The Thrift Savings Plan is the federal government’s retirement savings account for civilian employees and members of the uniformed services. It works much like a private-sector 401(k): you contribute part of your paycheck, choose how the money is invested, and let it grow in a tax-advantaged account until retirement. Congress created the plan through the Federal Employees’ Retirement System Act of 1986, and the money sits in a dedicated trust fund managed by the Federal Retirement Thrift Investment Board.1Office of the Law Revision Counsel. 5 USC 8437 – Thrift Savings Fund
Who Can Use the TSP
Three groups of federal personnel can participate:2Thrift Savings Plan (TSP). How the TSP Fits Into Your Retirement
- Employees covered by the Federal Employees Retirement System (FERS), which generally applies to those hired on or after January 1, 1984.
- Employees covered by the older Civil Service Retirement System (CSRS), typically those hired before that date who never converted to FERS.
- Active-duty military and Ready Reserve members, including those in the Blended Retirement System (BRS).
For FERS participants, the TSP is one piece of a three-part retirement package that also includes a FERS basic annuity and Social Security. For CSRS employees and military members, it sits on top of their annuity or military retired pay.
How Contributions Work
If you started or restarted federal service on or after October 1, 2020, your agency automatically enrolled you at a default rate of 5% of your basic pay, deducted from each paycheck.3Thrift Savings Plan (TSP). Making Contributions BRS military members are auto-enrolled at the same 5% rate after 60 days of service. If you were hired between August 2010 and September 2020, your default was 3%. You can raise, lower, or stop your contributions at any time through your agency’s payroll system.
The IRS caps how much you can put in each year. For 2026, you can contribute up to $24,500 from your own pay.4Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Anything your agency contributes is on top of that limit. If you are 50 or older at any point during 2026, you can add another $8,000 in catch-up contributions. A higher catch-up of $11,250 applies if you turn 60, 61, 62, or 63 during the year, a change introduced by the SECURE 2.0 Act.5Thrift Savings Plan (TSP). Contribution Limits
Traditional or Roth: Choosing How Your Contributions Are Taxed
Every dollar you put in is designated as either traditional or Roth, and the choice determines when you pay tax on it.
Traditional contributions come out of your paycheck before federal income tax is withheld, lowering your taxable income for the year. You pay income tax on both the contributions and the earnings when you withdraw them in retirement.6Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions
Roth contributions use after-tax dollars, so your taxable income now stays the same. The payoff comes later: qualified withdrawals of both contributions and earnings are tax-free, provided you are at least 59½ and the account has been open for at least five years.7Office of the Law Revision Counsel. 26 USC 402A – Optional Treatment of Elective Deferrals as Roth Contributions Roth tends to favor participants who expect to be in a higher tax bracket in retirement than they are today.
Beginning in 2026, one restriction kicks in for higher earners. If your FICA wages from your federal employer exceeded roughly $145,000 in the previous calendar year, any catch-up contributions you make must be Roth rather than traditional.8Federal Register. Catch-Up Contributions Regular contributions up to the $24,500 limit are unaffected.
Agency Contributions and Vesting
If you are a FERS or BRS participant, your employer adds money to your account on top of what you contribute yourself. There are two pieces:9Thrift Savings Plan (TSP). Contribution Types
- An automatic contribution equal to 1% of your basic pay each pay period, deposited whether or not you contribute anything yourself.
- Matching contributions of dollar-for-dollar on the first 3% of pay you contribute, then 50 cents on the dollar for the next 2%.
Contribute at least 5% of your pay and you receive an additional 5% from your agency: 1% automatic plus 4% matched. Contribute less than 5% and you leave part of that match on the table. CSRS employees and uniformed service members not covered by BRS do not receive automatic or matching contributions.
Your own contributions and their earnings are yours from day one. The agency automatic 1% has a vesting requirement, meaning you have to complete a certain amount of federal service before you get to keep that portion if you leave. Most FERS employees vest after three years of civilian service.10eCFR. 5 CFR Part 1603 – Vesting A two-year vesting period applies to certain positions, including members of Congress, congressional employees, non-career Senior Executive Service appointees, and certain Schedule C political appointees. BRS military members also vest after two years.11Defense.gov. Blended Retirement System Defined Contribution Fact Sheet Leave before you vest and the agency automatic contributions, along with their earnings, are forfeited.
