FINANCIAL MANAGEMENT

1. FINANCIAL MANAGEMENT Element 42

2. Purpose • To inform the member of the financial resources available to help with transition.

3. Thrift Savings Plan (TSP) OVERVIEW TSP Questions to ask your Sailors Are you contributing to TSP? Do you know how to start contributing to the TSP? Do you know the difference in Roth/Traditional TSP? Do you have a TSP account? Do you know where your funds are invested?

4. MyPay and TSP Start or Stop my TSP Increase or decrease my TSP Choose Roth or Traditional Change my address

5. Tax Treatment Options Traditional Taxes paid upfront Tax-free earnings when withdrawn • Taxes deferred • Taxable when withdrawn Roth

6. Index-Based Funds

8. Lifecyle (L) Funds

9. Two Investment Approaches

10. Leaving the Military and TSP • Leave funds in the TSP, if more than $200. If less than $200, TSP will automatically send a check for the amount in the account. • Transfer to IRA or other plan • Contribute via transfer • Withdraw funds (Partial and Full Withdrawals)

11. TSP optional to supplement • retirement income Thrift Saving Plan • Defined-ContributionPlan, similar to 401(k) program • Contributionsarefromtheemployee • Aportionmay/maynotbematchedby employer • Eachparticipanthasan individualaccount • Thebenefitatretirementdependson amountscontributed+investmentperformanceofaccount • Investmentriskmay restsolelywiththeemployeedueto opportunityto choose fromanumberofinvestmentoptions

12. Legacy Retirement System -Defined annuity benefit (pension) computed as 2.5% X Years of Service X Retired Base Pay - Must serve at least 20 years *Retired base pay is an average compilation of the pay that the service member received at their highest rank, for consecutive 36 months. Example: An 0-5 grade who served 20 years with a retired basic pay of $8,500. 2.5% X 20 years X $8,500 = $4,250 monthly pension

13. Blended Retirement System • Combines the legacy 20-year military retirement system with a defined contribution plan, known as TSP. • Computed as 2.0% X Years of Service X Retired base pay Example: An 0-5 grade who served 20 years with a retired basic pay of $8,500. 2.0% X 20 years X $8,500 = $3,500 monthly pension

14. 4 Major Changes • Automatic 1% DoD contributions after 60-days of military service for 26 years after entry date. • DoD will match service member’s contribution up to 4% additional matching contributions after two-years of service to the member’s TSP account. • New service member will be automatically to contribute 3% of their basic pay. • Invest contributions in an “age appropriate” lifecycle (L) fun rather than (G) fund, unless members choose otherwise.

15. After 60 days After 2 years • Continuation Pay • Mid-career incentive designed to maintain force retention • Payable after 12 years of service • Minimum is 2.5 x monthly basic pay (0.5 x for RC) • Lump Sum • May elect lump sum of 25% or 50% at retirement • Discounted present value from retirement to age 67 • At age 67, reverts back to full annuity

16. Who is Affected? • If serving as of December 31, 2017: • GRANDFATHERED in current retirement system • NO ONE will be automatically moved to BRS • Many currently-serving members eligible to opt into BRS • Active: Fewer than 12 years of total service as of Dec. 31, 2017 • Reserve: Fewer than 4,320 retirement points as of Dec. 31, 2017 • Eligible members have all of CY 2018 to make their decision • Member wants to stay covered under current system – do nothing • Member decides BRS is better – can opt in • New accessions on or after January 1, 2018 covered by BRS

18. Survivor Benefit Plan (SRP) • The Survivor Benefit Plan (SBP) was established by Congress to provide monthly income to survivors of retired military personnel upon the member’s death when retired pay stops. • It pays your eligible survivors an inflation-adjusted monthly income. • A military retiree pays premiums for SBP coverage upon retiring.(Automatic election if no election is made) • The maximum SBP annuity for a spouse is based on 55 percent of the member's retired pay, smaller amount may elected.

19. SBP cont… • Eligible children receive benefits only when the spouse dies and equally divide a benefit that is 55 percent of the member's elected base amount. • Coverage is also available for a former spouse or, if the retiree has no spouse or children, for an "insurable interest" (such as a business partner or parent). - Designed to protect member’s retired pay against member’s early death, the survivor outliving the benefits, and inflation.

20. CAUTION! If you are married and decline SBP at retirement, you will not be eligible to later cover that spouse, or cover a new spouse should this marriage end in death or divorce and you later remarry. To be eligible to provide SBP coverage for a later acquired spouse, you must elect coverage for your spouse at retirement.

21. Indirect Compensation • Medical care/Dental • BAH/BAS • State/Local Tax Advantage • Serviceman’s Group Life Insurance (SGLI)

22. Indirect Compensation cont… • Commissary and NEX • Education Programs (TA,NavyCool) • Fleet and Family Programs/Legal Counselling • Space Available Travel/Gym Membership

23. Navy ePFM TGPS/Capstone Command Financial Specialist PFM at Fleet and Family Support Center For Guard and Reservist not located near a military installation, Military OneSource can offer assistance

24. Local Resources: Command Financial Specialist (CFS)

25. Resources: • http://military pay.defense.gov/Calculators/RMC-Calcular/ • TSP: www.tsp.gov or the Thriftline at 1-877-968-3778 • TSP forms: www.tsp.gov/forms/index.html • BRS Info: http://militarypay.defense.gov/blendedretirement • SBP: http://militarypay.defense.gov/benefits/survivor-benefit-program/ • www.militaryonesource

26. Questions?