One of the most common questions we are asked is about the difference between the Thrift Savings Plan (TSP) and the Blended Retirement System (BRS). This is a natural question as while they are separate entities, they are linked together as well.
What is the Thrift Savings Plan? (Taken from TSP.gov)
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees’ Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency, if you are eligible to receive agency contributions) put into your account during your working years and the earnings accumulated over that time.
How does the BRS & TSP link together?
The Blended Retirement System is composed of multiple aspects, but primarily it is composed of two parts. The first part of the BRS is the Thrift Savings Plan investment model (automatic 1% and matching 4%). The second part of the BRS is the pension upon reaching retirement age/time in grade.
The TSP is the primary mechanism by which approximately 80% of DoD servicemembers exiting the military before their 20+year mark can invest in their retirement, although this is, of course, a good investment for those 20% of DoD servicemembers who will retire with a military pension. There are of course dozens of other methods that a DoD servicemember can save for retirement outside of the Blended Retirement System. These include, but are not limited to an IRA or Roth IRA.
