A lot of people have asked questions about the Blended Retirement System (BRS) since it started on January 1st, so I wanted to give you an update on what I know.
The “Was I Supposed To Get Government Contributions In January” Confusion
The number one most common thing I’ve seen asked since BRS started is “Did anybody get their January matching?”
Some people received January contributions while others didn’t, as you can see from this sampling on Reddit:
Opted into BRS on 4 JAN but no matching
Has anyone actually received their BRS matching yet?
When does the BRS start matching?
Checking if BRS matching contributions took hold
I did some digging and found the answer. I posted this in several of the military money forums I’m in on Facebook, but I know many of you aren’t in them so I’m reposting it here. If the part at the bottom applies to you, email me at militarydollar@militarydollar.com so I can submit your name.
If you don’t know where to find whether you have received your government contributions, you can look at your LES in the lower right hand corner of the block section – look for something that talks about “Agency Contributions.”
I wrote this before February contributions were out, so feel free to contact me if this applies to you but for February instead of January (i.e. opted in on February 1st and didn’t receive February contributions).
Opt Ins Since January 1st, 2018
I don’t have numbers for everything, but here is what I do have:
As of January 10th, 2018, approximately 70,000 people had opted into the BRS. That is out of approximately 1.6 million servicemember who were eligible to switch.
As of February 12th, 2018, that number had increased to 140,056 total opt ins (Active and Reserve Components) across the entire DOD.
I have no idea how many people will end up opting in over the course of 2018, but I’ve seen several people ask about this so I knew people were interested.
In case you are wondering, the DOD has no goals for opt ins. I know a lot of people think they do, but really – they don’t.
Updates to the MyPay Screen
Probably the most controversial part of the BRS opt in process was where the link was placed on the myPay screen.
Oh my goodness was this a problem.
For my Marine, Coastie, and NOAA readers (do I have any NOAA readers?) who don’t know what happened, here’s the gist.
The Air Force, Army, and Navy used myPay as their BRS opt in system. Prior to BRS opt in starting on January 1st, the top link in the myPay home page (after logging in) was a link to see your LES. It’s been that way as long as I can remember. Well, they put the BRS opt in link in that same place. And then there were problems.
People started reporting that they were accidentally opting in to BRS. Considering this is an irrevocable and potentially hugely financial impactful decision, that is bad. Bad bad.
Now, it wasn’t as easy as just clicking on one link and opting in, which was reported several times (including by at least one popular publication). There were multiple screens that included several clicks and/or check boxes and some filling out of personal information. But there also wasn’t a big ‘ole banner that said “YOU ARE OPTING IN TO THE BLENDED RETIREMENT SYSTEM RIGHT NOW.” There was a statement to that effect at the end, but people were caught off guard.
I’m not going to litigate this here. Some people thought it was way too easy to accidentally opt in to BRS. Others were confused why anybody would think it was easy given the multiple screens.
(I can tell you that officially, the number of people who have reported this is significantly lower than what you’d believe by looking at social media. Rumors were flying like crazy!)
The point is, the BRS Opt In link is no longer in the location where everybody is used to seeing the LES link. After much demand, the link was moved out of the traditional LES spot.
What You Should Know About The Accidental Opt Ins
First, if you believe you accidentally opted into BRS via myPay and you aren’t getting resolution through your normal chain of command, please either email me at militarydollar@militarydollar.com or message me on Facebook. I have some contact information that I was asked not to share widely, but can pass to those affected by this. I make no guarantee that the people I provide contact information for can help, but it’s worth a shot.
Second, as far as I can tell the people who were most vulnerable to this were Reserve Component members – and they potentially suffer the worst. Why? Well this one actually took some thought and putting together multiple pieces of information.
- From talking to people, it sounds like Reserve Component members check their LES far more often than Active Duty. This makes sense. If you are AD, you probably only check your LES occasionally – mostly if you see a number you don’t expect in your bank account, am I right? But Reserve Component members aren’t necessarily paid the exact same amount each month, so they go into their LES screen more often to see what it says. I only have anecdotal information for this, but it seems logical.
