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Changes to retirement passes first hurdle.

whitesoxnation

Well-Known Member
pilot
Contributor
The TSP is crap. Deductions from my paycheck vs. electronic transfer or wiring money like any other account out there? What is this, 1974? No contributions from extra BAH? Investing in only the offered funds? Do I have to fill out a DD-form whatever and get it signed off by my command to sell a fund in the account and have it re-invested in something else (if you can even do that)? Interfund transfer restrictions?

What a joke, get real. The only thing that might make it worth it is the 5% matching.

And a "whopping" continuation pay of 2.5 months basic pay at 12 years? I don't know if I'm supposed to laugh or not.

This isn't subtantive change to "make sure everyone has something for their service." It's an attempt to reduce future government pension liabilities under that guise.
 
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Spekkio

He bowls overhand.
I'm pretty sure that all employer backed retirement plans (ie 401k's) require paycheck contributions, or else they become IRAs and you play by that set of rules.

You can reallocate your TSP funds as many times as you like however you like through TSP's website. No DD-ID10T form necessary, and unlike Vanguard they don't have a minimum holding time before you can trade again. But yes, you do have to purchase one of their funds. They do lack specificity (you essentially get to choose one of 5 index funds), but they also have dirt cheap fees.

Most servicemembers would make more money for retirement with the blended plan than not, and servicemembers who leave before 20 years get to keep a little something. Again, this is a pretty good system, the problem is that they want to raid Tricare to pay for it.
 

whitesoxnation

Well-Known Member
pilot
Contributor
I'm pretty sure that all employer backed retirement plans (ie 401k's) require paycheck contributions, or else they become IRAs and you play by that set of rules.

You can reallocate your TSP funds as many times as you like however you like through TSP's website. No DD-ID10T form necessary. But yes, you do have to purchase one of their funds. They do lack specificity (you essentially get to choose one of 5 index funds), but they also have dirt cheap fees.

Most servicemembers would make more money for retirement with the blended plan than not, and servicemembers who leave before 20 years get to keep a little something. Again, this is a pretty good system, the problem is that they want to raid Tricare to pay for it.

According to the TSP website you're only allowed to to transfer money between funds 2x a month, and any transfers after that are only able to be transfered into the G (t-note/bond) fund.
 

Spekkio

He bowls overhand.
Good find, but as TSP is a long-term investment account I've never found the need to reallocate funds more than twice a month. Still more liberal than Vanguard's 30- or 60- day wait for trading their index mutual funds.
 

whitesoxnation

Well-Known Member
pilot
Contributor
Good find, but as TSP is a long-term investment account I've never found the need to reallocate funds more than twice a month. Still more liberal than Vanguard's 30- or 60- day wait for trading their index mutual funds.

And how about an index ETF?
 

Spekkio

He bowls overhand.
I don't use ETFs for my IRA as they don't have an auto-invest option from your bank account, so I can't answer any restrictions they may have on their index funds. The ability to day trade with my IRA is not a feature that I need, but being able to 'set it and forget it' with my monthly contributions is, particularly when deployed.

If you are using a TSP account to day trade, you're doing it wrong.
 

whitesoxnation

Well-Known Member
pilot
Contributor
I don't use ETFs for my IRA as they don't have an auto-invest option from your bank account, so I can't answer any restrictions they may have on their index funds. The ability to day trade with my IRA is not a feature that I need, but being able to 'set it and forget it' with my monthly contributions is, particularly when deployed.

If you are using a TSP account to day trade, you're doing it wrong.

How does the TSP determine what price level your money is invested at? If you want X amount of your money invested in one of their index funds what is the method they use to determine when it will be invested?
 

HAL Pilot

Well-Known Member
None
Contributor
I'm pretty sure that all employer backed retirement plans (ie 401k's) require paycheck contributions, or else they become IRAs and you play by that set of rules.
I'm pretty sure you are wrong.

I have an employer 401K retirment plan. I put in $0. My employer puts in amount equal to 23% of my earnings. I could put in something if I wanted but that would put me over the combined employer/employee limit including my catch up). Even if this were not the case, I am still not required to put any money in myself.
 

villanelle

Nihongo dame desu
Contributor
I'm pretty sure that all employer backed retirement plans (ie 401k's) require paycheck contributions, or else they become IRAs and you play by that set of rules.

