TSP, the Thrift Savings Plan, is a retirement investment program offered to federal employees and members of the United States military including members of the Ready Reserve. TSP is what financial planners describe as a defined-contribution plan.
Some feel the features of TSP resemble a private-sector 401(k) retirement plan. Employees may be eligible for employer contributions, and many of the plan’s investment options allow you to diversify your portfolio in a low-cost way.
Investment options include “Lifecycle Funds” which is described as “an automated investment tool that combines certain stock, bond, and government securities funds in professionally determined proportions based on when you expect to need the money” according to TSP.gov.
There is also an option to invest in Individual TSP Funds, and the ability to transfer funds from other “eligible employer plans or traditional individual retirement accounts (IRAs)” to a Thrift Savings Plan retirement account.
Military members have a different set of requirements and options for signing up and changing their contributions. Civilian federal employees don’t use the same portal as military members can, and in today’s uniformed services, new recruits are automatically signed up.
Setting Contributions
If you work for a federal agency or in the military, you may find that there is a Thrift Savings Plan rep in the nearest human resources office. Military units may have an individual designated as the TSP representative who is fulfilling an additional duty. As in, not a fulltime position.
Locate your rep via your human resources office, First Sergeant, Command Sergeant Major, or Senior Chief. In any case, you can self-service aspects of your plan by using the Department of Defense myPay portal.
Some Basics About Thift Savings Plan Contributions
When enrolled, your plan options and procedures may vary depending on the nature of your federal service. For example, uniformed services Thrift Savings Plan options and regulations are not identical to other plans.
Military retirement system options as of January 1, 2018, include matching Thrift Savings Program contributions up to 5% of base pay each year. Eligibility for contribution matching, however, is delayed and may take up to three years to begin.
For those in the Federal Employees Retirement System (FERS), one option is for your employer to match your TSP retirement contributions for the first three percent of your basic pay contributed each pay period, with reduced contributions for the next two percent.
However, you are required to contribute a minimum of 5% in order to receive “the full amount of agency money.” Why is this important? Those automatically enrolled start at a contribution rate of five percent. “Consider increasing your contributions to at least 5% of your basic pay if you have not already done so” according to TSP.gov.
It’s clear that there’s a motivation for some to change Thrift Savings Plan contributions as soon as possible. The procedure for changing the amount of your contribution includes the following steps:
- Ask your human resources office about the accepted procedure for changing your TSP contribution
- Use the required electronic system to submit digital forms such as TSP-1 or TSP-U-1 or military members
- Submit paper forms such as Form TSP-1, or Election Form TSP-U-1 for military members
Joe Wallace specializes in personal finance, military affairs, and consumer protection topics. Since 1995, his work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and collects unusual vinyl records, which gives him an excuse to write the vinyl blog Turntabling.net.
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