Eligibility
Contributing and vesting
An employee or uniformed service member may change, stop, or restart contributions, at any time, with very few exceptions noted below.Employee contributions
As of October 1, 2020, new civilian employees and service members in the BRS are automatically enrolled in the TSP with a 5% deduction from their gross pay being deposited into the age-appropriate Lifecycle (L) Fund, unless they make another choice or choose not to participate. Employees hired before then either contribute automatically at 3% or do not have any automatic contributions and had/have to opt-in to TSP; their contribution levels did not change when the newer rules were implemented. All FERS and CSRS employees and members of the uniformed services may contribute up to theMatching contributions
All FERS employees automatically have 1% of base pay contributed by their agency, even if the employee does not participate in TSP; the employee cannot waive this requirement. Additional matching contributions are made dollar-per-dollar up to 3% of base pay (e.g. an employee contributing 3% will have 1% automatically contributed plus 3% matched, for a total of 4%), then at $0.50/$1 for each additional dollar up to 5% of base pay; amounts above 5% are not matched nor are "catch-up" contributions regardless of an employee's base pay. CSRS employees (including CSRS Offset employees) are ineligible for automatic or matching contributions. Uniformed service members under the legacy system are eligible for matching contributions only if the secretary of the specific service designates as such (as of 2019, no specific specialty has been designated as such). However, in 2006, Congress enacted legislation to sponsor a pilot program to offer matching contributions to new active duty enlistees. This program was administered by the Department of the Army from April 1, 2006, through December 31, 2008. Enlistees who qualified for TSP matching during this period (provided completion and returned paperwork was processed as of initial enlistment) receive a dollar for dollar matching contribution on the first three percent of their contributions from basic pay; and fifty cents on the dollar for the next two percent contributed for the duration of their first term of enlistment. The program has since ended, and according to the TSP as of the end of 2018 only five soldiers who were part of the pilot program are still serving and receiving such matching contributions. Beginning in 2018, the Blended Retirement System (BRS) for members of the uniformed services applies automatically to new enlistees (who may receive matching contributions after two years) and to current members who opted in (those members begin receiving matching contributions automatically).Vesting requirements
Employees are fully vested from day one for any employee and agency matching contributions, and earnings thereon. FERS employees must generally complete three years of Federal civilian service to be fully vested in agency automatic contributions and earnings thereon (certain FERS employees and Members of Congress, as well as military members, have only a two-year requirement), otherwise the separated employee loses the unvested amount (except in cases of death, in which case the amounts will deem to be vested). Military and civilian service cannot be combined to meet vesting requirements.Administrative Expenses
TSP's operating expenses are extremely low. This is due to the expenses being subsidized by three major sources: matching contributions and earnings forfeited due to employees not meeting vesting requirements, excess agency contributions and earnings forfeited due to retirement plan corrections (this involves employees placed in FERS who were eligible for, and chose to be placed in, the older CSRS plan), and loan participation fees. However, those sources do not completely cover total expenses, and therefore the balance is taken from investment earnings.Investment options
Fund selection
The TSP offers investors 15 funds in which to invest, in both traditional and Roth versions (however, all agency automatic and matching contributions are placed in the traditional version of the fund(s) selected). Five are individual funds (one dealing with government bonds and the other four tracking specific market indices) while the other ten are target date funds (referred to as "Lifecycle" or "L" Funds) designed to professionally change the allocation mix of investments among the individual funds during various stages of the employee's federal service and are composed of various percentages of the individual funds. All TSP funds are trust funds that are regulated by theIndividual funds
* G Fund – Government Securities fund. These are unique government securities specifically issued to the TSP (thus, not available to the general public) and earn interest set by law at the weighted average yield on outstanding US Treasury securities with four or more years to maturity. Since these securities are backed by the full faith and credit of the US Government; the G Fund is the only fund with no risk of loss of principal. The G Fund was the initial fund established by the TSP when it began operations on April 1, 1987. * F Fund –Lifecycle Funds
On July 1, 2020, the TSP introduced the Lifecycle Fund series in five-year increments. Lifecycle Funds are target date funds which, over a long period of time (typically the period between an employee's entry/re-entry into Federal service and a presumed age of 63 for first withdrawal), allow for automatic reallocation of assets from more-risky stock funds (the C, I, and S Funds) into less-risky income funds (the F and G Funds) as an employee reaches retirement age, as an employee may lack the time, interest, and/or expertise to determine suitable investments at various life stages. Originally the Lifecycle Funds were offered only in 10-year increments (those ending in zero). The current Lifecycle Funds established, along with the corresponding estimated retirement date window, are as follows: * L2065 – Retirement date of 2063 and thereafter * L2060 – Retirement date between 2058 and 2062 * L2055 – Retirement date between 2053 and 2057 * L2050 – Retirement date between 2048 and 2052 * L2045 – Retirement date between 2043 and 2047 * L2040 – Retirement date between 2038 and 2042 * L2035 – Retirement date between 2033 and 2037 * L2030 – Retirement date between 2028 and 2032 * L2025 – Retirement date between 2021 and 2027 * L Income – Individuals currently receiving monthly payments The L 2010 and L 2020 Funds were retired on December 31, 2010, and June 30, 2020, respectively, and merged into the L Income Fund. Every five years (in years ending in 0 or 5) the L Fund with that year in its title will be retired and merged into the L Income Fund, and a new fund will be created with the year in its title that is 45 years from that date. As an example, in 2025, the L2025 fund will be retired and the L2070 fund will be created.Simulating TSP portfolios