You can reallocate your TSP funds as many times as you like however you like through TSP's website. No DD-ID10T form necessary, and unlike Vanguard they don't have a minimum holding time before you can trade again. But yes, you do have to purchase one of their funds. They do lack specificity (you essentially get to choose one of 5 index funds), but they also have dirt cheap fees.

Most servicemembers would make more money for retirement with the blended plan than not, and servicemembers who leave before 20 years get to keep a little something. Again, this is a pretty good system, the problem is that they want to raid Tricare to pay for it.

I had an employer plan (working for a state university) that gave us a 10% 403b contribution, no match required. So basically it was an extra 10% pay, dumped into a retirement account. Beyond that, we were able to contribute more, but there was no match. Unusual, but not unheard of.

---
I didn't read this article in the OP, but last I read about this plan, it was basically FERS. And FERS offers a 1% contribution with no match required. After that, the employee has to pony up to get the match. So it seems this plan does have a something for nothing. Which is good as I wonder how many E-3s can/will afford to give up some of their pay to get a match. At least they'll still have that "free" 1%.

That said, being that Husband plans to do 20 and is most of the way there, I'm glad he'll be grandfathered in. Certainly this new plan is a big loss for those who do 20. The 20% reduction in benefit amount (from 50% of pay to 40% of pay) isn't catastrophically different, especially with the TSP contribution and match, and that small bonus at 12 to make up for some of it. But waiting until retirement age to start the pension is a giant difference. That makes me wonder what this will do to retention, when the carrot on the end of the stick is much smaller and they've added a lot of interim carrots for those not interested in the larger one at the end. And how much will be spent on bonuses to counteract any possible retention repercussions?

Is retirement a retention program, or a fairness program?

In the end, the changes aren't truly for the purpose of making things more fair (something for everyone, not just the 20s!), though that's how it's being sold. It's a financial decision. This should be be cheaper, assuming they don't have to use a ton of bonuses to keep people in or go to the model of adding more guys at the beginning (and paying their salary and training) so that you end up with the numbers you need at O-4+.

Since it's a volunteer service, I guess the labor market will be the final arbiter on whether this is works for enough people, and in the right ways, to give the military the manning it needs.
 

wlawr005

Well-Known Member
pilot
Contributor
I didn't read the article either. How many years required to keep the old 50% at 20 program?
 

roflsaurus

"Jet" Pilot
pilot
It's says current military members aren't required to opt into the new plan. Also, I may have missed it, but I didn't see anything about waiting until retirement age to start collecting. I've been a pretty big proponent of keeping retirement the way it is, but to be honest, this looks like a pretty good deal. I won't be opting in, due to the loss of 8 years worth of contributions I've already missed out on, but still a good deal for newbs.

And the TSP is great. You won't find mutual funds with lower expense ratios ANYWHERE EVER. Sure, there aren't a lot of choices, but we're in the military. Since when do any of us like choices? :)
 

Flash

SEVAL/ECMO
None
Super Moderator
Contributor
...I didn't read this article in the OP, but last I read about this plan, it was basically FERS. And FERS offers a 1% contribution with no match required. After that, the employee has to pony up to get the match.

It is very similar to FERS but most earn only 1% a year towards retirement (law enforcement, fire fighters and a few others get 1.7% a year up to 20 years) and have to contribute towards retirement as well (0.8% to 4.4% of your pay depending on when you joined the civil service) while the military earns 2% with this proposed retirement plan.

Since it's a volunteer service, I guess the labor market will be the final arbiter on whether this is works for enough people, and in the right ways, to give the military the manning it needs.

Yup!
 
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Spekkio

He bowls overhand.
I'm pretty sure you are wrong.

I have an employer 401K retirment plan. I put in $0. My employer puts in amount equal to 23% of my earnings. I could put in something if I wanted but that would put me over the combined employer/employee limit including my catch up). Even if this were not the case, I am still not required to put any money in myself.
What I meant was that IF you contribute to your 401k, the money must be deducted before it touches your bank account similar to TSP, which is something that whitesoxnation took issue with. I didn't mean that all employers require paycheck contributions.
 
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