Bulletin 17-U-3
August 29, 2017

Revision to Implementation of the Blended Retirement System

The National Defense Authorization Act for Fiscal Year 2016, Public Law 114-92, signed into law November 25, 2015, authorized the uniformed services1 to change their traditional retirement plan from one that relied primarily on a cliff-vested defined benefit to one that blends a reduced defined benefit with enhanced Thrift Savings Plan (TSP) benefits, continuation pay, and retention bonuses paid at defined career milestones. The new retirement system is known as the Blended Retirement System (BRS).

1 The uniformed services consist of the Army, Navy, Air Force, Marines, Coast Guard, the Commissioned Corps of the Public Health Service, and the Commissioned Corps of the National Oceanic and Atmospheric Administration.

Services may not make Blended Retirement System (BRS) contributions prior to the first full pay period in 2018.

This bulletin discusses the changes to records and reports that both the TSP and the services must implement to process the contributions of members who are participating in the BRS. TSP Bulletin 02-U-21, dated July 25, 2002, explains how payroll office submissions of member data and TSP contributions are processed after September 2002; TSP Bulletin 05-U-2, dated January 26, 2005, discusses the elimination of TSP open seasons and the restrictions on contribution elections that are tied to open seasons; and TSP Bulletin 11-U-8, dated September 19, 2011, discusses the implementation of Roth TSP contributions.

  1. Definitions
  2. Automatic Enrollment and Reenrollment
  3. Procedures for Members Who Have Opted into BRS
  4. Employee Data (06) Record (EDR)
  5. Erroneous Forfeitures of Service Automatic (1%) Contributions
  6. New Default Investment Fund for Blended Retirement and Beneficiary TSP Participants
  7. Processing Service Automatic (1%) Contributions and Matching Contributions
  8. Records, Journal Vouchers and Error Codes List
  1. Definitions
    1. annual additions limit. An annual dollar limit, established under the Internal Revenue Code (IRC § 415(c)), for tax-deferred TSP member contributions, tax-exempt TSP member contributions, Roth TSP member contributions, Service Automatic (1%) Contributions and Service Matching Contributions. Catch-up contributions made by members are not subject to this limit, but have a separate IRC limit.
    2. automatic enrollment. Automatic deductions from basic pay for members covered by BRS who have a Date of Initial Entry into Military Service (DIEMS) of January 1, 2018, or later. Members who opt into BRS are not eligible for automatic enrollment. The Federal Retirement Thrift Investment Board (FRTIB) has set the percentage to be deducted from basic pay at 3%.
    3. Blended Retirement System (BRS). The term Blended Retirement System (BRS) refers to the uniformed service retirement system that applies to all new members with a DIEMS date of January 1, 2018, or later and to eligible members with a DIEMS date of December 31, 2017 or earlier who elect (opt in) to be covered by BRS.
    4. catch-up contributions. Contributions that are made by a member aged 50 or older and are permitted to exceed the Internal Revenue Code (IRC § 402(g)) elective deferral and annual additions limits (IRC § 415(c)).
    5. contribution allocation. A member’s designation that tells the TSP how contributions, transfers and rollovers, and loan payments that are going into his or her account should be invested among the TSP funds.
    6. contribution election. A request by a member to start contributing to the TSP, to change the amount of his or her contribution to the TSP each pay period, to terminate contribution to the TSP, or to change the contribution type (i.e., Traditional vs. Roth).
    7. Date of Initial Entry into Military Service (DIEMS). The Date of Initial Entry into Military Service (DIEMS) is the date a person was initially enlisted, inducted, or appointed in a regular or reserve component of a uniformed service as a commissioned officer, warrant officer, or enlisted member. Breaks in service do not affect a DIEMS date. Military academy cadets or midshipmen (date of entry into the academy), ROTC/NROTC cadets (date of scholarship contract or date the cadet began the advanced ROTC/NROTC course, whichever is earlier) and members of the delayed entry program (date enlistment contract signed, regardless of when the member entered active duty) are considered under these provisions. The DIEMS is the date of the initial contract signed by the service member obligating the service member to any type of military service—even if it was later voided. It determines which of the retired pay coverages the service member is eligible to use.
    8. elective deferral limit. An annual dollar limit established under the Internal Revenue Code (IRC § 402(g)) for tax-deferred TSP member contributions and for Roth contributions. Catch-up contributions made by members are subject to a separate IRC limit (IRC § 414(v)).
    9. Employee Data Record (EDR). The electronic record, also known as the “06 record,” used by the service’s payroll office to transmit to the TSP information about the member and the service in order to establish and maintain the member’s TSP account.
    10. forfeiture. The removal of Service Automatic (1%) contributions or Service Matching contributions and associated earnings by the TSP from a member’s TSP account. These funds are forfeited to the TSP to offset administrative expenses. Forfeitures occur in the following situations:
      1. Service Automatic (1%) Contributions are removed from the accounts of separated uniformed services members who do not meet the TSP’s two-year vesting requirement.
      2. Service Matching Contributions are forfeited to the TSP at the time a member requests and receives a refund of member contributions associated with the first 90 days of automatic enrollment.
      3. The TSP will also remove service contributions from the TSP account of a member who was incorrectly covered under BRS and whose record is later corrected. Contributions that have been in the member’s account for less than one year will be returned to the service upon the submission of negative adjustment records. Contributions that have been in the member’s account for one year or more will be forfeited to the TSP.
    11. late contributions. (1) member contributions that were timely deducted from a member’s pay but were not timely reported to the TSP recordkeeper for investment; (2) member contributions that were timely reported to TSP but were not timely posted to the member’s account because the payment record on which the contributions were submitted contained errors; or (3) member contributions attributable to a back-pay or similar award.
    12. makeup contributions. Member contributions that should have been deducted from the member’s basic pay on an earlier date but were not deducted, and, consequently, are being deducted currently.
    13. mandatory termination date. The date at which members lose eligibility for Service Automatic (1%) Contributions and Service Matching Contributions. It occurs when the member has completed 26 years of service and is calculated using the member’s Pay Entry Basic Date (PEBD).
    14. pay date. The date associated with a TSP contribution from basic pay earned during an applicable pay period.
    15. Pay Entry Basic Date (PEBD).2 The date that denotes how much service a member has for the purpose of determining longevity pay rates. The TSP will use this information to determine vesting period and eligibility to receive service automatic and matching contributions. Services use the PEBD to populate the Service Computation Date field on the Employee Data 06 – Record.
    16. reenrollment. The automatic enrollment that takes place in January when a member who was previously automatically enrolled has elected to terminate his or her contributions during the previous calendar year and has not elected to resume them by the last full pay period of that year. Such members are reenrolled in January at the 3% rate.
    17. Retirement Code. The code submitted by services to establish whether the member is in the active or reserve component and whether the member is covered by the traditional military retirement system or BRS.
    18. Service Automatic (1%) Contributions. Contributions equal to 1% of basic pay each pay period, contributed to a BRS member’s TSP account by his or her service, not from the member’s pay. Upon separation from service, members must meet the TSP two-year vesting requirement in order to keep these contributions and their associated earnings.
    19. Service Computation Date (SCD). The date the TSP uses to verify eligibility for Service Matching Contributions and Service Automatic (1%) contributions and to determine whether a member is vested. Services submit the PEBD to populate this field.
    20. Service Matching Contributions. Contributions a service must make each pay period when BRS members contribute to the TSP. The member is entitled to receive a matching contribution on the first 5% of basic pay he or she contributes to the TSP each pay period. See Section VII of this bulletin for more information.
    21. TSP Status Code. The code transmitted by the service’s payroll office to the TSP on an EDR that reflects a member’s participation in the TSP. Section IV of this bulletin provides the definitions and use of each of the TSP Status Codes.
    22. TSP Status Date. The date a member attained or changed his or her current TSP status. Service payroll offices provide the Status Date to the TSP on the EDR at the time the TSP Status Code changes. The Status Date information in Section VI of this bulletin provides the applicable Status Date a service should use when a TSP Status Code is changed.
    23. TSP Vesting Code. Reflects the number of years of service a member must have to be vested in (i.e., entitled to) Service Automatic (1%) Contributions. Members are fully vested in these contributions after two years of service. Consequently, payroll offices should enter a “2” in this field.

