On March 9th, the MFLN Family Development Early Intervention team held their first webinar of 2017 with this year’s speaker, Dr. Kristie Pretti-Frontczak. In it, she provided a context for seeing the power of play and how it is necessary for success in school and in life. If you haven’t seen it, you definitely want to go back and take a look here.
Today, our team wanted to share this follow -up piece that Dr. Pretti-Frontczak recorded on her concept of “The Zigzag.” Take a look and hear in detail what she means when she talks about zigzagging with the children in your work. You can get even more great ideas from Dr. Pretti-Frontczak from her website Pre K Teach and Play.
The video is closed captioned. If you’d prefer a written transcript you can find it here.
This post was edited byRobyn DiPietro-Wellsa member of the MFLN FD Early Intervention team, which aims to support the development of professionals working with military families. Find out more about the Military Families Learning Network FD concentration on ourwebsite, onFacebook,onTwitter, andYouTube.
If you attended the March 14 webinar Military Blended Retirement System, you know how many questions participants were asking. Our facilitator Andy Corso, Assistant Director of Military Compensation, Retired and Annuitant Pay Project Lead for the implementation of the Uniformed Services’ Blended Retirement System, answered as many as time allowed but we just couldn’t get to them all. As promised, we collected the outstanding questions and Andy has provided responses.
How does delayed entry affect BRS? Cadets/Midshipmen and Delayed Entry Program service members are opt-in eligible if their Date of Initial Entry into Military Service (DIEMS) date is on or before December 31, 2017, and they otherwise meet the BRS eligibility criteria. Once they are in a paid status, service members will have 30 days to make an opt-in decision.
Is a member who ops-in immediately VESTED even though they haven’t served 2 years? Current service members opting into BRS between January 1, 2018 and December 31, 2018, will receive DoD automatic 1 percent contributions and up to 4 percent additional DoD matching beginning the first pay period after opting in. Members are automatically vested in their contributions, the matching contributions and any earnings immediately, regardless of time in service. The automatic government 1% becomes vested after 2 years of service, per TSP regulations.
For current members can Continuation Pay be contributed to TSP? Yes, but members should be aware of the annual IRS cap (currently $18,000), as not to miss any government matching contributions to their TSP account.
Is there a mandatory participant contribution under BRS? For some reason I was understanding that it was an automatic 3%bp contribution..? New accessions on or after Jan. 1, 2018 will be automatically enrolled into TSP with a 3% of base pay contribution rate; while they may opt-out of the 3% rate, they will be auto-enrolled each January. There is no mandatory contribution level for opt-in service members.
Please provide more info about the “8 and up to 12 years.” Seems vague. The National Defense Authorization Act included a continuation pay provision as a way to encourage service members to continue serving in the Uniformed Services. Continuation pay is a direct cash payout, like a bonus. When a service member reaches between 8 and 12 years of service, active component members will be eligible for a cash incentive of 2.5 to 13 times their regular monthly of basic pay and Reserve component members will be eligible for .5 to six times their monthly basic pay (as if serving on active duty), in return for a commitment of a minimum of three more years of service. Each of the branches of service will issue guidance as it relates to this provision.
On continuation pay is there a max? See question number 5.
Is the 12 years of service for RC members also OR is there a set number of Retirement points? The ability for a RC service member to opt into BRS is based on retirement points (4,320 or less as of Dec. 31, 2017). The ability for an RC member to receive continuation pay is based on years of service (12 years of service). It is important to note the difference.
Is there a set tax rate for the continuation pay and lump sum? Continuation pay is considered earned income and therefore taxable. There is no set tax rate. The lump sum payment is also considered earned income and is therefore taxable. Service members may choose to receive their continuation pay and/or lump sum payments in installments to reduce their tax liability.
How are the two years calculated for reservists?Two years is calculated based on time in service. It is not based on points or qualifying years.
Would reserves need to acquire 720 points? No, see question number 9.
Will the 1% automatic contribution also stop after 26 years, like the matching funds?Yes, all TSP automatic and matching stop at the end of 26 years of service. However, service members can continue to contribute to the TSP on their own.
Is there a tax penalty for early distribution from the military plans? There is no option for early distribution from the defined benefit retirement plan. For TSP, members are subject to the same rules on early withdrawal as their civilian federal employee counterparts. Visit www.tsp.gov for more information.
Can participants opt out of the 3%? New accessions may opt-out of the 3% requirement, but will be automatically re-enrolled each January. See question number 4.
Does it stop when they reach 26 years or complete 26 years? Have heard both. See question 11.
What TSP fund will their 3% contribution be placed in? Currently it’s the G fund for military members. New accessions will have their funds automatically placed in the Lifecycle fund that matches their approximate retirement age. Service members may change their fund allocation and distribution at any time.
