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

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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.

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How to read your LES: A quick checklist

Of course, all parts of your monthly LES are important to review, but here’s a quick checklist of the parts you should look at regularly every month:

  • Box 10, which lists how much you were actually paid through your basic pay and various supplements.
  • Box 11, which lists your deductions — including any taxes owed and TSP contributions, which we’ll explain more about later.
  • Box 19, which lists how much money was deposited in your account after deductions and allotments were distributed.
  • Box 28, which tallies your available vacation time or leave you have available.
  • Box 76, which describes future changes or command notices.

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

How to open 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 service, 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, either 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 either 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 realize that if you joined after Jan. 1, 2018, 3% of your basic pay has been automatically rerouted to a TSP retirement savings account since your very first paycheck in basic training? You may not even have noticed the less than $25 from your checking account every pay that was redirected to your TSP account for E-1 pay grades.

Boost your earnings: When you raise those automatic TSP account contributions up to 5% of your basic pay, your military service will contribute an additional 5% of your basic pay to your TSP account. It’s like you’re getting a raise, just for saving a small portion of your pay.

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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. Remember that the law does place limits on how much money you can put into a tax-deferred savings plan like the TSP, so do some quick calculations to make sure your proposed changes won’t create problems come tax time.

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.

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