When you’re automatically enrolled in a retirement savings plan, your employer chooses the rate at which contributions will be deducted from your pay. That’s called the default rate. The employer also chooses how your contributions will be invested. That’s called the default investment. In the BRS, the default rate is 3% of base pay, and the default investment is a TSP lifecycle (L) fund.
For example, if your base pay is $1,500 a month, or $750 each pay period at the time you’re initially enrolled, you’ll contribute $22.50 ($750 x 0.03 = $22.50) twice a month. That’s $540 a year. Then, as you move up in rank over the years, and your pay increases, the amount you contribute will increase as well.
For the first two years you’re in the BRS, the DoD contributes an automatic 1% of your base pay. Using the same $750 per pay period, the DoD would add $7.50 ($750 x 0.01 = $7.50) twice a month to your account. As you begin your third year of active duty, the DoD will also begin to match your contribution at a rate of 100% of the first 3% of base pay and 50% of additional contributions up to 5% of base pay.
For example, if, at the two-year mark, your base pay has increased to $1,900 a month, or $950 per pay period, and you’re still contributing at the 3% rate, you’d be adding $28.50 twice a month ($950 x 0.03 = $28.50) and the DoD will be adding a match of $28.50 plus the automatic 1% ($950 x 0.01 = $9.50). That’s a combined total of $66.50 a pay period or $1,596 a year.