Why Military Members Don’t Get Matching Contributions in the Thrift Savings Plan – Unless They Participate in the Blended Retirement System

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TShrift Savings Plan Matching Contribution ChartCivil Service members receive a matching TSP contribution.
The Thrift Savings Plan is a great investment opportunity for military service members and eligible civil service members working for the US government. The TSP offers the opportunity to save in a traditional or Roth retirement account. And while the TSP doesn’t offer too many investment options, it offers among the lowest cost investment funds…

The Thrift Savings Plan is a great investment opportunity for military service members and eligible civil service members working for the US government. The TSP offers the opportunity to save in a traditional or Roth retirement account. And while the TSP doesn’t offer too many investment options, it offers among the lowest cost investment funds you will find anywhere.

Thrift Savings Plan Matching ContributionsThe Thrift Savings Plan is virtually identical for military members and civil service members, but there are some small differences you should be aware of.

The first is that they are actually housed under different plans. You can have a military TSP account and a civil service TSP account, but they will be separate accounts. You can be eligible for both accounts if you worked for one agency and then another, or even if you work for both at the same time (this is common for many Guard or Reserve members who are dual status technicians).

You also cannot combine these accounts if you are still eligible to contribute to both of them. You can only combine them after you are no longer eligible to contribute to one or both of them. (Even then, you may not wish to combine your military TSP account if you have contributions that were made in a tax-free zone).

Another big difference is that civil service members have an automatic agency matching contribution added to their account. In fact, matching contributions are automatic for new employees.

This was not the case for military members until January 1, 2018, and only if the member had either opted into the Blended Retirement System or joined the military after January 1, 2018, and were automatically enrolled in the BRS.

Matching TSP Contributions for Military? Only in the Blended Retirement System

As a general rule of thumb, military members who are in the High 3, or High Pay, or REDUX retirement plans are not eligible for matching TSP contributions. This has changed for those who participate in the Blended Retirement System.

Let’s take a look at agency matching contributions, then dive into why military members don’t get them.

Thrift Savings Plan Matching Contributions

This chart shows how Thrift Savings Plan matching contributions are made for civil service employees who fall under the Federal Employee Retirement System (FERS). Federal employees under the Civil Service Retirement System (CSRS) system are not eligible for agency contributions to their Thrift Savings Plan account.

TShrift Savings Plan Matching Contribution Chart
Civil Service members receive a matching TSP contribution.

As you can see from the chart above, civil service members get a 1% agency contribution regardless of whether or not they elect to defer any of their own pay. FERS Civil Service members will then receive a 1% match for the next 2% of their pay that they defer, for a total of 5% contribution (2% member deferral, 1% automatic agency contribution, and 2% match = 5%).

FERS Civil Service members receive 0.5% match for each of the next two percentage points of pay they defer, up to a total agency contribution of 5% (1% automatic contribution, plus up to 4% matching contribution).

Most Military Members Don’t Get Matching TSP Contributions

If have been in the military for more than a few years, you are probably wondering why you don’t get matching TSP contributions. It’s not that military members can’t get them, it’s that you probably don’t.

The secretary of each branch of the armed forces is authorized to allow matching contributions for servicemembers in critical specialties. These matching contributions are generally given as incentives to servicemembers who agree to serve 6 years on active duty in those specialties. According to Wikipedia, the last time this was available was the end of 2008.

Of course, this has changed with the new Blended Retirement System, which combines the traditional pension with the Thrift Savings Plan.

How Matching TSP Contributions Work for Military Members

Matching contributions are only made to contributions from base pay. So any incentive pay, special duty pay, bonuses or other pay used to fund your Thrift Savings Plan won’t count toward your matching contributions.

After that, the formula is similar to to the civil service formula.

Members will receive a 1% automatic contribution to their TSP account.

After that, they will receive a 1% matching contribution for the first 2% of their pay they contribute. Members will then receive a 0.5% match on for each of the next two percentage points of pay they defer.

The maximum matching contribution is up to 5% of the member’s pay. Members can contribute more than 5% of their pay if they wish (and their future self will be happy they did!). But they will only receive a match on the first 5% they contribute.

Why Don’t All Military Members Get Matching Contributions?

All members who join the military on or after January 1, 2018, will receive matching contributions to their TSP because they will automatically be enrolled in the Blended Retirement System.

But others who joined before that date and chose not to switch to the BRS will not receive matching TSP contributions.

In theory, the secretary of each branch had the power to allow this. However, these funds would need to come out of personnel funds, which are limited each year by budgets mandated by Congress. In other words, they could do it, but they would have to cut funds elsewhere.

Those funds are generally allocated to other needs, such as paying military salaries, selective enlistment and reenlistment bonuses, retention pay, and more. Giving everyone a matching contribution would mean cutting force strength numbers, which would leave the services shorthanded.

How to Use This When Making Investment Decisions

You should look at all your options when trying to decide between investing in the TSP or another investment opportunity. In general, most military members should be eligible to participate in the Thrift Savings Plan and an IRA.

Which is better? It depends on your situation. We covered this in more depth in the following article: comparing TSP and an IRA.

Bottom line: Don’t get caught up on whether or not you receive a matching contribution. It’s neither fair nor unfair. It just is. The important thing is to look at the opportunities available to you and take advantage of them. In my opinion, the Thrift Savings Plan rocks. It’s a great opportunity, with or without a matching contribution. Take advantage of it. You will happy with yourself 20 or 30 years from now when you see a 5 or 6 figure balance in your TSP account.

