In pay status (continuing to receive a paycheck), or.Actively employed by the Federal Government, or.To make qualified contributions to a TSP up to the maximum allowed amount, you must also be: A civilian in certain other categories of government service.A member of the uniformed services (active duty or Ready Reserve).A Civil Service Retirement System Employee.A Federal Employees’ Retirement System Employee.In fact, you are eligible to contribute to the TSP if you fit into one of the following categories: If you are a federal employee or a member of the armed forces, and aren’t sure whether you are eligible for participation in the TSP, you probably are. This allows you to participate in compound growth, in which your earnings create earnings, and is most beneficial the longer you have until retirement.Ī new option is also becoming available, the Roth Thrift Savings Plan, where contributions are taxed, but withdrawals are tax-free. Moreover, while your funds are invested, you are not taxed on their earnings until you make withdrawals. This in turn decreases your tax burden while you’re employed, which can be particularly significant if you contribute the maximum amount or are in a high income tax bracket. These benefits include matching funds contributed on your behalf by your employer (for eligible employees), and tax advantages, including an income deduction and long-term tax deferral on contributions and their growth.īecause you fund your TSP with “pre-tax” dollars, you actually lower the amount of income you must pay taxes on. The TSP is very similar to a civilian style 401k or 403b retirement plan and offers similar savings options and tax benefits. And they’re a lot cooler than Jeff Bezos. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. It is administered by the Federal Retirement Thrift Investment Board, which is an independent government agency managed by five board members and an executive director appointed by the president. The Thrift Savings Plan was established by Congress in the Federal Employees’ Retirement System Act of 1986 for federal employees and members of the uniformed services (including the Ready Reserve). Though it offers numerous advantages for retirement savings, the TSP is under-appreciated and may be the most under-utilized benefit offered by the federal government. Since it’s a “defined contribution” retirement plan, the retirement income you receive from the TSP will depend on how much you (and your agency, if applicable) contribute during your working years, along with how well your investments perform over that time. The Thrift Savings Plan (also known as the TSP) is a retirement savings and investment plan offered to current employees of the military and federal government.
government or military service is the Thrift Savings Plan. Possibly one of the greatest benefits to U.S.
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