Thrift Savings Plan for USPS Employees: Match, Limits, and Funds

The Thrift Savings Plan for USPS employees is a tax-advantaged retirement account that works much like a private-sector 401(k): career postal workers set aside part of each paycheck, and those under the Federal Employees Retirement System receive employer contributions worth up to 5% of basic pay on top of their own.¹ It sits alongside the FERS basic annuity and Social Security as one of the three pillars of federal retirement income. Employees under the older Civil Service Retirement System can also contribute, but they receive no employer match.²

Who Is Eligible and How Enrollment Works

All USPS career employees are eligible, whether they fall under FERS or CSRS. Reemployed annuitants can also participate if their service is covered by one of those systems.³

New career hires are enrolled automatically. Since October 1, 2020, the automatic contribution rate has been 5% of basic pay per pay period.⁴ Employees hired between August 1, 2010, and September 30, 2020, were enrolled at 3%. CSRS employees are not enrolled automatically and must make a contribution election to participate.⁵ Rehired employees who had a break in service of 31 or more full calendar days are also subject to automatic enrollment.³

Automatically enrolled contributions go into an age-appropriate Lifecycle (L) Fund, matched to the participant’s date of birth against a target retirement age of 63. Employees enrolled before September 5, 2015, who never selected an allocation may still have their balance in the G Fund, the earlier default.⁶

The USPS Match for FERS Employees

The matching formula is the most valuable feature of the plan for FERS postal workers.⁷

The Postal Service contributes an automatic 1% of basic pay each pay period, whether or not the employee contributes anything.
Employee contributions up to the first 3% of basic pay are matched dollar for dollar.
Employee contributions between 3% and 5% of basic pay are matched at 50 cents on the dollar.

An employee who contributes 5% of basic pay ends up with 5% in employer money on top: the 1% automatic plus 4% in matching. Anything less than 5% leaves matching dollars unclaimed, which is why the American Postal Workers Union tells members to contribute at least that much.⁸ Employees are immediately vested in their own contributions and in agency matching contributions. The automatic 1% contribution vests after three years of creditable civilian service.⁷

CSRS employees receive no employer contributions of any kind. They can still contribute their own money for the tax-deferred savings benefit, but no USPS dollars are added.⁹

Contribution Limits for 2026

The IRS caps annual TSP contributions as follows for the 2026 tax year:¹⁰

Elective deferral limit: $24,500 combined across traditional and Roth contributions.
Catch-up contributions for ages 50 through 59 and age 64 and up: an additional $8,000, for a total of $32,500.
Enhanced catch-up for ages 60 through 63: an additional $11,250, for a total of $35,750. This higher tier was created by Section 109 of the SECURE 2.0 Act.¹¹
Annual additions limit: $72,000, which counts employee, agency automatic, and agency matching contributions together but excludes catch-up amounts.

Mandatory Roth Catch-Up for Higher Earners

Starting January 1, 2026, a SECURE 2.0 provision requires that employees who earned more than $150,000 in the prior year direct their catch-up contributions to a Roth account once their traditional contributions reach the $24,500 deferral limit.¹⁰ The switch happens automatically for most participants. Anyone who does not want Roth catch-up contributions must adjust regular contributions to stay under the deferral limit. The $150,000 threshold is indexed for inflation.¹²

Traditional or Roth

Contributions can go to a traditional (pre-tax) balance, a Roth (after-tax) balance, or a combination.¹³ Traditional contributions reduce current taxable income, and both contributions and earnings are taxed as income when withdrawn. Roth contributions are made with after-tax dollars, and qualified withdrawals of both contributions and earnings come out tax-free.

For Roth earnings to be tax-free, two conditions have to be met: at least five years must have passed since January 1 of the year of the first Roth contribution, and the participant must be at least 59½, permanently disabled, or deceased. One detail worth knowing: all agency automatic and matching contributions go into the traditional balance, even when the employee’s own contributions are Roth. Roth balances are not subject to required minimum distributions.¹³

Roth In-Plan Conversions

Also starting in early 2026, the TSP allows participants to convert money from their traditional balance to their Roth balance while it stays inside the plan.¹⁴ Up to 26 conversions are allowed per calendar year, with a minimum of $500 per conversion and at least $500 left in each traditional source afterward. The converted amount is added to taxable income for the year. No money leaves the account to cover the tax, so participants pay it using funds from outside the TSP. Conversions are irreversible once completed.¹⁵

Investment Options

The TSP offers five individual funds and a series of Lifecycle funds that blend those five in shifting proportions.

