There is A LOT of variation on how this process actually works. Many of the personnel (read E2s-E4s) in the finance offices in the deployed environment have NEVER helped someone with this process. Very few use it. It is relatively easy to defer money from your paycheck into this, but if you actually want to max out your deployed benefits, you'll want to defer most of your paycheck into the TSP and write a check from your savings into the SDP. It took 11 visits to the finance office to get this process done for me. Luckily, there wasn't much else to do and the finance office was only 78 steps from the front door of the hospital.
Most of the time you'll have to write two checks to get up to $10K in the account. They'll limit your first one to $6 or $7K, then the next month you can write one for $3-4K. But you do indeed earn an annualized return of 10% on the money. A great deal for no risk, true free lunch there. I wish they'd let you put in $100K. But don't kill yourself over it. Even on a year long deployment you won't make even $1000.
I wouldn't bother putting tax-exempt money into your TSP unless BOTH of the following are true:
1) You've already maxed out your own and a spousal Roth for the year and
2) You plan to do a Roth conversion of most of your TSP when you separate.
Good luck.
