The Blended Retirement System is how the military pays for retirement for anyone who entered service on or after January 1, 2018. It has two pieces working together: a traditional 20-year pension, and a Thrift Savings Plan account that receives government matching contributions from early in your career. The pension is smaller than the one it replaced, but the TSP match means most members leave service with retirement savings, not just the roughly one in five who stay for 20 years.
Who’s Covered
Enrollment is automatic. If your date of initial entry into military service is January 1, 2018, or later, you’re in BRS with no paperwork.1Military Compensation and Financial Readiness. Blended Retirement Members already serving under the legacy High-3 system had a one-year window during 2018 to opt in; more than 400,000 switched. That window is closed. If you were serving before 2018 and didn’t opt in, you remain under High-3.
New members are also automatically enrolled to contribute 5 percent of their basic pay to the TSP starting at initial entry training.2Defense.gov. A Guide to the Uniformed Services Blended Retirement System You can change that percentage at any time, but the 5 percent default is set to capture every dollar of government match once you’re eligible.
Government Matching in the TSP
The investment side runs through the Thrift Savings Plan, the federal government’s version of a 401(k). The match has two layers.
After 60 days of service, the government automatically puts 1 percent of your basic pay into your TSP each pay period whether or not you contribute anything yourself.3Office of the Law Revision Counsel. 5 USC 8432 – Contributions That 1 percent doesn’t fully belong to you until you complete two years of service. Leave before then and you forfeit those automatic contributions along with any earnings on them.
Starting at the two-year mark, the government also matches what you contribute. The match is dollar-for-dollar on the first 3 percent of basic pay you put in, then 50 cents on the dollar for the next 2 percent.3Office of the Law Revision Counsel. 5 USC 8432 – Contributions Contribute at least 5 percent of your basic pay and the government adds a total of 5 percent to your account (the 1 percent automatic plus 4 percent in matching). These matching contributions vest immediately. Contribute less than 5 percent and you’re leaving free money behind.
2026 Contribution Limits
The IRS sets an annual cap on what you personally can put into the TSP. For 2026, that elective deferral limit is $24,500, and it covers your traditional and Roth contributions combined. Government automatic and matching contributions don’t count against it. Members age 50 and older can add $8,000 in catch-up contributions, and those turning 60, 61, 62, or 63 during 2026 get an enhanced catch-up limit of $11,250 under the SECURE 2.0 Act.4The Thrift Savings Plan (TSP). 2026 TSP Contribution Limits
A separate ceiling, the annual additions limit, caps contributions from all sources at $72,000 for 2026.5Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs That higher number matters mostly for deployed members contributing tax-exempt combat zone pay, because traditional contributions from tax-exempt pay don’t count against the $24,500 personal limit.
The 20-Year Pension
Complete at least 20 years of active duty and you earn a monthly pension for life. The formula: 2.0 percent times years served, applied to the average of your highest 36 months of basic pay.6Office of the Law Revision Counsel. 10 USC 1409 – Retired Pay Multiplier A 20-year retiree gets 40 percent of that high-three average. Each additional year adds another 2 percent.
That 2.0 percent multiplier is lower than the 2.5 percent used under the legacy High-3 system, where a 20-year retiree received 50 percent. The reduction is the trade for the TSP matching every BRS member gets during their career.
The pension adjusts each year for inflation based on the Consumer Price Index. The adjustment compares the average third-quarter CPI of the current year to the prior year’s third-quarter average, and any increase takes effect on December 1.7Military Compensation and Financial Readiness. Retirement Cost of Living Adjustments (COLA) If CPI falls, the adjustment is zero rather than negative, so the pension never shrinks.
Continuation Pay at Midcareer
Continuation Pay is a one-time cash bonus paid between your 8th and 12th year of service, with the exact timing set by your branch, in exchange for an additional service commitment.8Military Compensation and Financial Readiness. Continuation Pay The statutory minimum service obligation is three years, and individual services can require more.9Office of the Law Revision Counsel. 37 USC 356 – Continuation Pay: Full TSP Members With 7 to 12 Years of Service
The payment is a multiplier of monthly basic pay. For active duty, the multiplier is at least 2.5 and can run as high as 13, depending on branch and specialty.9Office of the Law Revision Counsel. 37 USC 356 – Continuation Pay: Full TSP Members With 7 to 12 Years of Service Each branch publishes its rates annually, and high-demand career fields tend to get the largest payouts. This is the one BRS benefit you have to actively elect. Miss the eligibility window and it’s gone.
Lump Sum Option at Retirement
Retirees under BRS choose how to receive their pension. The default is the full monthly annuity from the formula above. You can also take a partial lump sum of either 25 percent or 50 percent of the discounted present value of your future retirement payments.10Military Compensation and Financial Readiness. BRS Lump Sum Fact Sheet Take 25 percent as a lump sum and your monthly check drops to 75 percent of its full value. Take 50 percent and you receive half. In either case, your pension reverts to the full amount when you reach Social Security full retirement age, which is 67 for most people.
