Those stacks of Benjamins pictured above represent the money you could be leaving on the table if you make the wrong choices or don’t fully understand the Blended Retirement System (BRS). Here are the Top 5 things that every Servicemember should know about the BRS:
- The BRS goes in to effect on January 1, 2018. All Servicemembers joining on or after that date will be automatically enrolled. There is an “opt-in” period which runs the entire calendar year of 2018 for all eligible Servicemembers (eligibility IAW the DoD’s Implementation Plan 6.b). Current Servicemembers not meeting the eligibility requirements will remain under the legacy retirement system for the duration of their careers.
- Eligible Servicemembers will automatically remain under the legacy system unless they opt-in to the BRS. The opt-in is irrevocable though, there’s no going back once that decision is made.
- There are four primary elements of the BRS: the pension, the defined contribution, continuation pay (aka bonus) and a lump sum option at retirement.
- The pension multiplier is reduced from 2.5X years of service (YOS) under the legacy system to 2X YOS under the BRS.
- In order to maximize the DoD matching portion of the defined contribution element, Servicemembers will need to contribute 5% or greater of their pay to their TSP starting no later than their 25th month of service and until their retirement.
These are truly just the highlights (or lowlights depending on your point of view) with the BRS. It is critical that all Servicemembers understand the BRS and how to best maximize the benefits and free money that it offers. Although I will personally remain under the legacy system, I will need to be able to provide my Airmen with an understanding and give them the guidance, knowledge and resources so that they can make an educated decision for themselves.
If you’d like more information, I will be doing a full in-depth article on the BRS in my November E-Newsletter. Please send “Subscribe” to JOIN my 100% always, all-the-time free e-newsletter. Also, you can follow Aim High Finance on Facebook and stay up to date as blog posts are published.
Please visit the DoD’s BRS website for more details and resources.