      2 The Navy and Marine Corps refer to this as the pay entry base date, while the Air Force calls it simply the pay date. DoD refers to it as the basic pay date. See “DoD Financial Management Regulation,” volume 7a, chapter 01, para. 100101 (Feb. 02).

  2. Automatic Enrollment and Reenrollment Back to Top
    1. Basic Rules
      1. Members who are covered by BRS and who have a DIEMS of January 1, 2018, or later are subject to the automatic enrollment and reenrollment provisions of Public Law 114-92, the National Defense Authorization Act of 2016.
      2. Services must deduct and contribute 3% of the basic pay of a member who is automatically enrolled NO LATER THAN the first full pay period following the date that is sixty days after the member’s PEBD.
      3. Members who have a DIEMS of December 31, 2017 or earlier are generally NOT subject to the automatic enrollment and reenrollment provisions of Public Law 114-92, the National Defense Authorization Act of 2016 even if they elect (opt in) to be covered by BRS.

        However, when an opt-in member separates and then reenters service, that member will be automatically enrolled.
      4. Members subject to automatic enrollment who terminate their contributions and do not elect to resume them by the last full pay period of the year must be reenrolled at a rate of 3% effective January 1st of the following year.
    2. Hardship and Reenrollment

      Auto-enrolled members who are in a non-contribution period at the end of the year should not be reenrolled in January. However, if the member does not resume contributions in the following year, the member should be enrolled in the subsequent year.

