The Federal Employees' Retirement Security Act of 1986 established the 澳洲幸运5官方开奖结果体彩网:Thrift Savings Plan, or TSP. It is a 澳洲幸运5官方开奖结果体彩网:qualified retirement plan for federal employees and members of the uniformed services. The Thrift Savings Plan is a 澳洲幸运5官方开奖结果体彩网:defined contribution plan similar to a 401(k), which is a plan offered by companies in the private sector.

Understanding a Thrift Savings Plan

The Thrift Savings Plan was introduced in 1986 through the Federal Employees Retirement System Act. A TSP allows federal workers to invest in a tax-advantaged retirement account and shares similar features to those of a traditional 澳洲幸运5官方开奖结果体彩网:indiviꩵdual retirement account (IRA) or Roth IRA.

Traditional Thrift Savings Plan

Your contributions to a traditional TSP provide you a 澳洲幸运5官方开奖结果体彩网:tax deduction in the year you contributed, meaning it's not part of your taxable income. The earnings grow 澳洲幸运5官方开奖结果体彩网:tax-deferred, meaning you're not taxed on earnings growth each year. However, you pay income taxes on withdrawal amounts in retirement—both earnings and contributions.

Roth Thrift Savings Plan

You receive no tax deduction on contributions into a Roth TSP, meaning you pay income taxes on your money before it's deposited and get no upfront tax break that year. However, the earnings grow tax-free, and you pay no taxes on withdrawals in retirement, whether from earnings or contributions.

Contribution Limits for Thrift Savings Plans

In 2025, you can deposit $23,500 to a TSP unless you're 50 and over, whereby you can contribute an additional $7,500 as a 澳洲幸运5官方开奖结果体彩网:catch-up contribution for a total of $31,000 for the year.

The TSP contribution limits are quite a bit higher than for traditional and 澳洲幸运5官方开奖结果体彩网:Roth IRAs. For 2025, you can contribute $7,000 annually and an extra $1,000 catch-up contribution for those age 50 and older.

Matching Contributions

If you are part of the Federal Employee Retirement System (FERS) or the Blendജed Retirement System (BRS), 𒈔your agency may match your contributions.

Most agencies automatically contribute 1% of your salary to a TSP and an additional 4% after two years of service.

Investing in a TSP

The Thrift Savings Plan accepts rollovers from previous retirement plans, such as a past 401(k) or IRA. Likewise, if a participant terminates employment and goes to work in the private sector, the Thrift Savings Plan account can either remain intact or be rolled over into the new employer's plan or to a 澳洲幸运5官方开奖结果体彩网:traditional IRA.

Although the Thrift Savings Plan is limited in its available 澳洲幸运5官方开奖结果体彩网:investment options, it does offer a low-cost way for government workers to 澳洲幸运5官方开奖结果体彩网:save for retirement. As with other qualified retirement plans, the participant can choose and allocate any percentage of their account assets into any 澳洲幸运5官方开奖结果体彩网:desired funds.

The available funds are below.

Individual Funds

• The G fund, which invests in government securities, such as Treasuries
• The F fund, which invests in corporate and government bonds
• The C fund, an index fund representing the S&P 500
• The S fund, a small-cap stock index fund—riskier than the C fund, with higher potential gains
• The I fund, an international stock index fund that mirrors the 澳洲幸运5官方开奖结果体彩网:MSCI EAFE Index—the riskiest individual fund, with the highest potential returns

Lifecycle Fund

A sixth choice is to invest in one of the 11 Lifecycle, or L, Funds, containing a percentage of all five individual funds. As the chosen Lifecycle Fund approaches maturity and the fund holder's retirement year, a rebalancing of the funds in the portfolio toward less risky assets occurs.

The Bottom Line

A Thrift Savings Plan is a major component of compensation for employees of the federal government and armed services. The TSP provides a tax-advantaged form of retirement savings and government matching of employees' contributions to help them save for retirement. As with other retirement plans, starting early can help you 澳洲幸运5官方开奖结果体彩网:build wealth in retirement.