A Thrift Savings Plan (TSP) is a retirement investment program that is only available for those who are gainfully employed by the federal government as well as members of the uniformed forces and Ready Reserve. This is a defined contribution plan, and it allows workers the same benefits that their counterparts in the private sector receive.
What Exactly Is TSP?
With Congress passing the Federal Employees' Retirement System Act of 1986, the Federal Retirement Thrift Investment Board administers the plan.
TSP ensures that government employees and current and retired members of the armed services, including the Ready Reserve, have access to retirement and investment plan benefits. These are the same kinds of tax and savings benefits enjoyed by employees of many private companies in the United States, often through 401(k) accounts.
TSP supplements the Federal Retirement System benefits for civilian employees and is an addition to Civil Service Retirement System pay offered by the government to members of the military.
How TSP Works
TSP is a combined contribution plan. This means the amount of benefits you accumulate over your working years will depend on how much you contribute to your plan plus your agency’s or service’s contributions (if you qualify for them). In addition, you will receive any earnings that accumulate over the same time.
Maximum TSP Deductibles
The IRS limits how much of a TSP contribution you can make each year. For 2022, the maximum annual elective deferral is $20,500. If you are 50 years of age or older (or if you turn 50 in 2022), you are allowed to contribute what is referred to as a catch-up contribution. The annual catch-up limit is currently $6,500 and is in addition to the regular $20,500 limit.
How to Calculate TSP
To calculate TSP, you have to decide how much you can contribute each month and then multiply that number by 12. You will have to calculate the amount deducted from your paycheck as a percentage.
For example, if you earn $30,000 annually, you get paid 26 times a year and your TSP is set at five percent, around $58 will be deducted from your paycheck each pay period. Your annual contribution will be about $1,500.
Automatic TSP Contributions
If you entered federal service between August 1, 2010 and September 30, 2010, you were automatically enrolled at 3 percent of your basic salary. If you entered federal service on October 1, 2020 or later, you were automatically enrolled at 5 percent of your basic salary.
Your agency will automatically deduct your TSP contribution every pay period until you do one of three things:
- Change the contribution amount
- Stop your contributions
- Reach your TSP annual contribution limit
Agencies with FERS or BRS employees will contribute 1 percent of their basic salary each pay period to the TSP fund even if the employee does not make a personal contribution to the fund. The agency contribution is not taken out of your paycheck and does not reduce your salary for income tax purposes.
Quickly Use a TSP Growth Calculator
You can quickly and easily calculate how well your TSP fund is doing.
- Check how many shares you have in a particular fund by logging in to your TSP account.
- Check the current value of shares for your particular fund. You can find this information on the U.S. government TSP website or by looking up the TSPtalk share price.
- Multiply the number of shares you own by the price per share. For example, as of July 11, 2022, the value of the L Income TSP fund was $22.4037. If you have 1,000 shares of the L fund, your account’s value will be $22,403.70. Fund values are updated daily.
You can find TSP calculators on the government's TSP website.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.