Author Topic: TSP/BRS December Match Issue  (Read 578 times)

epps

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TSP/BRS December Match Issue
« on: January 26, 2019, 12:31:36 PM »
I'm wondering if anyone else ran in to this problem last December with agency matching in a uniformed services TSP account. I maxed out my roth TSP contributions with my december contribution (i.e hit $18,500 with the December pay period check/ paycheck on January 1st, 2019 meaning I did not reach the limit prior to the last pay period that I know will freeze you out of the match). Although I contributed greater than 5% (don't have the exact number because my normal contribution that is around 1/12th of the yearly limit was lowered slightly automatically by the system). I did not receive my matching contribution, but I did recieve my automatic contribution.

Although I contributed at least 5%, it appears because I hit the contribution limit PERIOD I was locked out of matching contributions nonetheless during that month. This doesn't seem correct to me, so I'm planning to go to finance to see what they have to say. I wanted to check and see if anyone else ran in to this issue or if there is documentation somewhere that suggests that I should have seen this coming? From the policies I have been able to find from TSP (https://www.tsp.gov/PDF/formspubs/tspbk08.pdf as an example) as long as I put in 5% I should receive the match for that month. It is super frustrating if this is the case, because then the standard Contribution Limit/ 12/ Monthly Net set it and forget it method of tuning TSP contributions will cost you that last month of matching, so you'll have to try to contribute as close as possible to 18,999.99. This is a major pain to do in DFAS to ensure that it hits at the right time. A rough back of the napkin look at the cost of this in my case adds up to a loss of over $25,000 (a year of my current expenses) in todays dollars with an after inflation growth of 5% by age 59.5 without going through the trouble to add in pay raises etc. Not a game changer by any imagination, and not enough to change my decision between BRS and legacy had I known about it last January, but frustrating nonetheless.

Anyone else have this problem or thoughts before I go in to finance and look like an idiot?

TLDR- Public service announcement that even if you max your contribution to the Roth TSP in the final pay period, you will lose that month's match the way the system is currently set. Not cool.
« Last Edit: January 26, 2019, 12:56:43 PM by epps »

Sailor Sam

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Re: TSP/BRS December Match Issue
« Reply #1 on: January 26, 2019, 03:04:13 PM »
Hrm. I stayed with legacy, but my wife switched over to BRS, with contributions to maximize on pay check 24. I just queried her, and she says she got the 5% match.

You said DFAS, so I'm assuming DoD? The USCG doesn't seem to be having the same issue, so perhaps you should tell Finance to call Topeka, and get their shit straightened out? ;)

paging @Nords. Commander, we need you!

Nords

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Re: TSP/BRS December Match Issue
« Reply #2 on: January 26, 2019, 04:25:19 PM »

Anyone else have this problem or thoughts before I go in to finance and look like an idiot?

TLDR- Public service announcement that even if you max your contribution to the Roth TSP in the final pay period, you will lose that month's match the way the system is currently set. Not cool.
Epps, we see a lot of complaints every year about December TSP transactions... and this was even before the BRS software was implemented.

Have you checked your TSP account balances for 2018?  Are all 12 DoD BRS matching contribution transactions in your traditional TSP account statements, or is one match missing?  Are all the agency contributions in your traditional TSP account statements?  If you have 12 agency contributions and 11 matching contributions then we know that it's DFAS's fault to fix.

Does your W-2 match your January LES?  I'm out on a limb here, but it's possible that your DoD BRS matching contributions might be reflected in an info box of your W-2.  I'm not sure whether matching contributions are included on a DFAS W-2, but they add a bunch of extraneous numbers there.

Maybe DFAS or the FRTIB were impacted by the government shutdown?  I know that DoD was funded and largely not affected, but I don't know who at DFAS or the TSP might have been furloughed... or which contractors were suspended.  Your LES might have been wrong just because there wasn't any labor to update it.