Are the funds combined with existing TSP accounts or will/can they have two allocations? Service members who currently have a Uniformed Service’s TSP account will utilize the same TSP account if the opt into BRS.
I may have gotten this mixed up…those who opt-in, what is the vesting period for the automatic 1%? Is it also 2 years and not immediate? See question number 2.
What age is retirement assumption for determination of age appropriate lifecycle? Service members will be placed in the L Fund geared towards the future point when withdrawals from an account are expected to begin. Service members can change their contribution and allocation at any time. To identify the L Fund that matches a service member’s target withdrawal date visit https://www.tsp.gov/InvestmentFunds/FundOptions/index.html
The lump sum will make veterans a target of scammers – does the benefit match the risk? The BRS offers options for service members. It is an important decision and service members should be encouraged to speak to a military professional financial counselor or other trusted advisor, to better understand the pros and cons of their decision.
Any chance the taxes on a lump sum payout can be spread across several years of tax returns? The lump sum is considered earned income and is therefore taxable. Service members may choose to receive their lump sum payments in up to four installments over four years to reduce their tax liability.
Can you provide a basic example with the math of a lump sum? There is a formula for calculating lump sum, which can be found in the DoD Implementation Policy in attachment 2. Additionally, you can visit http://militarypay.defense.gov/BlendedRetirement and access the “Introduction to Blended Retirement” PowerPoint. This will provide a visual of how the lump sum works. A calculator will be available shortly to run individual scenarios—it has the ability to display estimated lump sum payments.
Will there be an initial set tax rate? No. The lump sum is considered earned income and is therefore taxable. Service members may choose to receive their lump sum payments in up to four installments over four years to reduce their tax liability.
Does this benefit have a COLA? While the lump sum does take into account COLA, when it is paid out, it is discounted to its present value. The remaining 75% or 50% pension are inflation protected, which means they receive an annual COLA.
How will those that took the 15-year payout be affected in the BRS? Are they eligible to opt in? Those who selected REDUX will not be able to opt-in. You need to be under 12 years of service to opt-in and those that selected REDUX were in their 15th year of service. They will not be affected by BRS.
Is the lump sum able to be rolled to an IRA, either directly or indirectly (60 days)? The service member would not be able to roll over their lump sum payment into another retirement plan. Only an “eligible rollover distribution” can be moved to another retirement plan. In order for a distribution to be eligible to rollover, among other things, it must come from a “qualified trust.” To keep it simple, this is basically an employer-sponsored retirement plan that meets certain requirements of the tax code. The military retirement fund is not a “qualified trust” and therefore money that comes from it cannot be rolled over to another retirement plan.
If a service member gets out of the military and re-enters after 2018 will they still have 60 days to opt in if they meet the TIS requirement? They must meet the eligibility criteria to opt-in. Active component service members must have less than 12 years of service as of December 31, 2017, and Reserve component service members with less than 4,320 retirement points as of December 31, 2017. If eligible, they will have 30 days to opt-in once they re-enlist and are in a paid status.
Does the Continuation pay work as if they take 3 years they will get 2.5 basic pay and if the take 6 years they will get 5 months basic pay? No that assumption is incorrect. Each branch of service will determine when and at what rate service members will receive continuation pay and may be based on factors such as hard-to-fill positions, retention rates and specialty skill, among others. The services continue to work on guidance related to this provision.
Are BRS and Legacy pension payments adjusted for inflation? Yes, pensions are inflation protected, which means they receive an annual Cost of Living Adjustment (COLA).
Is there a cap or limit on the length of time that eligible service members can receive automatic and matching contributions? See question number 11.
The continuation pay…if they want to put it into TSP is it a rollover or regular contributions (which may make them reach annual cap quickly) See question number 3.
Can you give a numerical example of how the lump sum payment will affect the SBP payments? The DoD is still finalizing the policy as it applies to lump sum payments and the Survivor Benefit Plan. Guidance will be forthcoming. Check back at http://militarypay.defense.gov/BlendedRetirement and click Frequently Asked Questions.
Wouldn’t the SBP payment (calculated on what it would have been had the service member not taken a lump sum) deplete the resources earlier? The DoD is still finalizing the policy as it applies to lump sum payments and the Survivor benefit Plan. Guidance will be forthcoming.
Just to clarify, lump sum will be a component of the BRS only – it will not be an added option to the legacy system. Correct?Yes
Will the reserve retirement points value chart be amended for BRS retirements to reflect the change from 2.5 to 2.0%? Reserve retirement, points requirement for qualifying years and number of qualifying years does not change under BRS.
There seems to be a significant disparity on the points that service members have on their records; what if they are wrong at the time of opting in? Service members should review their points record each year and ensure it is up-to-date. If they find an issue, they should contact their personnel servicing office immediately.