Guest Post – Conversion to the New Pay Plan Can Adversely Impact Your TSP

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by Brendon Drew

DFAS has struggled to accurately implement the new pay plan, and most physicians notice the impact on their LES. What most don’t realize, though, is that the errors may have also impacted their Thrift Savings Plan (TSP) investments. If you contribute to the TSP with any of your medical specialty pays, you should thoroughly investigate your LES and your TSP statements. Here’s an example of what can happen.

I was transitioned off of the legacy pay in February 2017:

Drew 1

When DFAS completed the retroactive pay changes, $785.93 was removed from my 2017 TSP contribution total:

Drew 2

While that may not seem like much, consider that my TSP earned 27% in 2017, the money grows tax­-free in a Roth account, and I plan on having that account for another 30-­40 years.

Since the involuntary withdrawal occurred in calendar year 2018 but went back into calendar year 2017, I was unable to provide “catch up” contributions in 2018.

I recommend that you review your LES carefully. In the month(s) you are transitioned from the legacy system, look for a negative VSP and/or BCP entitlement. If you see one of these, go pull your TSP statements from the corresponding period and you may find that money was taken out of your retirement account and given back to you as cash.

If you have questions about this, feel free to email me on the global address book. Make sure you have access to your LES and prior TSP statements.

2 thoughts on “Guest Post – Conversion to the New Pay Plan Can Adversely Impact Your TSP

    David R said:
    March 28, 2018 at 06:32

    How did you do 27% in the TSP last year? Top performer was I fund at 22%, C did 22% and S did 18%. Are there other options?

    Like

      Joel Schofer, MD, MBA, CPE responded:
      March 28, 2018 at 06:36

      This was a guest post, so I can’t comment on the return, but you only have 6 options in the TSP, a Lifecycle fund or one of the other 5 that make up the Lifecycle funds.

      Like

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