Because TSP funds are not offered in the public market (especially the G Fund as those securities are special to the TSP), it can be difficult to backtest TSP portfolios. However, most TSP funds track well-known indices and can be approximated using low-cost funds offered to the general public. Below is a list of Vanguard Exchange-Traded Funds (ETFs) that are equivalent to the TSP funds in terms of their content. * C Fund – VOO * S Fund – VXF * I Fund – VEA * F Fund – BND * G Fund – VGSH The TSP can also be approximated by tracking the performance of the index each fund seeks to match. * C Fund – .INX (TSP withdrawals
During employment
Loan program
There are two types of loans available (a general purpose loan and a loan for a primary residence); an employee can have only two loans active at any one time, and only one of each type. The minimum loan amount is $1,000 and the maximum is $50,000, but the employee must have sufficient assets in the account to take out a loan. The minimum term is one year; the maximum term is five years for the general purpose loan and 15 years for the residence loan. There is a $50 processing fee per loan which is taken out of the loan proceeds. If the employee or service member is married the spouse (even if separated) must consent to the loan. Loans must be repaid via payroll deduction (though an employee may also make additional repayments outside this process) and the interest rate charged (which is fixed for the life of the loan) is the G Fund return rate at the time the application is processed. After repayment an employee must wait 60 days before applying for another loan of the same type. If the employee separates from federal service before the loan is paid, the employee must repay the loan balance within 90 days or it will be reported as taxable income. In addition, any overdue amount not repaid by the end of the following calendar quarter is also reported as taxable income.In-service withdrawals
Employees may make either an "age-based" withdrawal or a "financial hardship" withdrawal. The minimum withdrawal amount is $1,000 (or the account balance, if smaller). For married FERS employees and uniformed service members the spouse must consent to the withdrawal; for married CSRS employees the spouse need only be notified. Any funds withdrawn cannot be repaid to the TSP, and subject the employee to both taxes (including penalties if the employee is under age ) and loss of potential future earnings. An employee must be over age to request an "age-based" withdrawal, and need not specify any reason for doing so. Employees may make up to four such withdrawals per calendar year, but no sooner than every 30 days between them. A "financial hardship" withdrawal can only be made once every six months, and is limited to one of four specific needs: *negative monthly cash flow, *medical expenses (including household improvements needed for medical care), *personal casualty losses, or *legal expenses for separation or divorce.Post-employment
Separated and retired participants are not eligible for TSP loans. Participants who retire under age and who withdraw their balances (either in a lump sum, partial withdrawal, or by annuity) are not subject to the early withdrawal penalty. Participants who leave Federal service may leave their accounts with the TSP, roll over the TSP accounts into an IRA or (if leaving for a non-Federal employer, and where eligible) a retirement account with the new employer, subject to the requirements below. Upon separation, any balances less than $200 (but at least $5) will be automatically cashed out in a single payment; amounts less than $5 are not automatically cashed out and are forfeited to the TSP, but the participant may later request payment. The participant then has 60 days to complete the rollover of the funds to a qualifying account to preserve their tax-deferred status. For participants having balances of $200 or more, upon separation the following options are available (spouses' rights apply when the balance exceeds $3,500): * A participant may leave their funds in the TSP, but if the employee does not withdraw the entire balance (or receive monthly payments or purchase an annuity) by April 1 of the year following the year the member turns age 72 (or, if the member separated from Federal service after age 72, the year following separation; unlike IRA rules which require withdrawal at that time regardless of employment status) required minimum distributions will be made per tax laws. * A participant may request a partial withdrawal provided that the balance is at least $1,000. * A participant may request a full withdrawal in a combination of any or all of the following options: ** A single payment (which may be rolled over into a qualifying retirement account), ** Periodic payments (monthly, quarterly, or annually) based on a dollar amount or request TSP compute lifetime payments (these may be changed no sooner than every 30 days, may be rolled over into a qualifying retirement account, and at any time the participant may request a final single payment of the remaining balance; also an employee may request a partial withdrawal along with periodic payments), and/or ** A life annuity (provided there is at least $3,500 available in the account to purchase the annuity), based on one of several different features depending on what is chosen (single life or joint, survivor benefit, cash refund or "10-year certain"). ** A participant who requests a single and/or certain monthly payments may roll over their payment(s) into a qualifying retirement account. If an employee has both a traditional and a Roth account, withdrawals may be made from one or the other, or proportionally from both (but if one account reaches zero future withdrawals will be made from the other). For employees having multiple TSP accounts, the rules apply to each account separately. However, an employee cannot choose to withdraw from only certain funds (e.g. only from the C Fund), any withdrawals are made proportionally across all funds. Any funds remaining in a TSP account will accrue earnings and participants may make interfund transfer allocation changes to the balance.Payment at Death
If a participant dies, then any unpaid balance is paid to the beneficiary(ies) designated. If the participant did not designate any beneficiary(ies), then the "statutory order of precedence" is used, as follows: *To the widow or widower, *To any surviving children (in equal shares) or their descendants, *To any surviving parent or parents, *To the court-appointed executor or administrator of the estate, *To the next of kin as determined by the laws of the state where the employee/retiree lived at death.Notes
References
External links
* {{Official website, https://www.tsp.gov/ Investment in the United States Retirement plans in the United States Civil service in the United States Tax-advantaged savings plans in the United States Federal Retirement Thrift Investment Board United States military pay and benefits