Where Your Money Is Invested
The TSP offers five individual funds and a set of target-date portfolios, all with unusually low fees. Combined administrative and investment expenses for each core fund ranged from about 0.033% to 0.051% in 2025.12Thrift Savings Plan (TSP). Expenses and Fees
The five core funds are:
- The G Fund invests in specially issued U.S. Treasury securities. It is the lowest-risk option and guarantees you will not lose principal.
- The F Fund tracks the Bloomberg U.S. Aggregate Bond Index, covering government, corporate, and mortgage-backed bonds.13Thrift Savings Plan (TSP). F Fund
- The C Fund mirrors the S&P 500 Index, giving you exposure to 500 large U.S. companies.14Thrift Savings Plan (TSP). C Fund
- The S Fund tracks the Dow Jones U.S. Completion Total Stock Market Index, covering small and mid-sized U.S. companies not in the S&P 500.15Thrift Savings Plan (TSP). S Fund
- The I Fund provides exposure to international stock markets across developed and emerging economies.16Thrift Savings Plan (TSP). I Fund Benchmark Index Change Complete
If you would rather not build your own allocation, the Lifecycle (L) Funds automatically blend the five core funds into a single portfolio based on your target retirement date. Early on the mix tilts toward stocks; as the target date approaches, it shifts toward bonds and government securities. If you never make an investment election, contributions default into the L Fund closest to the year you turn 62.17Office of the Law Revision Counsel. 5 USC 8438 – Investment of Thrift Savings Fund
Participants who want more choice can use the mutual fund window, which opens up thousands of outside mutual funds. It requires at least $40,000 in your TSP account and carries its own fees, so it is a niche option.18Thrift Savings Plan (TSP). Mutual Fund Window
Getting Money Out of Your TSP
What you can do with your balance depends on whether you are still working for the government.
While You Are Still Employed
You can borrow from your own contributions through a TSP loan. A general purpose loan is available for any reason and must be repaid within 1 to 5 years. A residential loan, used to buy or build your primary home, can be repaid over up to 15 years and requires documentation such as a purchase contract or builder’s agreement.19eCFR. 5 CFR Part 1655 – Loan Program The interest rate is fixed at the G Fund rate in effect the month before you apply, and repayments, with interest, go back into your own account.
Two in-service withdrawal options exist beyond loans:20eCFR. 5 CFR Part 1650 – Methods of Withdrawing Funds From the Thrift Savings Plan
- An age-based withdrawal, available once you reach 59½, lets you take all or part of your vested balance. Partial amounts must be at least $1,000.
- A financial hardship withdrawal, available if you face a genuine emergency such as medical expenses, a personal casualty loss, or legal costs, is limited to the amount you need, with a $1,000 minimum.
After You Leave Federal Service
Once you separate, you can access your full balance through a partial distribution, a total distribution, automatic installment payments (monthly, quarterly, or annually), a life annuity, or any combination of these.21Thrift Savings Plan (TSP). Withdrawals in Retirement
The 10% Early Withdrawal Penalty
If you take taxable money out of your TSP before age 59½, the IRS adds a 10% tax on top of the regular income tax you owe.22Office of the Law Revision Counsel. 26 USC 72 – Annuities, Certain Proceeds of Endowment and Life Insurance Contracts Federal employees get an important exception: if you separate from service during or after the calendar year you turn 55, the 10% penalty does not apply to your TSP distributions.23Thrift Savings Plan (TSP). Information for TSP Participants Leaving Federal Employment Hardship withdrawals taken while you are still working are generally subject to the penalty regardless of age.
Required Minimum Distributions
Once you reach age 73, federal tax law requires you to start withdrawing a minimum amount from your traditional TSP balance each year. The IRS will not let tax-deferred money grow indefinitely, and missing the required amount triggers an excise tax on the shortfall.24Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Naming a Beneficiary
If you die with money still in your TSP account, the balance is paid out as a death benefit. You can name one or more beneficiaries directly with the TSP, and keeping that designation current after marriage, divorce, or the birth of a child matters, because a form you filed years ago controls even if your circumstances have changed.
If you never name a beneficiary, or none of the people you named are still living, the TSP pays out in this statutory order:25eCFR. 5 CFR Part 1651 – Death Benefits
- Your spouse
- Your children, and descendants of any deceased children
- Your parents, in equal shares
- The executor or administrator of your estate
- Your next of kin under the laws of the state where you lived
That default order may not match what you want, and a former spouse could remain on file if you never updated the form. Filing a current designation with the TSP is the only reliable way to make sure the account goes where you intend.