Military Pay 101: Opening a Bank Account and an Introduction to TSP

When you’ve received your first LES, that means you’ve been paid for your service in the armed forces. We’ve got some tips on how you can make the most of your Basic Pay — from the most important parts of your actual pay stub to picking the right bank account, to even getting a “raise” by increasing your Thrift Savings Plan contributions.

How to read your LES: A quick checklist

Of course, all parts of your monthly LES are important to review, but here are the the sections you should look at monthly:

• Entitlements shows how much you were paid through your basic pay and various supplements.
• Deductions lists your deductions — including any taxes owed and TSP contributions.
• Summary lists how much money was deposited in your account after deductions and allotments were distributed.
• Leave tallies your available vacation time or leave you have available.
• Cm Agcy Contr describes future changes or command notices.

Learn more about the LES and how you can use it to properly budget your monthly expenses.

Opening a new military-friendly bank account for your automatic deposits

During basic training processing, you were required to list your personal checking account for automatic deposit of your pay. You may have listed a “joint” or shared account with a parent or guardian established before you turned 18 or maybe you went with your neighborhood credit union.

But now that you’re in the military, ask yourself these questions to see if you need to open a new bank account that can handle your military lifestyle:

• Does my bank have a lot of locations in the U.S. if I’m reassigned and overseas if I’m deployed?
• Can I access my funds anytime online or with mobile banking solutions?
• Are there fees for using out-of-network ATMs?
• Are there account maintenance fees? Could these fees be waived by setting up an automatic deposit — like my military paycheck — or keeping a minimum balance?
• How does my bank handle overdrafts when I withdraw more money than I have in the account?
• Can I easily transfer money to different accounts at the same or different banks?

You can change the bank account associated with your military pay direct deposit online via myPay or via the paper Direct Deposit Enrollment Form, FMS 2231. Don’t get rid of your old account until you’ve received at least one deposit in your new bank account — just to make sure everything transferred smoothly.

How to adjust your automatic retirement contributions to TSP

Did you know that if you joined the military after Jan. 1, 2019, you were enrolled in the Thrift Savings Plan? After your first 60 days of service, 3% of your pay was automatically deducted from your paycheck and redirected to your TSP account.

In February 2020, the Federal Retirement Thrift Investment Board increased the automatic-enrollment percentage from 3% to 5% for everyone who automatically enrolled in the TSP on or after Oct. 1, 2020.

Your military service matches your TSP contributions up to 5% of your basic pay. While contributing 5% per pay period maximizes the government’s matching contribution, contributing more than 5% maximizes the benefits of compound interest. Over time, even small, regular additions to your retirement account can yield big payoffs. You probably won’t even miss the small amount deducted each month for your retirement future.

Keep in mind there are annual contribution limits for TSP accounts. In 2024, you can contribute up to $23,000, and people 50 and older can contribute an additional $7,500.

To make sure you are contributing the right percentage of your pay to TSP, use a TSP calculator with information from your pay statements.

You can change your TSP account contribution — either raising your automatic deduction or lowering it if you need to — whenever you need to, through your service branch’s electronic pay system or by filing a paper Thrift Savings Plan Election Form, TSP-U-1. If you do not want to be enrolled in TSP, you can stop contributions. You can also request a refund for contributions you did not want to make.

Congratulations again on your first paycheck — you’ve earned it. If you’d like more advice on how to make the most of your Basic Pay and allowances — including consolidating credit card debt, filing taxes and even saving up for your first home — remember you can always contact a Military OneSource financial advisor for free help designed specifically for your military lifestyle.