The Thrift Savings Plan for Federal Employees

The Thrift Savings Plan is a retirement and savings investment plan for federal employees. Congress established the TSP in 1986 for the purpose of providing federal employees with retirement income. The TSP offers federal employees the same type of savings and tax benefits that many private corporations offer their employees under so-called 401(k) plans. You can participate in the TSP if you are covered by the Federal Employees Retirement System (FERS), the Civil Service Retirement System (CSRS), or an equivalent retirement plan.

The Thrift Savings Plan is an important benefit designed to help federal employees save for the future. If you are a newly hired FERS employee, you can begin your contributions to the TSP immediately. When you become eligible, your agency will contribute an amount equal to 1% of your base salary each pay period. In addition, your agency will match your contributions up to certain limits set by law. To take advantage of all the agency matching money that is available, you would need to contribute 5% of your basic pay each pay period. However, you can contribute more or less.

You may think that you are too young or financially constrained to worry about retirement. Remember, though, that delaying your decision to contribute means that you miss out on agency matching contributions that you can never recapture.

If you are a CSRS employee, you do not receive any agency money, but like FERS employees, you decide how your money is invested, and you don’t pay taxes on it or its earnings until you take it out. You may also elect to contribute any dollar amount or percentage of basic pay. However, your annual dollar total cannot exceed the Internal Revenue Code limit, which is $17,000 for 2012. You do not receive any agency contributions.

Civilian employees who are members of the Ready Reserve can also contribute to a separate account from their Reserve pay. Members of the uniformed services should read the Summary of the Thrift Savings Plan for the Uniformed Services for complete and accurate TSP information applicable to them.


In short, the TSP is a valuable benefit for federal employees that offers all participants:

  • Tax deferral on contributions
  • A choice of five investment funds
  • A loan program
  • Catch-up contributions for participants age 50 or older
  • In-service withdrawals for financial hardship or after age 59½
  • A choice of post-separation withdrawal options
  • The ability to transfer money from other eligible retirement savings plans into your TSP account


Signing Up for the TSP

Ask your agency personnel office for the TSP Election Form (TSP-1) or download a copy from the Forms & Publications section of the TSP Web site ( [MC1] Use the form to show how much you want to contribute each pay period. Then submit Form TSP-1 to your agency personnel office. (Some agencies may be using an electronic version of Form TSP-1. Check with your personnel office.) Your agency will deduct your contributions from your pay each pay period. You can stop your contributions at any time.

Add Comment