Benefits - New Employees - Thrift Savings Plan
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The TSP is a retirement savings and investment plan for Federal employees under CSRS and FERS. The purpose of the TSP is to provide additional retirement income. The TSP offers federal civilian employees the same type of savings and tax benefits that
many private companies offer under "401(k)" plans. Employees can choose to contribute toward either the Traditional TSP (pretax), or the Roth TSP (after-tax), or a combination of both.
Detailed TSP information
is available on the TSP website (www.tsp.gov). Please review the information to help you decide if Traditional (pre-tax) contributions or Roth (after- tax) contributions are most beneficial for you.
You may also wish to consult a qualified financial or tax advisor. If you need additional TSP information, please contact your Benefits Specialist.
Following is a brief summary of the most significant TSP benefits and provisions:
Employee Contributions
As a new federal employee or a rehired (with a break in service) federal employee covered under FERS or CSRS, you will be automatically enrolled to contribute 5% of your basic pay each pay period into your Traditional TSP account. If
you are a new federal employee, your TSP contributions will automatically be invested in an age-appropriate L Fund until you make a contribution allocation with the TSP. If you are being rehired and have a $0 balance in your TSP account from your
previous period of employment, you will also have your TSP contributions invested in an age-appropriate L Fund. If you are being rehired and have an existing TSP account with a balance greater than $0, your TSP contributions will be invested
based on your last contribution allocation on file with the TSP or, if no contribution allocation is on file, your TSP contributions will be invested in the G Fund.
New employees who want to change (increase or decrease) their Traditional TSP contribution amount or change to the Roth TSP or a combination of both Traditional TSP and Roth TSP may submit
a TSP-1 directly to the Benefits staff during the first pay period after your hire date, if you want the contribution change to be effective the following pay period. (Please refer to the Important Information link for specific submission instructions.) Please note that once you receive access to your Employee Personal Page account, you will be required to use the self-service feature for any future contribution changes.
New employees who do not wish to participate in the TSP are required to submit a TSP-1 during the first pay period to stop the automatic contribution. A refund of automatic TSP contributions is
available directly from the TSP. The request for a refund must be made within 90 days after the first automatic contribution. Transferees, rehires (without a break in service), and current employees retain their existing TSP eligibility.
The Internal Revenue Code places a limit on the dollar amount of contributions you can make to the TSP. The Internal Revenue Service (IRS) calculates the limit every year and it can change annually. Combined contributions to the Traditional TSP and the Roth TSP must not exceed this IRS elective deferral limit.
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Agency Automatic Contributions and Matching Contributions
FERS employees receive agency automatic and matching contributions. TSP savings are a very important part of the retirement package for FERS employees. FERS employees are strongly encouraged to contribute to the TSP!
1. Agency Automatic (1%) Contributions - an amount your agency contributes to your TSP account that is equal to 1% of your gross basic pay. Your agency makes this contribution to your Traditional TSP account even
if you do not contribute your own money to your TSP account.
2. Matching Contributions - when you contribute your own funds to your TSP account (Traditional, Roth, or a combination of both) you will also receive matching contributions from your agency. Matching contributions apply to the
first 5% of pay that you contribute each pay period. Matching contributions are made to your Traditional TSP account (even if you contribute to only the Roth TSP) and are matched dollar for dollar on the first 3% of pay you
contribute, then $.50 on the dollar for contributions between 3% and 5%. In order to take full advantage of the agency automatic 1% and matching contributions, employees and newly hired employees (who were automatically enrolled to contribute
3%) need to be contributing at least 5%. This can be done by submitting the TSP-1 form to the Benefits staff or by making a change using the Employee Personal Page.
Although the TSP is still a great investment, CSRS employees do not receive agency automatic contributions or matching funds.
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Investments
The TSP offers a choice of six investment funds. When your TSP account is initially established, contributions are placed in an age appropriate L Fund; however, you may change your investment allocations at any time by accessing your TSP account.
Detailed information about each of the funds and historical rates of return can be found on the TSP website: www.tsp.gov.
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TSP Loans
The TSP Loan Program gives you access to the money you have contributed to the TSP and to the earnings on that money. (You cannot borrow any agency contributions or any earnings attributable to those contributions.) The TSP will disburse Traditional
and Roth amounts from a participant's TSP account proportionally. There are two types of loans, a general-purpose loan, and a loan for the purchase of your primary residence. Before you consider a loan, please contact your Benefits Specialist.
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Transferring Funds into the TSP
The TSP can accept transfers (or rollovers) of eligible distributions from any eligible retirement plan, including a traditional IRA or Roth employer plan balances. Employees should use the form TSP-60 to transfer eligible funds into the TSP. A transfer or rollover cannot be used to establish a TSP account. Please note that the Roth TSP differs from a Roth IRA: The Roth TSP has no income restrictions on contributions and the contribution limits
are the same as the IRS elective deferral limits. Prior participation in a Roth 401(k) transferred into TSP counts toward the 5-year rule.
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TSP Catch-up Contributions
Eligible employees are permitted to make "catch-up" contributions from their basic pay to their TSP accounts. Catch-up contributions made are in addition to regular TSP contributions. An employee who meets all of the following requirements
is eligible to make catch-up contributions:
1. The employee must be age 50 or older in the calendar year the catch-up contributions are made. The participant's birthday can be as late as December 31 of that year.
2. The employee must be at work or on paid leave during the pay period in order to make contributions.
3. The employee must be contributing the maximum annual contribution limit to their regular TSP for the current tax year.
The Internal Revenue Code places a limit on the dollar amount of contributions you can make to the TSP catch-up. The IRS calculates the limit every year and it can change annually. The combined TSP catch-up contributions to the Traditional TSP and
the Roth TSP must not exceed this IRS elective deferral limit
You can elect to make catch-up contributions to the Traditional TSP, the Roth TSP, or a combination of both by completing the TSP-1. You can change the amount
of your catch-up contributions, or stop your catch-up contributions at any time by making an election using the Employee Personal Page. Contribution elections will be effective the beginning of the pay period following receipt
of the change. Catch-up contributions are invested according to your most recent contribution allocation on file with the TSP.
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