Thrift Savings Plan
Congress established the Thrift Savings Plan (TSP) in the Federal Employees’ Retirement System Act of 1986. On October 30, 2000, a new law extended the eligibility for participation in the TSP to all members of the uniformed services.
What Is It?
The Thrift Savings Plan is a retirement savings and investment plan. It is a retirement benefit offered to Federal employees and military personnel (including Reservists) similar to 401(k) plans offered to many private-sector employees. This is a supplement to military retirement pay.
 How Does It Work?
A participant can sign up for Thrift Savings Plan by contacting their paymaster and requesting the TSP Election Form (TSP-U-1). The form can also be downloaded from the TSP website at www.tsp.gov. The paymaster will deduct the authorized amount from your paycheck each pay period. Military personnel are eligible to participate as soon as they become members of the uniformed services. Participants can change the amount or stop their contributions at any time.
What Are the Benefits of Participation?
Participation in the Thrift Savings Plan has many advantages, including:
- Before-tax contributions and tax-deferred investment earnings.
- A portable retirement account that can move with participants when they retire or leave federal or military service.
- A diversified choice of investment options, including professionally designed “lifecycle” funds.
- Matching contributions if the participant meets varying workplace qualifications.
- Low administrative and investment expenses.
Matching Contributions:
Under federal law, the Secretary responsible for each branch of military service may designate critical specialty areas for matching contributions. Members engaged in those specialties who agree to serve on active duty for 6 years may be eligible for matching contributions to their Thrift Savings Plan during their time on active duty.
There are also a number of specific regulations and limitations that pertain to Matching Contributions:
- Matching Contributions only apply to amounts contributed from “basic” pay, not from “incentive or special” pay.
- Matching Contributions apply to the first 5% contributed each pay period.
- Contributions are matched dollar-for-dollar on the first 3% contributed and matched 50 cents on the dollar for the next 2% contributed.
Contact Information:
For more information on the Thrift Savings Plan, visit www.tsp.gov or call the ThriftLine toll-free at 1-877-968-3778.
Military Saves
Military Saves is part of the national campaign known as America Saves, which is sponsored by the Consumer Federation of America (CFA). America Saves and Military Saves have been established “to persuade and encourage people to avoid debt and build wealth.” Service members are invited to join Military Saves and become lifelong savers. Membership is free and includes a free quarterly electronic newsletter, access to wealth building information, and debt reduction tips. You can learn more about this national campaign by going online at www.militarysaves.org (for Military Saves) and www.americasaves.org (for America Saves). |
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