Thrift Savings Plan
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services, including the Ready Reserve. TSP is similar to the 401(k) plans offered to employees in the private sector. The purpose of the TSP is to help employees save for their retirement. TSP is a defined contribution plan. This means that the employee’s TSP income depends on how much the employee and their agency put into the account. Employees are encouraged to contribute early and consistently to meet their retirement savings goal.
Employees may choose to contribute to either a Traditional (pre-tax) account or Roth (after-tax) account, or both. Employees must be in pay status as a full-time or part-time employee to contribute. If hired on or after October 1, 2020, they are auto-enrolled in the Traditional TSP at 5 percent of their salary. However, they may change their election and may increase or decrease contributions at any time. Employee contributions are subject to the Internal Revenue Code elective deferral limit, determined annually by the Internal Revenue Service.
Each pay period, employees covered under the Federal Employees Retirement System receive Agency Automatic Contributions equal to 1 percent of their basic pay and Agency Matching Contributions on the first 5 percent of their basic pay. Employees are encouraged to contribute at least 5 percent to receive the maximum agency match. There are no agency contributions for Civil Service Retirement System (CSRS) participants.
While employees are encouraged to keep their contributions in the fund to maximize earnings on contributions, the TSP does allow participants to make in-service withdrawals and take loans against their contributions if they meet certain requirements. For additional program details click here.