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Blended Retirement System (BRS): An Overview

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What is the Blended Retirement System (BRS)?

The Blended Retirement System (BRS)  was created with the Fiscal Year 2016 National Defense Authorization Act (NDAA) and went into effect in 2018.

The new system blends the traditional legacy retirement pension with a defined contribution benefit that is applied to the service member’s Thrift Savings Plan (TSP) account.

What follows is not tax advice, and it is not investment advice. This article is for information purposes only. Before making any decision on taxable income it is advisable to speak to a trained professional.

Eligibility for Blended Retirement System

Your eligibility depends on when you joined the service.  If you:

  • Joined on or after January 1st, 2018 – you are automatically enrolled into the BRS. That will be your retirement plan.
  • Served on active duty for 12+ years before December 31st, 2017, you may have been grandfathered into the legacy retirement system. Nothing will change for you.
  • Served on active duty for less than 12 years, as of December 31st, 2017, you are grandfathered under the legacy retirement system but had the option to select BRS. The opt-in period was from January 1st through December 31st, 2018. You were not moved to the BRS unless you requested to do so.
  • Are a cadet or a midshipman attending a service academy as of December 31st, 2017, or if you are in the Reserve Officer Training Program (ROTC) and have a signed contract as of December 31, 2017, you’re also grandfathered under the legacy retirement system.
  • If your commissioning date occurs after the 2018 opt-in window, you had 30 days upon commissioning to opt-in to the BRS. If you enter an academy or sign your service contract on or after January 1st, 2018, your retirement plan is the BRS.
  • Are in the Reserve or National Guard and have accrued more than 4,320 retirement points as of December 31st, 2017, you are grandfathered into the legacy retirement system, nothing changes.
  • Accrued fewer than the 4,320 retirement points as of December 31st, 2017, you will be grandfathered into the legacy retirement system but can choose to opt-in to the BRS.

The BRS won’t change how you accrue retirement points or when you can retire.

Defined Benefit

BRS provides a defined benefit, a monthly pension for life.  You will receive this benefit after 20 years or more of active duty service. How much you receive depends on how long you have served. The longer you do, the higher your potential benefit.

BRS uses a multiplier to determine how much money you will receive; 2.0% times the years served times the average of your highest 36 months of basic pay. For example, if you have served 20 years, you would receive 40% of the average of your highest 36 months of basic pay. If you served for 25 years, you would receive 50%, and so on.

The Defined Benefit also has an annual Cost of Living Adjustment (COLA).

Defined Contribution

The Defined Contribution is a way to save for retirement, whether you plan to stay in the service for two or 20 years. The Blended Retirement System offers government benefits toward retirement through your Thrift Savings Plan. This offers a mix of investment funds through contributions to a traditional (pre-tax) retirement account, a Roth (after-tax) retirement account, or a combination of both.

If you were automatically enrolled in the BRS because you joined after January 1st, 2018, you would need to wait 60 days before the 1% Service Automatic Contribution will begin. You will start to do so immediately if you opt in instead.

If you were automatically enrolled in the BRS because you joined after January 1st, 2018, you may be required to wait two years before you start Service Matching Contributions.

  • You may start receiving them immediately if you elect to opt in instead. Your service will match contributions up to an additional 4% of your basic pay.
  • For example, if you put in 3%, you have 7%.
  • 3% from what you put in, 1% for the Service Automatic Contribution, and 3% Service Matching Contribution.

Continuation Pay: What is Continuation Pay?

Through the Blended Retirement System, you are eligible to receive Continuation Pay.  Continuation Pay is a one-time, mid-career bonus payment in exchange for an agreement to perform additional obligated service. Your service branch will determine your commitment, which will be a minimum of 3 years.

Continuation Pay is a direct cash payout to eligible members who have completed at least 8, but not more than 12 years of service. This is calculated from a servicemember’s Pay Entry Base Date (PEBD). The reason it’s offered is easily explained through retention, “as a way to encourage Service members to continue serving.”

Who’s Eligible for Continuation Pay?

Most service members may be eligible for continuation pay, but when it’s paid out and how much is given is determined through an individual’s branch of service.

Continuation Pay is open to Active Duty, National Guard, and Reservists participating in the BRS who can qualify for an extension of their current obligated service.  It comes in addition to any other career field-specific incentives or retention bonuses.

You may be eligible for this if you are active duty.  This includes AGR (Active Guard Reserve) and FTS (Full Time Support), National Guard and Reserves are also eligible, if they are “able to enter into an agreement to perform additional obligated service” according to Defense.gov.

Active Duty

The amount for active duty can run between 2.5 to 13 times your regular pay. Your taxable contribution pay may place you in a higher income bracket. You may be allowed to split it up into four equal payments over four years to avoid that.

National Guard or Reserve

You may also qualify for Continuation Pay in the National Guard or Reserve.  This will require that you agree to perform additional obligated service. You would receive between 0.5 to 6 times the monthly basic pay of an active duty service member in the same pay grade.

These multipliers can be variable, depending upon specific needs of an individual’s branch, critically manned positions, and special skills (comparable to stipulations for re-enlistment bonuses).

TSP Investing

As with other specialty pay and bonuses, continuation pay may be diverted as an investment into a TSP, bearing in mind the IRS’s maximum amounts allowed annually.

While there are no matching contributions from the DOD specifically for invested continuation pay, this invested amount can affect other types of income that will be matched; hitting a maximum too quickly could affect other government automatic and matching contributions.

Lump Sum

Under BRS, you may be eligible to elect to receive a discounted portion of your retirement pay upfront.

If you opt for a lump sum, you must decide if you want 25 or 50% of your future payments at retirement. You may receive one lump sum or equal annual payments, one a year for up to four years. Monthly retired pay reverts to the full amount at full social security retirement age, which is usually 67 years old.

The lump sum of 25 or 50% is discounted to the present value.  Therefore a lifetime of equal, personal, monthly payments is usually worth more.

The Blended Retirement System will be the new way of retirement for the military. While some are still grandfathered in, recruits will automatically be enrolled in the BRS.

Additional Information Regarding Continuation Pay

If interested in additional information about BRS and Continuation Pay, visit the following sites:

  • The Blended Retirement System (BRS) Continuation Pay Fact Sheet
  • Blended Retirement System (BRS) Overview
    Blended Retirement System (BRS) Calculator
  • IRS Contribution Limits Facts




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