      Example: An auto-enrolled member takes a hardship withdrawal in November 2018. The member should not be reenrolled in January 2019. The member may restart contributions again in May 2019. If the member elects not to do so by the final pay period of 2019, he or she would be reenrolled in January 2020.
    3. Responsibilities of the Services Preenrollment

      Services must do the following:
      1. Inform their new members and eligible reentrants of their automatic enrollment in the TSP, that 3% of their basic pay will be deducted for the TSP, and that they will receive 3% Service Matching Contributions after 2 years and 1 day of service, as well as the Service Automatic (1%) Contribution after they reach 60 days of service.
      2. Explain to their members the benefits and rules of participating in the plan, including Roth TSP, the TSP contribution rules, and the TSP matching rules; and notify them that they can change the amount or percentage of their contributions or terminate their contributions at any time.
      3. Inform their members who will be reenrolled in the TSP of their upcoming reenrollment and notify them that they can change the amount or percentage of their contributions or terminate their contributions at any time.
      4. Allow those members who do not wish to make automatic contributions (including automatic contributions due to reenrollment) to immediately terminate their automatic enrollment within the first pay period after accession/reentry or reenrollment subject to the service’s payroll processing window. Form TSP-U-1, Election Form or myPay may be used to make this election.
        1. If members terminate contributions during the first pay period of hire or reentry, there should be no contributions deducted from their first or subsequent pay checks, unless they voluntarily elect to contribute to the TSP at a later date.
        2. However, even if members terminate their own contributions, services must deposit Service Automatic (1%) Contributions into these members’ TSP accounts once they reach the eligibility date (60 days of service).
      5. Members must also be notified that they may request a refund of the member contributions that are associated with the automatic enrollment contributions as long as the request is received by the TSP no later than the refund deadline date provided in the TSP Welcome Letter. Members are not eligible for a refund of contributions associated with the reenrollment that takes place if they stop contributing.

        Members may make this refund request whether or not they choose to terminate their contributions to the TSP or submit a subsequent election to change their contribution amount or percentage. A copy of Form TSP-25, Automatic Enrollment Refund Request, is attached to this bulletin. More information on this appears later in this bulletin.
    4. Responsibilities of the Services After Enrollment

      Once a member is automatically enrolled in the TSP, the payroll office must do the following:
      1. Submit an Employee Data (06) Record (EDR) to establish the TSP account for a new hire (or to notify the TSP that the member is a reentrant after a break in service of more than 30 calendar days). The member’s TSP Status Code must be “A” (automatically enrolled), and the TSP Status Date should be the date the member attained his or her current status. The member’s TSP Retirement Code should be either “A” (active duty, new member, Blended Retirement System) or “R” (reserve, new member, Blended Retirement System). However, when an opt-in participant separates and then reenters service, that member will be automatically enrolled with a Status Code “A” and either “O” (active duty, opt-in, Blended Retirement System) or “N” (reserve, opt-in, Blended Retirement System) retirement code. Note: If a member opts out of automatic enrollment before any member contributions are made, the member’s status code should be “E,” “eligible for agency contributions.”
        1. (a) Begin deducting 3% of the member’s pay and submit it to the TSP on the Current Payment Record (17-Record for tax-deferred or 18-Record for tax-exempt if the member is serving in a combat zone). For new members, deductions must begin NO LATER THAN the first full pay period following the date that is sixty days after the member’s PEBD. For reentrants, deductions must begin NO LATER THAN the first full pay period following reentry or the first full pay period that begins on or after the member’s 60th day of service after PEBD, whichever is later.
        2. Begin submitting Service Automatic (1%) Contributions NO LATER THAN the first full pay period after the member has served 60 days and discontinue these contributions NO LATER THAN the first full pay period after the member reaches the mandatory termination date (26 years of service). Current service contributions are submitted on Current Payment Records (17-Records).
        3. Begin submitting Matching Contributions for members contributing their own money NO LATER THAN the first full pay period after the member has served 2 years and 1 day, and discontinue these contributions NO LATER THAN the first full pay period after the member reaches the mandatory termination date (26 years of service). Current service contributions are submitted on Current Payment Records (17-Records).

          NOTE: The TSP provides a sample letter about the plan that the services may use to provide information to uniformed services members who are automatically enrolled. This letter is attached to this bulletin and may also be downloaded in MS Word format from the TSP website.
    5. Refunds of Contributions Resulting from Automatic Enrollment

      Members who are automatically enrolled in the TSP may request a refund of the automatic enrollment contributions deducted from their basic pay (including associated earnings) within the first 90 days of the member’s first automatic enrollment contribution. Even if a member requests a refund of automatic enrollment contributions, the member may still continue making TSP contributions. Members are not eligible for refunds of contributions deducted as part of the reenrollment that takes place if they stop contributing to their TSP accounts.
      1. Form TSP-25, Automatic Enrollment Refund Request, must be submitted directly to the TSP and be received by the TSP no later than 90 days after the TSP’s receipt of the first automatic enrollment contribution (the refund deadline date). This date is provided in the TSP Welcome Letter sent to all members upon receipt of their first contribution.
      2. The refund the TSP pays to the member is considered ordinary earned income, but is not subject to the Internal Revenue Code (IRC) 10% early withdrawal penalty tax.
        1. Consistent with IRS regulations, members who are both eligible to request a refund of automatic enrollment contributions and are receiving matching contributions will forfeit the Service Matching Contributions and associated earnings that are attributable to the returned automatic enrollment contributions. If those Service Matching Contributions incurred investment losses, only the reduced amount is forfeited to the TSP.See 72 Fed. Reg. 63144, 63148.
        2. Any Service Automatic (1%) Contributions will remain in the member’s TSP account.
      3. If the member is a reentrant who was previously automatically enrolled, he or she may not be eligible to request a refund of automatic enrollment contributions. Under rules mandated by the Internal Revenue Service, a new 90-day refund period is not allowed unless one full calendar year (January through December) has passed since the member’s last automatic enrollment contribution.
  3. Procedures for Members Who Have Opted into BRS Back to Top
    1. Once a member opts to be covered by BRS, services must do the following:
      1. Submit an Employee Data (06) Record (EDR) to either establish the TSP account for a new TSP member OR update the account of a current TSP member. In both cases, the TSP Status Code must be either “Y” (contributing—if the member has a contribution election on file) or “E” (eligible for service contributions—if the member does not have a contribution election on file), and the TSP Retirement Code must be either “O” (active duty, opt in, Blended Retirement System) or “N” (reserve, opt in, Blended Retirement System)
      2. Only deduct and submit TSP member contributions if the member has a contribution election on file.
      3. Begin submitting Service Matching Contributions (provided the member is submitting member contributions) and Service Automatic (1%) Contributions NO LATER THAN the first full pay period after the member elects to be covered by BRS and discontinue these contributions NO LATER THAN the first full pay period after the member reaches the mandatory termination date.