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About Ryan Guina

Ryan Guina is the founder and editor of The Military Wallet. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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  1. Orlando Costa says

    If I started my TSP account on 2019, do I automatically get the 5% match if I contribute 5% ? or do I need to wait 2 years before I get the 5% match?

    • Ryan Guina says

      Hello Orlando,

      My understanding is that military members will begin receiving an automatic contribution of 1% of their base pay from the DoD beginning 60 days after entering the military.

      Members will begin receiving matching contributions up to an additional 4% of their pay (5% total) once they have completed two years of service (starting at 2 years, 1 day of service). The maximum DoD contribution is 5% if the service member is contributing 5% of their basic pay.

      I hope this helps!

  2. John says

    Where can I find out which job’s “MOS’s” in the ARMY are receiving the match contributions? The reason I ask is because I am in a MOS that is part of a manatory reclass.

    • Ryan Guina says

      Hi John, The best thing to do is speak with someone in your retention office, human resources, or personnel (or equivalent office in your branch of service). They should be able to provide that information or at least point you in the right direction. I wish you the best, and thank you for your service!

  3. kumalo says

    With the new changes with the army deciding to implement the match making changes for those whose do not retire in the army. Where I need clarification is what happens to those who had been contributing before the changes, do we have a match for contributions we made 3years ago? Thanks in advance…

    • Ryan Guina says

      Hello Kumalo, The new retirement plan doesn’t go into effect until 2018. There won’t be any matching TSP contributions until that time. When the matching TSP contributions do take place, they will only happen for contributions going forward, and will not be retroactive to previous TSP contributions. Additionally, you would need to opt in to the new retirement system to be eligible to receive matching contributions.

  4. Robert Smith says

    Getting ready to retire from the military and a Government Service position is an option I’m looking into. I have a question along the above article that I can’t seem to find an answer for. Do FERS Civil Service members (GS emloyees) have the same option as Active Military to invest in both the Traditional IRA and the “ROTH IRA” within TSP for FERS Civil Service members? I’ve heard there is the above mentioned matching for FERS Civil Service members, but they might not have the ability to invest in ROTH IRA within their TSP. Can you answer this question or share a link I could go read to get my answer? Thanks in advance.

    • Al says

      @ Robert Smith all FERS government employees may contribute to both a traditional IRA and the Roth TSP. If you invest at least 5% of income into your Roth TSP, you will receive the 5% match in your traditional TSP account.

      If you mean to ask if one may invest in both the traditional TSP and Roth TSP, the answer is yes.

  5. Pnlopea says

    In the information provided in your article, I did not discover an answer to the question of why the Fed Govt does not pay the 1% into an automatic TSP account for military members. Since the tax-payer is the ultimate guarantor of all Fed govt retiree pensions, etc, this makes no sense. The tax-payer would put military members at the top of the list of employees that should receive any additional benefits; it seems absurd that civilian paper pushers receive this benefit and active duty military members deployed multiple times into combat zones and FOB assignments do not. Please do not use the reasoning that the commander would need to make cuts to force strength due to cost. Congress or executive branch could easily provide a program to match the civilian program w/o deducting from military budgets! Thank you

    • Ryan Guina says

      Pnlopea, I clearly stated that the Secretary of each branch of the service can authorize TSP matching contributions under certain circumstances, but the funds would come out of the overall budget and cuts would have to be made elsewhere. Could the law be changed? I’m sure it could. But with the military downsizing and cutting back on other benefits, that would be a tough sell. If this is something you feel strongly about, then I recommend contacting a military lobbyist group to see if they have plans to lobby for this change, or would consider it among their top priorities for military and veterans benefits. You could also contact your Congressional Representative in regard to sponsoring a bill that would provide funds for the military to provide matching contributions for all servicemembers.

      Additionally, a hybrid retirement plan combining a reduced pension along with TSP contributions by the government is being considered as a replacement for the current retirement system (all current members would be grandfathered in, but could opt for the hybrid retirement plan if they wish). Here is more information: 2015 Military Compensation and Retirement Modernization Commission Recommendations.

  6. USPS Letter Carrier says

    You incorrectly state: “Civil Service members receive…”

    That should read FERS members. Civil Service members are part of CSRS or Civil Service Retirement System and do not receive any matching

    • Ryan Guina says

      Thanks for your comment. The article stated Agency matching for TSP participants was limited to FERS civil service members. However, each subsequent mention of civil service members did not state FERS. I have more clearly stated this so there is no confusion.

  7. Anton Ivanov says

    Great info – I came here with the questions as to why military members don’t get automatic matching TSP contributions. I now have my answer! Agreed that an all-service matching contribution program would be very expensive, but it would be a great selling point for new recruits or those think about re-enlisting.

    • Ryan Guina says

      It would be a great selling point for new recruits, but I think that if the military ever goes to a program where the match TSP contributions for all members, then they would do it by reducing retirement benefits, either by reducing the multiplier for each year of service, or they would do away with it altogether. I don’t see how the military could afford to do both. Here are most recent proposed changes to military retirement plan benefits from the Defense Business Board. It’s not a pretty proposal for anyone serving under today’s generous retirement program!

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