The lump sum uses a discount rate set annually by the DoD Office of the Actuary. For retirements in 2026, that rate is 6.46 percent.11Department of Defense / Office of the Assistant Secretary of Defense. Blended Retirement System Lump Sum Discount Rate for 2026 A higher discount rate shrinks the lump sum, because it assumes your money would grow faster if you kept the monthly payments. Financial advisors often caution against the lump sum because it typically produces less total money over a lifetime, though it can fit a specific need like buying a home or starting a business.
If you want the lump sum, notify your human resources office at least 90 days before your retirement date.10Military Compensation and Financial Readiness. BRS Lump Sum Fact Sheet Miss that deadline and you’re locked into the full monthly annuity.
What You Keep If You Leave Before 20 Years
This is the change that defines BRS. Under the legacy system, separating before 20 years meant walking away with nothing from retirement. Under BRS, you keep your entire TSP account, including your contributions and all government matching and automatic contributions, once you’ve completed two years of service.12Military OneSource. Blended Retirement System The balance stays invested and grows tax-deferred until you withdraw it.
What you don’t get is any pension. There is no partial pension for 10 or 15 years of service. The defined benefit still requires a full 20. About 80 percent of service members leave before that point, and for them the TSP piece is the whole of what BRS provides.
Survivor Benefit Plan
If you die after retirement, the Survivor Benefit Plan pays a monthly annuity to your spouse or other eligible beneficiary. The annuity is 55 percent of a base amount you elect, which can run from $300 up to your full retired pay.13Military Compensation and Financial Readiness. Survivor Benefit Plan Spouse Coverage Married members are automatically enrolled at the maximum level at retirement, and reducing or declining coverage requires spousal written consent. Premiums for spouse coverage are generally 6.5 percent of the elected base amount and are deducted before taxes. The annuity adjusts for inflation alongside retired pay.
How Reserve and Guard Service Fits In
Reserve and National Guard members are in BRS on the same general framework. TSP matching works the same way and the 2.0 percent pension multiplier is the same. Two things differ.
First, Reserve component members generally don’t begin drawing retired pay until age 60, well after active duty retirees who can start immediately in their 40s.14Military Compensation and Financial Readiness. Reserve Retirement Qualifying active duty service after January 28, 2008, can reduce that age; every 90-day period of qualifying active service drops the age requirement by three months.
Second, Continuation Pay multipliers for Reserve and Guard members not on full-time active duty start at a minimum of 0.5 times monthly basic pay, compared to the 2.5 minimum for active duty.9Office of the Law Revision Counsel. 37 USC 356 – Continuation Pay: Full TSP Members With 7 to 12 Years of Service The lump sum option is available with the same 25 or 50 percent choices, though the 90-day notification deadline runs from when they begin receiving retired pay rather than the retirement ceremony date.
Taxes at a Glance
Traditional TSP contributions come out of your paycheck before federal income tax; you pay tax on the full balance, contributions and earnings, when you withdraw it in retirement.15The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions Roth contributions go in after tax; qualified withdrawals in retirement, including earnings, are tax-free. To qualify for tax-free Roth withdrawals, five years must have passed since your first Roth contribution and you must be at least 59½. Junior members in low tax brackets often get the most from Roth; higher-ranking members in higher brackets may prefer traditional for the immediate tax break.
Combat zone pay has its own rules. Traditional TSP contributions from tax-exempt combat zone pay are never taxed, going in or coming out. Roth contributions from combat zone pay produce contributions and qualified earnings that are both tax-free.15The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions Roth contributions from tax-exempt pay still count against the $24,500 elective deferral limit; traditional contributions from tax-exempt pay do not, which is what makes it possible to push toward the $72,000 annual additions limit while deployed.
If you elect the partial lump sum at retirement, the taxable portion is subject to a mandatory 20 percent federal income tax withholding.16Internal Revenue Service. Topic No. 412, Lump-Sum Distributions That’s withholding, not the final bill; the full amount is taxable in the year you receive it and cannot be rolled into an IRA to defer the tax. A large lump sum can push you into a higher bracket for that one year.
Withdrawing from your TSP before age 59½ generally triggers a 10 percent early withdrawal penalty on top of income tax.17The Thrift Savings Plan (TSP). Changes to Tax Rules About TSP Payments Members who separate from service during or after the year they turn 55 avoid the penalty entirely, and any amount traceable to tax-exempt combat zone contributions is also exempt. Leaving the military in your 30s with a healthy TSP balance is generally a case for keeping the money invested, or rolling it into an IRA, rather than cashing out.
State tax treatment of military retirement pay varies. Some states fully exempt it, others tax it partially or fully, and the trend has been toward broader exemptions. TSP withdrawals are taxed by whichever state you’re a resident of at the time of withdrawal.