Government TSP
What is the Thrift Savings Plan?
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees. Congress established the TSP in the Federal Employees' Retirement System Act of 1986. Currently the TSP has 3.4 million participants and holds more than 147 billion is assets.The purpose of the TSP is to provide retirement income. The TSP offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under "401(k)" plans.
The TSP is a defined contribution plan. The retirement income that you receive from your TSP account will depend on how much you (and your agency, if you are a FERS employee) have contributed to your account during your working years and the earnings on those contributions.
What are the major features of the TSP?
FERS Participants — You can contribute up to 14 percent of your basic pay each pay period to your TSP account as soon as you become a Federal employee. Once you are eligible, you will receive:
- Agency Automatic (1%) Contributions
- Agency Matching Contributions
- Immediate vesting in Agency Matching Contributions and vesting — generally in 3 years — in Agency Automatic (1%) Contributions
- Very low fees.
In 2006 these salary limits will disappear, TSP participants will simply observe the Internal Revenue Service dollar limits on contributions which will be $15,500 in 2008.
The limit on catch-up contributions for 2008 is $5,000. If you are at least age 50 (or will become age 50 during the calendar year) and if you have made or will make the maximum amount of employee contributions for the calendar year ($15,500 in 2008), you may also make catch-up contributions to your TSP account.
Investment Options
A choice of 10 investment funds, four of which are index funds:
Government Securities Investment (G) Fund
Fixed Income Index Investment (F) Fund
Common Stock Index Investment (C) Fund
Small Capitalization Stock Index Investment (S) Fund
International Stock Index Investment (I) Fund
Five new "Life-Cycle" funds have just been added.
These new ( L ) funds will feature different asset allocations and will have a target retirement date. Each L fund will invest in existing TSP funds and, over time, shift from aggressive to conservative investments.
L2040
L2030
L2020
L2010
LIncome
Frequently Asked TSP Questions
I've left Federal service, can I roll the TSP into an IRA or employer plan?
Yes. You will complete TSP-70 Request For Full Withdrawal. Your spouse will be required to sign this document and your IRA provider or plan administrator will also need to sign this form. Once the provider has signed the form- submit to the TSP Service Office