The Thrift Savings Plan (TSP) is a valuable way to save for your retirement. For FERS employees, it is essential that you make contributions to the TSP if you hope to enjoy a comfortable retirement. For CSRS employees, the TSP offers a convenient and powerful mechanism for building up your savings.

The TSP is a payroll withholding based plan. CSRS employees get no government contributions. For FERS employees, your agency will automatically contribute an amount equal to 1 percent of your basic pay each pay period, and will provide matching contributions dollar-for-dollar for the first 3 percent of salary you invest and 50 cents on the dollar for the next 2 percent of salary you invest (there are no matching contributions on amounts above 5 percent of salary).

A dollar cap maximum called the “elective deferral limit” applies (in 2024, $23,000); employer contributions on behalf of FERS employees don’t count toward the limit. “Catch-up contributions” are allowed up to a separate annual limit; there are no matching contributions for FERS employees associated with catch-up investments.

Whenever you choose, you can change your investment level or change how your ongoing investments are allocated among the TSP funds. You generally can transfer your account balance among the funds twice a month, with a third transfer allowed only to move money into the government securities fund.

Thrift Savings Plan Investments Only Allowed While Employed

Although you may no longer make investments in your TSP account once you separate from the federal service, you may continue to move your money among the funds. In addition, you will be offered a series of withdrawal options from which to choose. You can leave you money in the TSP where it will continue to earn interest and defer a decision about what to do until a later date, within certain limits.

Note: Those taking phased retirement are treated as active employees, not as retirees, since they do not separate from service.

FERS and CSRS participants are always vested in their own contributions and the earnings on them (meaning that CSRS employees are always fully vested). FERS participants are always vested in the matching contributions their agencies make and the earnings on them, but they become vested in the agency automatic 1 percent contributions and their associated earnings only after three years of civilian service.

Because it is a retirement savings vehicle, the TSP provides only limited access to your funds before retirement. The main means of accessing your money is the loan program, although in-service withdrawals are also allowed under certain circumstances.

Under the TSP’s traditional design, investments are made with pre-tax money but the money along with its associated earnings is taxable on withdrawal. Under the Roth design investments are made with after-tax money but withdrawals of the amounts invested are tax-free, as are their associated earnings as long as certain conditions are met.

New Federal Hires Invest 5 Percent in TSP by Default

Newly hired employees, and those rehired after breaks in service under certain conditions, invest 5 percent of salary by default but may opt out or choose another investment level. Similarly, if they do not choose one or more funds to invest in, the money goes by default into the appropriate L fund based on the assumption that withdrawals would start at age 62.

For special investment, loan and withdrawal policies applying to those on leave without pay, see the publication Effect of Nonpay Status on Your TSP Account at Additional information specifically for those on furlough is in the publication Sequestration and Your TSP Account at that address.

Agency personnel offices have necessary TSP forms along with TSP publications, which also are available through the online personnel portals of many agencies and through and through the ThriftLine automated phone system—(877) 968-3778.