        NOTE: The TSP provides a sample letter that Services may use to provide information to uniformed service members who elect to be covered by the BRS regarding the TSP. This letter is attached to this bulletin and may be downloaded in MS Word format from the TSP website.
  4. Employee Data (06) Record (EDR) Back to Top
    1. Implementing BRS will require the payroll offices to submit additional pieces of data on the EDR than were previously submitted for uniformed service members. The fields for this data exist on the old EDR; however, the services have either not been required to fill these fields or have had fewer options to fill them.
    2. The EDR (06-Record) contains all the personal information about a member that the TSP needs to maintain the TSP account.
    3. Payroll offices must submit an EDR to establish the TSP account of a member, and they must submit the first payment record for that member along with the EDR. If a payroll office submission includes an EDR but does not include a payment record for a member, the TSP will reject (i.e., not process) the EDR, unless a uniformed services TSP account has not already been established for the member.
      1. TSP Status Codes (Pos. 193). Prior to blended retirement, uniformed services used only status codes “Y” –Yes, contributing, and “T” – Terminated contributions. Services will continue to use only these codes for members who are not covered by BRS. For members who are covered by BRS, services should use the following codes:

        A – Automatically Enrolled in the TSP:

        • uniformed services members automatically enrolled contributing 3% to the TSP

        T – Terminated Contributions:

        • uniformed services members who elect to terminate TSP contributions
        • uniformed services members in the non-contribution period as a result of a financial hardship in-service withdrawal

        NOTE: BRS members must receive Service Automatic (1%) Contributions even if they elect to terminate their contributions or are not eligible to make contributions as a result of receiving a financial hardship in-service withdrawal

        Y – Yes, contributing to the TSP:

        • uniformed services members who were automatically enrolled in the TSP and who elected to change the amount of their contributions
        • uniformed services members who were automatically enrolled in the TSP and who elected to change all or any portion of their contributions from traditional to Roth
        • uniformed services members who opted in to BRS and who elected to contribute to the TSP

        E – Eligible for service contributions:

        • uniformed services members who are not contributing but must receive Service Automatic (1%) Contributions. This code will apply to new BRS members who decide not to contribute to the TSP before their accounts are set up, and to members who opt in to BRS, but have either never made a contribution election or who contributed to the TSP prior to Blended but stopped their contributions prior to opting in, and who do not make a contribution election when they opt-in.

        R – Reenrolled in the TSP:

        • uniformed services members who were subject to automatic enrollment in the TSP, terminated their TSP contributions, and were subsequently reenrolled in the TSP
      2. TSP Status Dates (Pos. 194-197, Year; 198-199, Month; and, 200-201, Day). The TSP Status Date is the date members attain their current TSP status. Services will assign these dates to uniformed services members as described below.

        A – Automatically enrolled in the TSP:

        • Effective NO LATER THAN the first full pay period that is sixty days after the members PEBD for new members
        • Effective NO LATER THAN the first full pay period after the date of reentry for reentrants with a DIEMS date on or after January 1, 2018, or the first full pay period that begins on or after the member’s 60th day of service after PEBD, whichever is later, or for reentrants who had opted in to BRS

        Y – Yes, contributing to the TSP:

        • Effective date of the member’s first contribution election, or election to make Roth contributions

        NOTE: A “Y” status date does not change if members submit a subsequent contribution election to change their contributions or to start making Roth contributions.

        T – Terminated contributions:

        • Effective date of a member election to terminate contributions
        • Effective date of required termination due to receipt of a financial hardship in-service withdrawal

        R – Reenrolled in the TSP (See Section II, A (4)):

        • Date the member was reenrolled in the TSP
      3. TSP Pay Entry Basic Date (Pos. 218-221, Year, 222-223, Month; and 224-225, Day).
        1. The TSP-PEBD is the Service Computation Date. Members who began serving prior to January 1, 2018, and who did not convert to BRS do not have a TSP-PEBD, so this field should be left blank for these members, but “00/00/0000” is also acceptable.
        2. The TSP-PEBD has three uses:
          1. When a member separates, the TSP uses the TSP-PEBD, along with the TSP Vesting Code and separation date, to determine if the member is vested in the Service Automatic (1%) Contributions and associated earnings in the member’s account.

