to their Austerity Savings Plan account.

TShrift Savings Plan Matching Contribution Chart — Civil Service members receive a matching TSP contribution.

As you can come across from the nautical chart above, ceremonious service members get a 1% agency contribution regardless of whether or not they elect to defer any of their own pay. FERS Civil Service members will then receive a 1% match for the next 2% of their pay that they defer, for a total of 5% contribution (2% member deferral, 1% automatic agency contribution, and 2% match = five%).

FERS Civil Service members receive 0.5% lucifer for each of the next two percent points of pay they defer, up to a total agency contribution of 5% (1% automated contribution, plus up to 4% matching contribution).

Most Military Members Don't Get Matching TSP Contributions

If have been in the military for more than than a few years, you are probably wondering why you lot don't get matching TSP contributions. It'southward not that military members can't get them, it'due south that you lot probably don't.

The secretarial assistant of each branch of the military is authorized to allow matching contributions for servicemembers in critical specialties. These matching contributions are by and large given as incentives to servicemembers who agree to serve 6 years on active duty in those specialties. According to Wikipedia, the concluding fourth dimension this was available was the stop of 2008.

Of course, this has inverse with the new Composite Retirement System, which combines the traditional pension with the Thrift Savings Plan.

How Matching TSP Contributions Work for Military Members

Matching contributions are simply made to contributions from base pay. Then any incentive pay, special duty pay, bonuses or other pay used to fund your Thrift Savings Plan won't count toward your matching contributions.

After that, the formula is similar to to the ceremonious service formula.

Members will receive a 1% automated contribution to their TSP account.

After that, they volition receive a one% matching contribution for the first 2% of their pay they contribute. Members volition then receive a 0.5% lucifer on for each of the next two percentage points of pay they defer.

The maximum matching contribution is upwards to v% of the fellow member'southward pay. Members can contribute more than 5% of their pay if they wish (and their hereafter cocky will be happy they did!). Just they will merely receive a match on the first v% they contribute.

Why Don't All Armed forces Members Get Matching Contributions?

All members who join the military on or subsequently Jan 1, 2018, will receive matching contributions to their TSP because they will automatically be enrolled in the Composite Retirement System.

But others who joined before that date and chose not to switch to the BRS will not receive matching TSP contributions.

In theory, the secretary of each branch had the ability to allow this. Even so, these funds would need to come out of personnel funds, which are limited each year by budgets mandated by Congress. In other words, they could do it, but they would have to cut funds elsewhere.

Those funds are generally allocated to other needs, such every bit paying military machine salaries, selective enlistment and reenlistment bonuses, retention pay, and more. Giving anybody a matching contribution would mean cutting force strength numbers, which would go out the services shorthanded.

How to Apply This When Making Investment Decisions

You should look at all your options when trying to decide between investing in the TSP or another investment opportunity. In general, nearly military members should exist eligible to participate in the Thrift Savings Plan and an IRA.

Which is better? Information technology depends on your situation. Nosotros covered this in more depth in the following article: comparison TSP and an IRA.

Lesser line: Don't get defenseless up on whether or not you lot receive a matching contribution. Information technology's neither fair nor unfair. It but is. The of import affair is to look at the opportunities available to yous and have advantage of them. In my opinion, the Thrift Savings Plan rocks. It's a great opportunity, with or without a matching contribution. Have advantage of it. You lot will happy with yourself 20 or 30 years from now when you lot see a 5 or vi figure balance in your TSP account.

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Baby-sit.

Ryan started The Armed forces Wallet in 2007 after separating from active duty war machine service and has been writing about financial, small business, and military benefits topics since then. He also writes well-nigh personal finance and investing at Greenbacks Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Majuscule is a complimentary software program that allows him to track his internet worth, balance his investment portfolio, runway his income and expenses, and much more than. You tin can open up a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Armed services.com, US News & World Written report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Mag, Cash Coin Life, The Armed services Guide, USAA, Go Banking Rates, and many other publications.