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What percentage of your monthly salary do you need to contribute to your Blended Retirement System (BRS) Military Savings Plan to reach the maximum in December 2023?
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Here are the 2023 TSP military TSP contribution increase tables, based on the 2023 military pay increase and the TSP contribution limit, which increases to $22,500.
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To maximize your 5% TSP military match, you must contribute at least 5% each month to the TSP and NOT max out before December of the year. The easiest way to do this is to spread your contributions evenly over the 12 months of the year.
Matching the Military TSP through the Blended Retirement System (BRS) is a great way for military personnel to build their retirement savings.
I cover savings plan investing in my Military Money Guide podcast, available on Spotify and Apple Podcasts or embedded below.
BRS allows you to earn government matching income of up to 5% of your pay, so your Military Savings Plan (TSP) account can grow quickly. This is an improvement to the military retirement system for the more than 80% of service members who will not receive 20+ years of military retirement.
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Thanks to BRS matching contributions, I added an additional $4,600 to my Traditional TSP from January 1 to December 31, 2021. After 40 years at 7%, that matching contribution increases to $68,000.
Individual Retirement Accounts (IRAs, Roth and Traditional), is $6,500 in 2023. $541.66 per month to max out a Roth or Traditional IRA.
A BRS TSP match can be worth thousands per year if properly optimized. The drawback is that you have to contribute 5% every month because the match is paid every month.
So, you don't want to put all of your $22,500 in contributions in the first 6 months of the year (optional annual deferral limit): you have to spread your contribution throughout the year if you want to get the full amount. .
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I loaded my TSP contributions as quickly as possible at the beginning of the year. It's no longer the best within BRS, so I've changed my posting strategy.
Don't worry about going over the $22,500 annual limit. As long as you don't have another employee retirement account (401k, 403b, solo 401K), the DFAS computers will set a limit on your final contribution to make sure you don't top the account by more than a penny. There was a bug in 2021 and 2022 that allowed the contribution to be exceeded or "TSP overflow", but this has been fixed.
The chart above shows the percentage you should contribute each month for all enlisted ranks, warrants and officers up to O-8 with 26 years of service. If you are an O-9 or have more than 28 years of service, ask your assistant to tell you the number.
To increase your 2022 TSP contribution ($22,500) and receive the full 5% TSP rate you are eligible for, you must contribute at least 5% to the TSP each month.
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The formula is very simple. Take the maximum voluntary contribution deferral limit of $22,500 in 2022. Divide by 12 months = $1,875. Now divide $1,875 by your monthly salary to get your contribution percentage.
For example, if your base salary is $5,000/month, 1,875 / 5,000 = 0.375 or 37.5%. Add up to 38% because you can only vote on posts with a whole percentage.
If you contribute 38% of a $5,000 base salary, you'll put $1,900 into a TSP, Roth, or Traditional each month.
The match always goes to the Traditional TSP for tax reasons. You'll still get the match if you contribute to your Roth TSP, but the match goes to the Traditional TSP. You cannot change this. Side note
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So you contribute $20,900 to your TSP by November 2023. Your match will be worth $5,000 * 0.05 = $250 per month or $3,000 for the entire year.
In December 2023, since you only have $1,600 left in contributions ($22,500 - $20,900), the TSP or DFAS calculator should only allow you to contribute $1,600 and the remaining $200 will be returned to you in the December or January payment. Merry Christmas or year-end bonus!
You have now increased your annual contribution and received a full 5% every month of the year.
If you contribute at least 5% of your salary to TSP under the BRS, you may be wondering what that amount is each month.
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If you receive a full BRS match each month this year, it could be worth thousands of dollars depending on your rank and length of service. Over the course of several years or decades, your TSP match can add up to tens of thousands of dollars by retirement age.
The military automatically deposits 1% of your base pay into your Savings Savings Plan account. If you contribute at least 5% of your military pay to a Roth or Traditional TSP, the military will contribute an additional 5% to your Traditional TSP. This can be worth $1000 annually.
Yes! Roth TSP matches. However, the match will go to your Traditional TSP account. When you open a TSP, you have 2 accounts in the TSP: a traditional account and a Roth account. You can contribute to any of these and get a 5% match from your employer per month. However, whether you contribute to Trad or Roth, the match will ALWAYS go to the Traditional account.
At a minimum, you should put 5% into your TSP. If you are an NCO or below the rank of O-4 (major, lieutenant), you should probably contribute 5% to your Roth TSP. As your income grows, you should eventually contribute a maximum of $20,500 per year to your military TSP account while ensuring that you get a 5% match each year.
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You can if your tax form or program asks you to report it. However, you've already paid taxes on that money before it goes into your Roth. So it does not reduce your taxable income in that year.
To maximize your TSP military match, you must contribute at least 5% of your paycheck each month from January through December. That's why you don't want to use your allowance early in the year. There is a chart on my website that will show you what percentage to donate.
No, the standard TSP limit does not include matching. In 2023, you can contribute the full $22,500, plus get a match up to the "annual addition limit" of $66,000. The standard TSP limit is called the "voluntary deferral limit."
If you want to increase your TSP contribution each pay period, you need to do the math. Take the total annual contribution limit of $22,500 and divide it by the number of pay periods (12). That's $1875 a month. Divide that by your base salary to get your minimum monthly allowance to exceed TSP by December 31st.
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