            When a member separates from service, the service must notify the TSP by submitting an EDR with an updated TSP Employment Code (“S” - Separated) and Employment Code Date (date of separation). If the member is covered by BRS, the TSP will subtract the member’s TSP-PEBD from the updated Employment Code Date and compare this result to the TSP Vesting Code. If the result indicates the member is not vested, the Service Automatic (1%) Contributions and associated earnings will be removed from the member’s account and forfeited to the TSP. If Service Automatic (1%) Contributions incurred investment losses, only the reduced amount is forfeited to the TSP.
          2. When a member applies for a TSP loan, the TSP performs a series of tests prescribed by the Internal Revenue Code to determine how much the member may borrow. One of these tests involves the vested account balance, so calculating a member’s maximum loan amount depends on having a correct TSP-PEBD on file. A similar process is involved with calculating the maximum amount that can be withdrawn in an age-based in-service withdrawal.
          3. The TSP uses the TSP-PEBD to determine (1) eligibility for matching, which comes on or after the day that is two years and one day after the member enters a uniformed service and terminates on the day the member completes 26 years of service; and (2) eligibility for Service Automatic (1%) Contributions, which comes on or after the day that is 60 days after the day the member enters a uniformed service and terminates on the day the member completes 26 years of service.
      4. TSP Vesting Codes (Pos. 226). The TSP Vesting Code corresponds to the number of years uniformed services members must serve in order to be vested in the Service Automatic (1%) Contributions and associated earnings in their TSP accounts. Since members were not eligible for Service Automatic (1%) Contributions prior to BRS, this field was previously blank. BRS members will have a TSP Vesting Code of “2”. That is, these members vest when they have completed two years of service. This code should be submitted when the member is first covered by BRS.
      5. Retirement Codes (Pos. 227). Prior to BRS, we only used “Q” for active duty and “Z” for reserves. These fields were adequate when the military had only one retirement system. We will add four more: “A”, for Active Duty, new member, Blended Retirement System; “R”, for Reserves, new member, Blended Retirement System; “O,” for Active Duty, opt-in, Blended Retirement System; and “N,” for Reserve, opt-in, Blended Retirement System. The new fields will enable us to determine who is eligible for Service Automatic (1%) Contributions and Service Matching Contributions.
      6. Employment Codes (Pos. 228). We will continue to use the same Employment Codes that were in use prior to BRS. However, we are extending the “T” Employment Code to cover transfers from the active to reserve component (other than in an inactive status) or vice versa.

        Note: If a member transfers to another uniformed service or transfers from the active to reserve component or from the reserve to active component, the losing Service's/Component's payroll office must submit an employee data record with an employment code of “T.” The gaining Service's/Component's payroll office must submit an EDR and leave the employment code field blank.
  5. Erroneous Forfeitures of Service Automatic (1%) Contributions Back to Top
    Forfeitures of Service Automatic (1%) Contributions will occur 31 days after the TSP receives a separation code from a service payroll office.
    1. Erroneous forfeitures of Service Automatic (1%) Contributions and associated earnings can result
      1. from erroneous data (such as PEBD or separation date) submitted to the TSP recordkeeper by the services,
      2. because the service fails to inform the TSP that a member has returned to active status after a separation, or
      3. because a separation (S) code is inappropriately submitted instead of a transfer (T) code and the member is not activated within the 31-day period following the submission of the separation code.

        For those members who are transferring between active duty and reserve duty, the services must submit the employment code of “T” (as noted above).
    2. Under any of these circumstances, members are entitled to have forfeited funds restored. To restore forfeited funds, services must
      1. correct the erroneous member data that caused the forfeiture (e.g., TSP Service Computation Date or PEBD, TSP Separation Code, or TSP Separation Date) by submitting a current EDR (06-Record) with the corrected data to the TSP recordkeeper and
      2. submit a completed Form TSP-U-5-R to Agency Technical Services (ATS) to request that the forfeited funds be restored. The form must be used to request that funds be restored for each type of forfeiture described above.
        1. The form has four sections as follows:
          1. Section I. Member Information. This section contains the identifying information for the member for whom the restoration is being requested. Included are the member’s name and the member’s Social Security number.
          2. Section II. Verification of Corrections Made to Member’s TSP Account. Use section II to verify that the incorrect member data in the member’s TSP account that caused the forfeiture to occur has been corrected by the employing service prior to submitting Form TSP-U-5-R. For example, if a member was misclassified as a member who was not covered by BRS, the employing service must have submitted an EDR (06-Record) for the member to reflect a BRS code.

            Note: Form TSP-U-5-R will not be processed if section II is not completed by the service. The incorrect member data that caused the forfeiture must be corrected before the TSP recordkeeper will restore the forfeited funds. Services must therefore be able to identify the journal voucher associated with the correction; otherwise, the form will be rejected.
          3. Section III. Service Identifying Data. This section contains the identifying information for the submitting service. It includes the service’s name, the payroll office number, the name of the service contact person, and the telephone number of the service contact person.
          4. Section IV. Certification and Request to Restore Funds. This section provides the certification required for the TSP recordkeeper to process the forfeiture restoration. It includes the request to restore the forfeited funds and the certification that incorrect data in the member’s TSP account has been corrected prior to submitting Form TSP-U-5-R and, where applicable, that retroactive service contributions have been submitted to the TSP recordkeeper.