In any case, as much fun as going to the finance office may be, I'd wait until about Tuesday 12 February to start the inquisition.  By that time hopefully DFAS and the TSP will have balanced their books for 2018 and reconciled any mistakes... and they'll be able to talk to you before the government shuts down again on Friday 15 February.

The FRTIB and the DoD Financial Readiness Office know that they have a big-time BRS TSP training problem, and that they need to release more of the TSP staff's internal training curriculum to servicemembers & families.  That might happen in 2019... or 2020.  I'm a persistent thorn in their sides on that topic, because I keep pointing out the contradictions between what the TSP website says and what the TSP computers actually do.

paging @Nords. Commander, we need you!
Thanks, Sam!

Y'know, I think we need to expand the definition of work-related stress.  It's been nearly 17 years since I retired, but whenever I hear the words "Commander" or "Mr. Nordman" then reflexively and involuntarily (1) my sphincters clench, or (2) I look behind me to see who they're talking to, or (3) I feel guilty. 

Or all of the above.

darkelfx

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Re: TSP/BRS December Match Issue
« Reply #3 on: January 26, 2019, 05:11:59 PM »
@Nords Can you go into more detail on how that matching works for people close to, if not already, maxed TSP contributions right before the end of the year? I was under the impression that the DoD 5% matching they do counts towards your annual contribution limit, so ideally you're supposed to contribute enough each month and add the match to your contribution total for the year to hit the max limit for the year. Or am I completely wrong? This was never clarified to me so I've been contributing less than the max to make sure I still get the match every month because I was told if I hit my contribution limit before the year-end, the matching stops until the year resets.

Nords

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Re: TSP/BRS December Match Issue
« Reply #4 on: January 26, 2019, 05:33:02 PM »
@Nords Can you go into more detail on how that matching works for people close to, if not already, maxed TSP contributions right before the end of the year? I was under the impression that the DoD 5% matching they do counts towards your annual contribution limit, so ideally you're supposed to contribute enough each month and add the match to your contribution total for the year to hit the max limit for the year. Or am I completely wrong? This was never clarified to me so I've been contributing less than the max to make sure I still get the match every month because I was told if I hit my contribution limit before the year-end, the matching stops until the year resets.
Yep, I can go into lots of detail and nope, the DoD 5% matching does not count against the elective deferral limit ($19K in 2019).  That’s listed in the TSP contribution limits table.  Which admittedly is a lot more complex than I’d thought possible, so you’re also right that it’s never been clarified. 
https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/contributionLimits.html

You’ve been told incorrectly about the matching for the EDL.  The matching does indeed stop if you personally contribute $19K to the TSP before December, but your $19K contribution limit does not include DoD's BRS agency/matching contributions.

The regular annual limit (elective deferral limit) says:
“Applies to combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay, and bonus pay, but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone.”
The table doesn’t explicitly say this, but we’re supposed to infer by omission that agency automatic & matching contributions are not counted against the $19K limit.  You can contribute $19K to the TSP from your own pay, and still get a few thousand more bucks in agency (1%) and matching (up to 5%) contributions.

In other words, you can contribute as much as $1583.33 to the TSP each and every month and still receive another 5% of your base pay every month in BRS agency/matching contributions.  Of course in December you can go hog-wild and contribute $1583.37 to maximize your $19K. 

You could even sort of front-load the TSP by contributing all but 5% of your base pay during January-November, and then contributing "just" 5% of your base pay in December.  That earns you the full agency/matching contributions all year long.

The problem is that DFAS' MyPay (or Marine OnLine, or the USCG/NOAA/USPHS Direct Access) systems calculate your contribution in percentages, not dollars.  (There's a proven psychological reason* for this, but it still makes the math painful.)  You have to figure out the conversion between $1583.33 and your total pay amounts, and how you want to split it among the various pays, and how you want to split it between Roth TSP & Traditional TSP.  (See the MyPay screenshot below.)  Even then you still have to watch out for January pay increases, longevity increases every couple of years, the start/stopping of certain incentive & specialty pays like sea pay or sub pay, and the occasional bonus contract pay installment.

