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Opting-in for blended retirement adds value

By: tom philpott newspaper
December 31, 2017 Updated: December 31, 2017 at 4:10 am
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photo - tom philpott,
tom philpott, 

Last week, 900,000 active-duty service members and 700,000 Reserve and Guard members become eligible to opt out of a rigid yet more valuable High-3 military retirement plan into the new portable Blended Retirement System.

There's no need to rush that decision. The window for switching plans will be open for all of 2018 and the choice, once made, will be irreversible.

However, for service members who fully understand the system and plan to opt in, there are dollars to be lost if they delay unnecessarily.

"For those who do know they definitely want to opt into the Blended Retirement System, we would say there are advantages in opting in earlier rather than later," said Jerilyn Busch, director for military compensation policy in the Office of the Secretary of Defense. "The sooner they opt in, the sooner the government's automatic 1 percent contribution and matching contributions [to the Thrift Savings Plan] begin, and the sooner they begin to accrue earnings, not only on government contributions but on their own contributions."

Blended Retirement System enrollment is automatic for new entrants on or after Monday. People in the force before 2018 can switch to the system from High-3 if they have fewer than 12 years as of Sunday, or, for Selected Reserve personnel, if they have fewer than 4,320 points toward retirement as 2017 ends.

Members who opt into the system will get an automatic 1 percent of basic pay government contribution to their Thrift Savings Plan, and government matching of some Thrift Savings Plan contributions, starting in their first pay period after the switch.

"So, if somebody opts in on Jan. 3, they'll see it in their Feb. 15 pay day because the first pay period will begin Feb. 1," Busch said.

For new entrants on or after Monday, the 1 percent automatic government contribution will begin 60 days after enrollment and government matching of Thrift Savings Plan contributions won't begin until after two years of service.

That two-year delay of Thrift Savings Plan matching doesn't impact Blended Retirement System participants who joined the military before Monday.

Members who opt into Blended Retirement System will be vested immediately in their contributions, in service matching of contributions and in earnings on them.

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Send comments to Military Update, P.O. Box 231111, Centreville, VA, 20120, email milupdate@aol.com

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