            Section IV must be signed by an authorized certifying official for the service. Generally, this is the payroll certifying officer (or other service official) who is knowledgeable about the service’s payroll submissions. Form TSP-U-5-R cannot be signed by the member.

            Form TSP-U-5-R is not a stocked form; therefore, this form can be reproduced locally. For your convenience, a copy of the form is attached to this bulletin.
  6. New Default Investment Fund for Blended Retirement and
    Beneficiary TSP Participants Back to Top
    1. Effective January 1, 2018, the default investment fund for uniformed services TSP members (and spouse beneficiaries of deceased uniformed services participants) will change from the Government Securities Investment (G) Fund to an age-appropriate Lifecycle (L) Fund. This change is effective for those service members who joined the uniformed services on or after January 1, 2018, or elected to be covered by BRS. This section discusses how this new plan feature will be implemented and how members, services, and payroll TSP representatives will be affected.
    2. Detailed information on the L Funds can be found under the Fund Options section of tsp.gov.
    3. Who is affected by this change?
      1. Newly Enrolled Uniformed Services TSP Participants. All uniformed services members first enrolled in the TSP on or after January 1, 2018, and covered by BRS will have their TSP contributions invested in an age-appropriate L Fund until they make a contribution allocation with the TSP. Members who were enrolled in the TSP prior to January 1, 2018, will retain their current contribution allocations. Members who are not covered by BRS (regardless of when they first enroll in the TSP), and who have not yet made a contribution allocation will retain their default investment in the G Fund.
      2. Uniformed Services TSP Participants Who Reenter Service and Who Do Not Have a TSP Account Balance. Uniformed services members who reenter service on or after January 1, 2018, who have $0.00 balances in their TSP accounts from their previous period of service, and who are covered by BRS will have their TSP contributions invested in an age-appropriate L Fund unless they make a contribution allocation with the TSP. Those members who reenter service on or after January 1, 2018, and have an existing TSP account with a balance greater than $0.00 will retain the last contribution allocation on file with the TSP. If no contribution allocation is on file, a member who reenters service with a positive account balance and opts to be covered by BRS will have his or her future TSP contributions invested in an age-appropriate L Fund. If the member does not opt into BRS, the default investment fund will remain the G Fund.
      3. Uniformed Services Members Who Opt into BRS. Uniformed services members who opt into BRS will retain the last contribution allocation on file with the TSP. If no contribution allocation is on file, a member who opts into BRS will have his or her future TSP contributions invested in an age-appropriate L Fund.
      4. Beneficiary Participants. When a TSP member dies, the TSP will (once notified) move the deceased member’s entire account balance into the G Fund before processing payment to any designated or statutory beneficiaries. A surviving spouse who is entitled to receive $200 or more of a deceased member’s TSP account will have the entire death benefit automatically deposited into a Beneficiary Participant Account (BPA). New BPAs created on or after January 1, 2018, will use the age-appropriate L Fund based on the age of the beneficiary participant as the default investment. More information on BPAs is available in TSP Bulletin 14-4, Thrift Savings Plan Death Benefits.
    4. How is a member’s default L Fund determined?

      Beginning January 1, 2018, the TSP will use a target retirement age of 62 to determine which L Fund will serve as the default investment fund for uniformed services and beneficiary participants who are subject to the new default investment rules, as described in the previous section. The year the participant reaches age 62 will be matched with the corresponding L Fund, rounding up or down as necessary. For example, the age-appropriate default investment funds for calendar year 2018 will be as follows:

      Default FundFor those born in years:Expected TSP drawdown in:
      L Income 1955 or earlier Before 2018
      L 2020 1956 – 1962 2018 – 2024
      L 2030 1963 – 1972 2025 – 2034
      L 2040 1973 – 1982 2035 – 2044
      L 2050 1983 or later 2045 or later

      The TSP will use the date of birth listed on the EDR (06 Record) to determine the appropriate default L Fund for a participant. It is therefore extremely important that the member’s servicing payroll office submit an EDR with the correct date of birth when enrolling a newly hired or rehired member. Services will be responsible for paying breakage (lost earnings) when an incorrect date of birth caused by service error results in default investment in the wrong L Fund. See the Error Correction section below for more information.

      To determine the appropriate default L Fund for a new beneficiary participant, the TSP will use the DOB listed on Form TSP-3, Designation of Beneficiary, or Form TSP-17, Information Relating to Deceased Participant.
    5. What is the procedure for correcting errors?

      TSP members are not entitled to breakage when they are invested in the wrong default L Fund as a result of their own error (i.e., providing an incorrect date of birth at the time of accession). However, a participant who is defaulted into the wrong L Fund as a result of service error is entitled to receive breakage, provided the error is discovered by either the participant or the member’s service within 30 days of the date on the Welcome Letter sent by the TSP to the participant upon receipt of their first contribution. If the Welcome Letter is returned as undeliverable, the 30-day window is extended to 30 days after the member’s first quarterly or, if earlier, annual statement is posted to tsp.gov. If the error is discovered after either of these time periods, the service may use its own discretion in deciding whether or not it will pay breakage. The period for which the participant is eligible for breakage starts at the time the error is made and ends when the participant first reports the error to his or her service or when the participant performs a contribution allocation or interfund transfer, whichever is earlier.