I’ve confirmed this with the DoD BRS office and the TSP.  In Spencer’s case at MilitaryMoneyManual, that amounted to an additional $2687 of DoD’s “free” money.  He ended up adding a grand total of $21,187 combined into his Roth TSP and traditional TSP accounts in 2018... in his case $18,500 in the former and the $2687 in the latter.
https://militarymoneymanual.com/brs-tsp-match-contribution-value/

The higher limit for combat deployments (annual addition limit, $56K in 2019) says:
“An additional limit imposed on the total amount of all contributions made on behalf of an employee in a calendar year. This limit is per employer and includes employee contributions (tax-deferred, after-tax, and tax-exempt), Agency/Service Automatic (1%) Contributions, and Matching Contributions. For 415(c) purposes, working for multiple Federal agencies or services in the same year is considered having one employer.”
This is how we’re supposed to know that the lower EDL does not include agency/matching contributions... because the higher AAL does include them.

Note that if you deploy to a combat zone and you’re eligible for the higher AAL, you still have this fine print in the TSP contributions table:
“If you are a member of the uniformed services, you should know that Roth contributions are subject to the elective deferral limit ($19,000 for 2019) even if they are contributed from tax-exempt pay. If you want to contribute tax-exempt pay toward the annual additions limit, you will have to elect traditional contributions for any amount over the elective deferral limit.”

What that footnote means in practice is that if you hit the EDL ($19K for 2019) in your Roth TSP anytime before December, then the TSP will shut down your contributions for the rest of the year-- even if you’re still deployed to that combat zone.  I’ve also confirmed that several times with the DoD BRS office and the TSP:
https://the-military-guide.com/maximizing-your-thrift-savings-plan-contributions-in-a-combat-zone/

[* Since the TSP's creation in 1986, the federal government has learned that some employees would set their TSP contributions at a certain dollar amount... and never change them.  For 30 years.  The $10 that they had deducted from their first paycheck in 1987 would still be a $10 deduction at their retirement ceremony in 2017.  Because of this, a few years ago the Defense Finance and Accounting Service moved from dollar-amount contributions to percentages-of-pay contributions.  This way the military's default contribution of 3% (upon joining the military) rises with every annual pay raise and promotion.  Even if someone's contributing just 5% in order to get the full DoD BRS agency/matching contribution, it'll still go up with every pay raise and promotion.  Of course some servicemembers try to push the annual contribution limits, so they have to watch their percentages.  DFAS also sets the maximum contribution limits of 92% in order to have enough left from the remaining pay for FICA (7.45%), and 60%-65% in order to have enough left over for federal/state income-tax deductions.]
« Last Edit: January 26, 2019, 05:49:24 PM by Nords »

darkelfx

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Re: TSP/BRS December Match Issue
« Reply #5 on: January 26, 2019, 06:20:26 PM »
@Nords Wow a lot of info, but thank you for clarifying that! Full speed ahead I guess :)

Sailor Sam

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Re: TSP/BRS December Match Issue
« Reply #6 on: January 27, 2019, 05:36:44 PM »
paging @Nords. Commander, we need you!
Thanks, Sam!

Y'know, I think we need to expand the definition of work-related stress.  It's been nearly 17 years since I retired, but whenever I hear the words "Commander" or "Mr. Nordman" then reflexively and involuntarily (1) my sphincters clench, or (2) I look behind me to see who they're talking to, or (3) I feel guilty. 

Or all of the above.

I have that same reaction, but my pavlovian trigger is "Hey, XO."

epps

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Re: TSP/BRS December Match Issue
« Reply #7 on: January 30, 2019, 12:56:43 PM »
Thanks for the feedback. Nords hit it on the head, I think DFAS was messed up by the shutdown. The match did in fact show up in my TSP, just not reflected on my LES. Crisis averted, thanks for the help!