Thrift Savings Plan (TSP)
A thrift savings plan (TSP) is a type of retirement investment program open to federal employees and members of the uniformed services, including the Ready Reserve. These options are the Government Securities Investment (G) Fund, the Fixed-Income Index Investment (F) Fund, the Common-Stock Index Investment (C) Fund, the Small-Capitalization Stock Index Investment (S) Fund, the International-Stock Index Investment (I) Fund, as well as specific life-cycle (L) funds designed to include a mix of securities held in each of the individual funds. Employees new to federal employment can roll over 401(k) and individual retirement account (IRA) assets into a TSP and vice versa if they move to the private sector. A thrift savings plan (TSP) is a defined-contribution retirement plan that has many of the advantages of private-sector plans. TSP benefits can include automatic payroll contributions and agency matching contributions. Participants can choose to make tax-deferred contributions into a traditional TSP, which means the money that flows into the account will not be taxed until it is withdrawn. The F, S, C, and I funds in the TSP are index funds currently managed by the BlackRock Institutional Trust Company under contract by the Federal Retirement Thrift Investment Board (FRTIB).
What Is a Thrift Savings Plan (TSP)?
A thrift savings plan (TSP) is a type of retirement investment program open to federal employees and members of the uniformed services, including the Ready Reserve.
The TSP is a defined-contribution plan that offers federal employees many of the same benefits that are available to workers in the private sector. It closely resembles a 401(k) plan.
How a TSP Works
TSP benefits can include automatic payroll contributions and agency matching contributions.
Participants can choose to make tax-deferred contributions into a traditional TSP, which means the money that flows into the account will not be taxed until it is withdrawn.
However, participants may also choose to invest in a Roth TSP. This option allows employees to make after-tax contributions into their plans so that they'll owe nothing in taxes when they withdraw the money after retiring.
Employees new to federal employment can roll over 401(k) and individual retirement account (IRA) assets into a TSP and vice versa if they move to the private sector.
A thrift savings plan (TSP) is a defined-contribution retirement plan that has many of the advantages of private-sector plans.
Investing Options
The TSP offers a choice of six funds to invest in. These options are the Government Securities Investment (G) Fund, the Fixed-Income Index Investment (F) Fund, the Common-Stock Index Investment (C) Fund, the Small-Capitalization Stock Index Investment (S) Fund, the International-Stock Index Investment (I) Fund, as well as specific life-cycle (L) funds designed to include a mix of securities held in each of the individual funds.
The F, S, C, and I funds in the TSP are index funds currently managed by the BlackRock Institutional Trust Company under contract by the Federal Retirement Thrift Investment Board (FRTIB). This independent government agency administers the TSP and acts as a fiduciary legally liable to manage the TSP prudently and in the best interests of participants and their beneficiaries.
Index funds in the TSP are designed to mimic the return characteristics of the corresponding benchmark index. For example, the C Fund is invested in a stock index fund replicating the Standard and Poor’s 500 Index, which is made up of the stocks of 500 large to medium-sized U.S. companies. L funds are invested in the five individual TSP funds, and their asset allocations are based on the individual investor's time horizon.
Related terms:
401(k) Plan : How It Works & Limits
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Agency Automatic Contributions
Agency automatic contributions are contributions made by the federal government to an employee's TSP that equals 1% of their pay. read more
Corporate Pension Plan
A corporate pension plan is an employee benefit that provides regular income in retirement based on length of service and salary history. read more
Defined-Contribution Plan
A defined-contribution plan is a retirement plan in which employees contribute part of their paychecks to an account intended to fund their retirements. read more
Index Fund
An index fund is a pooled investment vehicle that passively seeks to replicate the returns of some market indexes. read more
IRS Publication 721: Tax Guide To U.S. Civil Service Retirement Benefits
IRS Publication 721: Tax Guide To U.S. Civil Service Retirement Benefits details U.S. income tax rules for retirees from federal service. read more
Pension Plan
A pension plan is an employee benefit that commits the employer to make regular payments to the employee in retirement. read more
Roth Option
A Roth option, available in some company 401(k) retirement plans, permits an employee to contribute after-tax dollars to an account. read more
S&P 500 Index – Standard & Poor's 500 Index
The S&P 500 Index (the Standard & Poor's 500 Index) is a market-capitalization-weighted index of the 500 largest publicly traded companies in the U.S. read more