      When a service learns that a member’s date of birth is incorrect, the servicing payroll office must submit an EDR to the TSP with the corrected date of birth. However, because the TSP will be unaware of the source of the error or whether the participant is entitled to receive breakage, receiving a new date of birth will not trigger corrective action by the TSP, other than to update the date of birth. The service should notify the affected member that participants are solely responsible for making investment changes to their TSP accounts. If they wish, members can make an interfund transfer to redirect money already in the account, or a contribution allocation to direct the investment of new contributions going into the TSP.

      To request a breakage calculation for a member, the service should submit Form TSP-U-5-B, Request to Calculate Breakage. The TSP will calculate and charge the employing service breakage, based on the initial, incorrect L Fund default investment and the accurate, age-appropriate L Fund, regardless of the member’s current contribution allocation. Once the calculation is completed and the member’s account is made whole, Form TSP-U-5-B will be returned to the service contact shown on the form. Section V of the form will show the amount of breakage for which the service is responsible. The service should use the information on the returned form to reconcile their records for TSP purposes.

      Form TSP-U-5-B is not a stocked form; therefore, this form can be reproduced locally. For your convenience, a copy of the form is attached to this bulletin.

      TSP errors are uncommon because most participant data is received electronically and does not require any manual processing. If a TSP error occurs, the participant will be entitled to receive breakage from the TSP, subject to the same 30-day window described above.
  7. Processing Service Automatic (1%) Contributions and
    Matching Contributions Back to Top
    1. Eligibility. Before submitting Service Automatic (1%) Contributions or Service Matching Contributions on behalf of a member, the payroll office must determine that the member has satisfied the applicable eligibility date (explained below) and has not reached the mandatory termination date.
      1. Service Automatic (1%) Contributions
        1. New Members become eligible for Service Automatic (1%) Contributions after completing 60 days of service. These contributions should start NO LATER THAN the first full pay period after the member reaches that milestone.
        2. Members who opt in should receive Service Automatic (1%) Contributions NO LATER THAN the first full pay period after their opt-in date.
        3. Reentrants should receive Service Automatic (1%) Contributions NO LATER THAN the first full pay period after the date of reentry or the first full pay period that begins on or after the member’s 60th day of service after PEBD, whichever is later.
      2. Service Matching Contributions
        1. New members become eligible for matching contributions upon completing 2 years, 1 day of service. These contributions should start NO LATER THAN the first full pay period after the member completes 2 years, 1 day of service.
        2. Members who opt in should receive Service Matching Contributions NO LATER THAN the first full pay period after their opt-in date.
        3. Reentrants with a DIEMS date of January 1, 2018, or later should receive Service Matching Contributions NO LATER THAN the first full pay period after the member reenters service or the first full pay period that begins on or after the member completes 2 years, 1 day of service, whichever is later.
        4. Reentrants who originally made a decision to opt in to BRS should receive Service Matching Contributions NO LATER THAN the first full pay period after the date of reentry.
        5. Services should use the PEBD to determine the eligibility dates (described in this section) for either Service Automatic (1%) Contributions or Service Matching Contributions.
        6. Members lose eligibility for Service Automatic (1%) Contributions and Service Matching Contributions after completing 26 years of service. These contributions should stop in the first full pay period after the member reaches this Mandatory Termination Date.
        7. Services should use the PEBD to determine Mandatory Termination Date for either Service Automatic (1%) Contributions or Service Matching Contributions.
    2. Once a member is eligible, the payroll office must determine the amount of Service Automatic (1%) Contributions or Service Matching Contributions of members (based on a member’s pay and TSP contribution election); deduct the member contributions from pay; and report the contributions, by source, to the TSP each pay period.
      1. (1) Service Automatic (1%) Contributions are equal to 1% of basic pay each pay period.
      2. Service Matching Contributions are based on the first 5% of basic pay the member contributes to the TSP each pay period. The formula for Service Matching Contributions is as follows:
        • Dollar for dollar on the first 3% of basic pay contributed; and
        • 50 cents per dollar on the next 2% of basic pay contributed.

          Total cannot exceed 4% of basic pay.
  8. Records, Journal Vouchers and Error Codes List Back to Top
    1. Records.
      1. Current Payment Record, Tax-Deferred -17.
        1. Services will use positions 93-99 on this record to reflect Service Automatic (1%) Contributions.
        2. Services will use positions 117-123 on this record to reflect the following:
          1. Service Matching Contributions attributable to current tax-deferred payments
          2. Service Matching Contributions attributable to current Roth payments
          3. Service Matching Contributions attributable to make-up traditional or Roth contributions
          Note: Tax-deferred make-up contributions, to include service contributions, are submitted on Current Payment Records with “as of” dates, which causes the TSP to compute breakage on service contributions only. (See TSP Bulletin 02-U-21, “Processing Submissions From Uniformed Services Payroll Offices in the New Recordkeeping System” (25 JUL 02)). Service contributions associated with employee Roth contributions are submitted on current payment, tax-deferred records. (See TSP Bulletin 11-U-4, “Implementation of Thrift Savings Plan Roth Contributions” (25 FEB 11)).
      2. Current Payment Record, Tax-Exempt -18.
        1. Services will use positions 93-99 on this record to reflect Service Automatic (1%) Contributions
        2. Services will use positions 117-123 on this record to reflect the following:
          1. Service Matching Contributions attributable to current tax-exempt payments
          2. Service Matching Contributions attributable to make-up tax-exempt contributions

          The TSP will ensure that all service contributions submitted on this record are treated as tax-deferred.