- If an AD member accidentally opts into BRS, they have a minimum of 8 years to make up for the lower pension by doing well with their TSP investments. This is because they can’t opt in after 12 years of service. 20 year retirement minimum – 12 years of service = 8 years at least. This is not necessarily true for Reserve Component members. Remember that Reserve Component opt in eligibility wasn’t based on years of service – it was based on points. That means someone could have been very close to 20 years of service already and they might’ve been eligible for opt in. In that case, they don’t have nearly as long to make up the difference through their TSP investments. That’s not good.
Again – if this affected you and your chain of command hasn’t been able to help (try them first!) then let me know.
How the Government Contributions Work
This is another big one, and one that is frequently misunderstood.
Did you or someone you know get the letter about enrolling in BRS and get pissed because – WHAT???? – you aren’t actually getting 1:1 matching on your contributions?
This one seems to have people riled up. As in, I’ve seen some people get really pissed about this.
Let me explain why what is actually happening is better than 1:1 matching.
First things first, nothing changed. This is what the BRS literature has said all along.
See how the “Service Matching Contribution” column never goes above 4%? That’s because the 5% you heard of included the 1% automatic contribution. There never was an offer of 5% matching, only 1% automatic + up to 4% matching.
Secondly, you may have heard a whole bunch of people reference “5% matching” and now think you were lied to. I fully accept that you may have heard that, as I too have heard it. And as much as I was able, I corrected people. It has always been 1% automatic contribution and up to 4% matching contribution.
I get it, people feel deceived. But the people who said “5% matching” (the vast majority of whom are regular people like you and me and not involved in actually administering BRS) weren’t trying to be deceitful. They either didn’t understand, or they did understand but thought it was easier to say “5% matching” instead of “1 % automatic and up to 4% matching” (more than one person admitted doing that to me).
So let’s quickly cover why the 1% automatic + up to 4% matching is actually better than a flat 5% matching contribution. Here’s that chart again.
Now, the beauty of government contributions is that it is free money. FREE MONEY. And it acts as basically an instantaneous return on any money you put into the TSP. Here’s how much those automatic + matching contributions give you in instantaneous returns.
You contribute 0%, the government gives you 1% automatic: this is an instantaneous return of infinite percent. You literally get something for nothing. The lowest paid member in the military (E-1 under 4 months) will get an extra $15/month for being alive and in the BRS. That’s not a lot, but it goes up from there. And you don’t have to do anything to get it.
You contribute 1%, the government gives you 1% automatic and 1% matching: this is an instantaneous return of 200%. You give one and you get two in return. 1 x 200% = 2
You contribute 2%, the government gives you 1% automatic and 2% matching: this is an instantaneous return of 150%. You give two and get three in return. 2 x 150% = 3
You contribute 3%, the government gives you 1% automatic and 3% matching: this is an instantaneous return of 133.3%. You give three and get four in return. 3 x 133.3% = 4 (I’m rounding)
You contribute 4%, the government gives you 1% automatic and 3.5% matching: this is an instantaneous return of 112.5%. You give four and get four and a half in return. 4 x 112.5% = 4.5
You contribute 5%, the government gives you 1% automatic and 4% matching: this is an instantaneous return of 100%. You give five and get five in return. 5 x 100% = 5
You max out the government contributions at a total of 5% (1% automatic + 4% matching).
Remember how I’ve talked about how anything between a 7%-9% return is pretty decent and reasonable? Well, doesn’t even “just” a 100% return sound amazing?
If you’d received a flat 1:1 matching for everything you put in, then everything you contribute would “only” get a 100% instantaneous return. And people who can’t or won’t contribute anything would get nothing. So as you can see, doing the government contributions this way is better for the servicemember than doing a flat 1:1. You are benefiting from this setup, not being hurt by it.
