Thrift Savings Plan and Blended Retirement Plan

The Blended Retirement System - Thift Savings Plan

Retirement plan.


The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan. In 2001, the Thrift Savings Plan became eligible for military members through the National Defense Authorization Act, which was originally only for Federal civilian employees. Now there is a retirement program that blends the traditional retirement program of the military with benefits similar to those offer by many civilian employees – a 401(k) plan. Contributing money to the TSP will be additional retirement income and will provide tax benefits as well. For more information see the official TSP website and This means it is long term savings for retirement and there will be penalties for early withdrawal as with other types of retirement / tax benefit programs.

The Military Legacy Retirement System

The legacy retirement system is the current system that provides a retirement payment each month after 20 years of service. The Legacy Plan also offers an easy military pension calculator that determines the monthly amount they will receive:

2.5% X number of years served X retired base pay*

The retired base pay is a 36 month consecutive average compiled at the highest rank of the member.

For instance, after 20 years at the retirement rank of O-5 and the highest monthly average base pay of $8,500 over a three year period average.

2.5% X 20 years X $8,500 = $4,250

Using the formula above, they would receive a monthly pension of $4,250 for life.

That is a great retirement program if you are 40 years old with 20 years of service. If you live until 60 years, you will have earned over a million dollars. Now, with the TSP you can blend the two programs and earn more.  

New Blended Retirement System

The Blended Retirement System (BRS) combines elements of both. Most service members (over 400,000) decided to opt-into the BRS. Since 2018, another 150,000 new members were automatically enrolled upon entering the service. In total, over half a million uniformed service members are now covered by BRS and able to begin receiving portable, government-provided retirement benefits.

How Does a Thrift Savings Plan Work?

If you plan on government service for 20 years, the Thrift Saving Plan with blended retirement maybe right for you. The Blended Retirement System (BRS) is a new (2018) retirement plan for the Uniformed Services that is available to eligible service members and new members. Features of the BRS includes a defined benefit (monthly retired pay for life) after at least 20 years of service, a defined benefit (consisting of government automatic and matching contributions) to a member’s Thrift Savings Plan (TSP) account, a bonus called continuation pay and a new lump sum option at retirement. Also, if a member decides to leave the military prior to retiring, if he/she gets a government service job, that retirement plan can transfer with the member, but the legacy retirement will not since 20 years were not completed. See your military / government financial specialist.

Servicemembers can sign up for TSP online at The Web site offers all the tools troops need to get started in the program and manage their accounts.

Who Is Eligible for BRS?

It depends on WHEN you joined the military. If you enter the Uniformed Service on or before Dec. 31, 2017, you are part of the legacy retirement system. If you are an active-duty service member with fewer than 12 years of service as of Dec. 31, 2017, or a member of the National Guard or Reserve in a paid status who has accrued fewer than 4,320 retirement points as of Dec. 31, 2017, you are grandfathered under the legacy retirement system, but may choose to opt into the BRS. If you enter the Uniformed Services on or after Jan. 1, 2018, you are automatically enrolled in BRS, and this is your military retirement plan.

Government Matching Program

The military members on BRS receive an annuity based on years of service. However, now the Department of Defense (DoD) will automatically contribute 1% to the servicemembers TSP account each month during active duty. After two years of service, the DoD will also match the servicemember’s contributions up to an additional 4%. For instance, a member who contributes 5% will see the DoD match that with an additional 5%.

This is a big opportunity for service members. The most important benefits the new BRS plans offers is that the BRS plan has a benefit for servicemembers who separate after serving less than 20 years. Under the BRS, a servicemember is vested in the DoD contributions to their TSP after two years of service.

Also, after leaving the military, servicemembers cannot continue contributing to TSP unless they take a federal job. They can leave their money in TSP, though, and continue to draw returns on it. The money in TSP can also be rolled over to another IRA account.