          Note: Make-up contributions are submitted on Current Payment Records with “as of” dates, which causes the TSP to compute breakage on service contributions only.
      3. Roth Current Payment Record – 13. Services will submit Service Matching Contributions associated with Roth current contributions on Current Payment, Tax-Deferred-17 records. See TSP Bulletin 11-U-4, “Implementation of Thrift Savings Plan Roth Contributions” (25 FEB 11).
      4. Negative Adjustment Record, Tax-Deferred - 27. Services will use positions 93-99 on this record to reflect negative adjustments to Service Automatic (1%) Contributions that were reflected on a Current Payment, Tax-Deferred, 17-Record or on a Late-Payment, Tax-Deferred, 47-Record. Services will use positions 117-123 on this record to reflect negative adjustments to Service Matching Contributions that were reflected on a Current Payment, Tax-Deferred, 17-Record or on a Late-Payment, Tax-Deferred, 47-Record.
      5. Negative Adjustment Record, Tax-Exempt -28. Services will use positions 93-99 on this record to reflect negative adjustments to Service Automatic (1%) Contributions that were reflected on a Current Payment, Tax-Exempt, 18-Record or on a Late-Payment, Tax-Exempt, 48-Record. Services will use positions 117-123 on this record to reflect negative adjustments to Service Matching Contributions that were reflected on a Current Payment, Tax-Exempt, 18-Record or on a Late-Payment, Tax-Exempt, 48-Record.
      6. Late Payment Record, Tax-Deferred - 47. Services will use positions 93-99 on this record to reflect Service Automatic (1%) Contributions attributable to late tax-deferred payments and to late Roth payments. Services will use positions 117-123 on this record to reflect Service Matching Contributions attributable to late tax-deferred payments and to late Roth payments.

        Note: Late contributions are submitted on late payment records, which cause the TSP to compute breakage on all payments (member and service).
      7. Late Payment Record, Tax-Exempt - 48. Services will use positions 93-99 on this record to reflect Service Automatic (1%) Contributions attributable to late tax-exempt payments. Agencies will use positions 117-123 on this record to reflect Service Matching Contributions attributable to late tax-exempt payments.
      8. Late Payment Record, Roth – 43. Services will submit Service Matching Contributions and Service Automatic (1%) Contributions Associated with a Roth Late Payment Record on the regular Late Payment (47) Record. See TSP Bulletin 11-U-4, “Implementation of Thrift Savings Plan Roth Contributions,” at 10 (25 FEB 11).
      9. Catch-up Contribution 30, 87, 89, 33, 83, 85-Records. Services need take no action regarding these forms to implement BRS. Catch-up contributions are not eligible for either Service Automatic (1%) Contributions or Service Matching Contributions.
      10. Recharacterization 67, 68-Records. Services need take no action regarding these forms to implement BRS. Service Automatic (1%) Contributions or Service Matching Contributions are always tax-deferred (traditional).
      11. Redesignation 94, 95, 96, 97, 98, 99, Records. Services need take no action regarding these forms to implement BRS. Service Automatic (1%) Contributions or Service Matching Contributions are always tax-deferred (traditional).
    2. Journal Vouchers.
      1. Certification of Transfer of Funds and Journal Voucher – TSP-U-2. This Journal Voucher has been amended to include a block for Service Automatic (1%) Contributions total current and late payments and a block for Service Automatic (1%) Contributions negative adjustments. (Service Matching Contributions has a block for both sections.) Services must enter the total Service Automatic (1%) Contributions from 17-, 18-, 47-, and 48-Records in block 17. Services must enter the total adjustments to Service Automatic (1%) Contributions from 27-, 28-records in block 23.
      2. Certification of Transfer of Funds and Journal Voucher for Contributions Requiring G Fund Breakage – TSP-U-2-G. This Journal Voucher has been amended to include a block for Service Automatic (1%) Contributions and a block for Service Automatic (1%) Contributions negative adjustments (Service Matching Contributions has a block for both sections). Services must enter the total Service Automatic (1%) Contributions from 17-, 18-, 47-, and 48-Records in block 17. Service must enter the total adjustments to Service Automatic (1%) Contributions from 27-, 28 records in block 23.
      3. Trailer Record (Employee Data, Payment, and Negative Adjustment) – TSP-U-2 Trailer Record. This trailer record has been amended to include Service Automatic (1%) Contributions. Services must now fill positions 33-46, “Service Automatic (1%) Contributions Total” in block 14 and positions 89-102, “Service Automatic (1%) Contributions Adjustment Total.”
    3. Error Codes List.

      The updated error codes list is attached to this bulletin. Service payroll offices should contact their Agency Technical Services (ATS) Analyst to obtain details about various record types, processing reports, and their uses.

Resources:

Jim Courtney
Director, Office of Communications
Office of Communications and Education