The Five Core Funds

G Fund: special-issue U.S. Treasury securities, designed to preserve capital at low risk.
F Fund: tracks the Bloomberg U.S. Aggregate Bond Index, low to medium risk.
C Fund: tracks the S&P 500 Index, medium risk.
S Fund: tracks the Dow Jones U.S. Completion Total Stock Market Index, covering stocks outside the S&P 500, medium to high risk.
I Fund: tracks the MSCI ACWI IMI ex USA ex China ex Hong Kong Index, high risk.¹⁶

The APWU has cautioned members against parking an entire balance in the conservative G Fund for decades, noting that stock-based and Lifecycle options may fit long-term growth better depending on the worker’s retirement timeline.⁸

Lifecycle Funds

The Lifecycle (L) Funds are target-date funds that automatically shift their mix of the five core funds from more aggressive to more conservative as the target retirement date approaches. Available funds run from L Income, for those already in or near retirement, through L 2075 for the youngest workers. Once a fund reaches its target date, it rolls into L Income. Each L Fund is rebalanced at the end of every trading day.¹⁷

Mutual Fund Window

The mutual fund window opens access to more than 4,000 outside mutual funds. Participation requires a $40,000 minimum account balance and an initial transfer of at least $10,000, and no more than 25% of the total TSP balance can sit in the window at any time. It carries a $37 annual administrative fee, a $95 annual maintenance fee, and a $28.75 trade fee for most transactions. As of early 2026, only about 9,000 of the more than 7 million TSP participants had funded window accounts.¹⁸

How to Start, Stop, or Change Contributions

USPS employees manage TSP contribution elections through PostalEASE, the Postal Service’s benefits self-service system. It is available online through the LiteBlue portal or the Blue intranet, or by phone at the Human Resources Shared Service Center, 877-477-3273, option 1.⁷ Log in with your Employee Identification Number and password. There is no open season for TSP contribution elections. You can change them at any time.¹⁹

Loans From Your Account

Active employees can borrow from their own TSP accounts through two loan types.²⁰ A general purpose loan can be used for anything, requires no documentation, has a $50 processing fee, and must be repaid within 12 to 60 months. A primary residence loan is limited to purchasing or building a primary residence, requires documentation, has a $100 processing fee, and must be repaid within 61 to 180 months.

The minimum loan is $1,000. The maximum is determined by a formula that considers your contributions and earnings, half of your account balance, and the highest outstanding loan balance in the previous 12 months, with an overall cap of $50,000. The interest rate is fixed for the life of the loan at the G Fund rate from the month before the loan is requested, which was 4.375% as of June 2026.²⁰

Withdrawals and Required Minimum Distributions

After separating from federal service, participants can take a partial distribution (minimum $1,000), a total distribution, an annuity purchase (minimum $3,500 for a lifetime monthly payment), or installment payments on a monthly, quarterly, or annual schedule. Installments based on IRS life expectancy tables are exempt from the 10% early withdrawal penalty that otherwise applies to distributions before age 59½.²¹

Separated participants must begin required minimum distributions once they reach RMD age and have left federal service. The RMD age is 73 for those born before 1960 and rises to 75 on January 1, 2033, for those born in 1960 or later. Since tax year 2024, Roth balances have been excluded from RMD calculations, so only the traditional balance counts. SECURE 2.0 also reduced the penalty for failing to take a full RMD from 50% to 25% of the shortfall, dropping to 10% if corrected within two years.²²

Rolling Outside Retirement Money Into the TSP

Postal workers with private-sector 401(k) plans, 403(b) plans, or traditional IRAs from before joining USPS can roll that money into the TSP. Direct rollovers of Roth balances from Roth 401(k), 403(b), or 457(b) accounts are also accepted, but the TSP does not accept rollovers from Roth IRAs. Rollover contributions do not count against the annual IRS elective deferral limit.²³

A rollover can be completed as a direct transfer from the outside plan to the TSP, or as an indirect rollover, where the participant receives the funds and must deposit them within 60 days to avoid tax consequences. The TSP runs a concierge service through the ThriftLine at 877-968-3778 to help coordinate paperwork with outside plan providers.²³

1
APWU. Thrift Savings Plan
2
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3
USPS. Employee and Labor Relations Manual, Section 591
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USPS. Employee and Labor Relations Manual, Section 592
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TSP. Contribution Types
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TSP. TSP Bulletin 24-2
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TSP. Contribution Limits
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TSP. Traditional and Roth Contributions
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Federal Register. Roth In-Plan Conversions Final Rule
15
TSP. Roth In-Plan Conversions
16
TSP. Individual Funds
17
TSP. Lifecycle Funds
18
TSP. Mutual Fund Window
19
USPS News. Retirement Contributions
20
TSP. TSP Loans
21
TSP. Withdrawals in Retirement
22
TSP. SECURE 2.0 and the TSP
23
TSP. Move Money Into TSP