Now, please don’t look at this and think “shoot, I’m better off the less I contribute!” No you aren’t. You want as many dollars from the government as possible. Do not waste this opportunity!
Lessons Learned
There is still a lot of confusion about the Blended Retirement System, no doubt. The other military money bloggers and I are working to keep you informed, and so is the BRS office at DOD (I speak with them often but do not work there). If you have any questions, please ask! There is still a lot of misinformation being passed around, and it’s causing people to be both overly optimistic and overly pessimistic about the BRS. The BRS is neither bad nor good – it is a tool. For some people it will be great, for others it will be less great. But if we want to help people out (because we are all leaders, right?) then it’s important that everybody understands the system.
Looking for even more BRS information? My complete series is found on my Blended Retirement System page.
Has it been confirmed that BRS contributions will go to a lifecycle fund rather than G (unless member elects otherwise)?
Thanks for asking!
New accessions (those who join after January 1st, 2018) will have all contributions go into an age-appropriate L Fund. Since that mostly means younger people, that’ll be the L 2050 for the vast majority. Once they start an L 2060 you can expect new accessions to go that fund instead. This is a huge change in the law and will prevent the often tragic case of the person discovering 5 years later that they’ve been in the G Fund the whole time and earning 2% while everyone else was averaging 7%+.
If someone who is already in the military (prior to Jan 1 2018) has a TSP account already, the contributions will follow whatever allocation they already had set up.
People who were already in the military but didn’t have a TSP account *should* have contributions going into an age-appropriate L Fund, but that’s definitely something they will want to check shortly after the account is established to be sure.
And of course, anybody can go in at any time and elect new allocations.
Any word on how the continuation pay process will go? Is there a option to wait the following year for a better multiplier?
What specifically would you like to know? The CP amounts will be announced each year by the Services – they can be different but this year they are all the same. As part of that announcement they will also say which year groups are eligible. You MUST complete the paperwork prior to going past that year point, if you are in the year group.
There is no option to delay. In theory they may offer it to the same year group again (only for those who haven’t already signed up) but that’s not something I would expect or count on.
Great post! Thanks for the info!
Thanks Amanda!
Hi!
Can you reattack the difference about where the auto and match funds go vs my contributions? For example, I have a Roth tsp and set the allocations to be slightly more aggressive than the L2050 fund. The “free money” goes into a traditional tsp from what I understand. Can I set the allocations to be different for that fund or does it have to go into a L2050 fund? Thanks!
It will match however you have set up your contributions to be allocated. So if you’ve set up your TSP asset allocation to be slightly more aggressive than L2050 (presumably through a mix of the five funds?) then the government contributions to the Traditional TSP will follow the same asset allocation.
From the TSP website: “If you have a traditional balance and a Roth balance in your TSP account, you cannot make a separate contribution allocation for each balance.” https://www.tsp.gov/PlanParticipation/AccountManagement/index.html
Thank you for this. I opted in 1 Jan but I looked at my LES and I did get BRS for that month.
Do you know anything about people having issues with the contribution match showing up in the TSP account? My LES shows that I am receiving a match, but when I check my TSP account I don’t see the amount anywhere. I spoke with finance and contacted TSP and neither of them knew the answer to the problem and claimed that wasn’t their issue. Thanks for the help!
Hi Jared,
Yes, a whole mess of people started reporting the same problem or other TSP contribution problems. Some people aren’t showing a match on their LES, some had their contributions reset to 0% in the new year, etc. There is even a thread about it over on the Mr. Money Mustache forums (https://forum.mrmoneymustache.com/investor-alley/tspbrs-december-match-issue/).
I can tell you that right now, my full (long) January LES is showing my 2019 contributions but tsp.gov is not. That being said, I *think* the TSP website should show it after 1 Feb. I recommend checking again then. If it still isn’t showing by 5 Feb, let me know and we’ll try to hunt down an answer together.