Roth TSP? You Were Overpaid Yesterday!

If you contribute to a Roth TSP, and diligently made the changes required by the Defense Finance and Accounting Service (DFAS) in January, you got overpaid yesterday (13 February 2015) because DFAS failed to take those new TSP contributions out of the mid-month pay.  Your end-of-month pay will have the entire Roth TSP contribution deducted, and the two paychecks together should come out to the right amount.  However, don’t spend this overpayment or you’ll find yourself short at the end-of-month payment!

In an email sent out Thursday night, Bruce N. Keith, Director, ESS Military Pay, states:

“Your Roth TSP elections submitted during January for February 2015 have been received and processed on your pay account. Unfortunately, we experienced a system error and the Roth TSP election that should have been withheld from your February 13 pay was not. The entire Roth TSP election that you made will be deducted from your pay due February 27.

I apologize for this inconvenience. Please be assured that steps have been taken to avoid a repeat of this situation in the future.”

When things work properly, your mid-month pay is determined by taking your estimated total month pay and allowances, deducting your estimated total month deductions and allotments, and dividing the remainder in half.  Obviously, this is all happening by computers because it would take thousands of people to do all those calculations manually each month.  It appears that the change to the software didn’t work properly, and the calculation did not include the Roth TSP contribution for the month.  Therefore, your mid-month pay is higher than it should be, by half the amount of your monthly Roth TSP contribution (as set up in January.)  As a result, your end-of-month pay is going to be lower than it should be, by the same amount.

It’s not a huge deal, now that we know where that money has come from, and know to keep it aside.  Resist the urge to spend it!

From a broader perspective, it’s always a good idea to set aside any extra money that shows up in your paycheck until you can verify where it came from and its purpose.  I knew that my husband’s pay was super-high this check, and I’ve just been staring at it.  I figured that either some explanation like this would come out, or it would be explained when the Leave and Earnings Statement came out at the end of the month.  I was really tempted to throw it into our new-car account, but I knew that wouldn’t be right.

*Note:  Marines were not required to change their Roth TSP election in January, and should not have been impacted by this error.*


About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • ken

    The mantra is if you are unexpectedly overpaid, don’t spend it. If you live on base and receive BAH, don’t spend it.

  • Mad Money

    Anyone that’s putting away for retirement is sensible enough to not go “oh look, extra money in my account, better go spend it,” no those guys have budgets and their outflows are independent of “windfalls”, but this does mess with our dollar cost averaging.

    Not only do I now have to adjust my TSP % multiple times a year now, but I also lose out on mid month investments. Let’s call this experiment a failure and leave the old system in place.

    I can set a dollar amount for any other allotment, but not the TSP, and that’s just absurd.

    I get it, the DoD is trying to get people to invest more, and since pay increases annually, with promotions, and with time in service, a percentage of base pay increases overall contributions, but come-on-man.

    • Kate

      Mad Money, I wish I shared your confidence. There are a wide variety of viewpoints towards saving and spending out there.

      Even people taking close care of their money could be caught out by this situation. As I said, my husband adjusted his tax withholding this month. Had it not been such a huge amount, I would have assumed that extra money was the adjustment to taxes and put it into our car savings account. Not the end of the world, but still.

      Another spouse with whom I spoke about this issue assumed that her deployed sub spouse had entered a tax-free area, and was getting ready to send that extra money toward their car loan. Her assumption was reasonable.

  • SAHD

    Wife is USAF, her mid month pay matched perfectly to what it would be after half of the monthly ROTH TSP contribution was taken out.

  • M Meier

    We were trying to do the right thing and had turned in the paperwork to our local pay office in December (Fort Buchanan requirement). The person sent it in 2 weeks later and the person at DFAS put it in wrong. We found out at the end of December, but had to wait until January to get a correction submitted. Then the person did the correction and then opted to make a change arbitrarily and put part of our Roth TSP into Regular TSP (not the change we made). We got the first W-2 (wrong), the corrected W2 (wrong) and have been waiting two weeks for another corrected W2. What a mess DFAS has made of our retirement for last year because now we didn’t hit the maximum for 2014 and there isn’t anything that can be done about it.

    • Kate

      M Meier, this is why I strongly recommend that you make all changes via MyPay and not with a person. With a screenshot, you have proof of the changes you’ve made immediately.

      Have you contact the Thrift Savings Plan (TSP) board to see if you are eligible to do a recharacterization of your contributions? I’m not entirely sure of the details and rules, but I know it can be done. Here is the form:

      I hope that helps.

  • Mr Knowitall

    The Roth TSP is listed under ‘DEDUCTION’ instead of ALLOTMENT for the February LES.

    • Kate

      Yes. This is, in my opinion, where it should have been all along, as it is not an allotment. Traditional TSP contributions have always been listed in the Deduction column. It doesn’t really matter in the big picture, but it makes me happy.