The Thrift Savings Plan (TSP) is the federal government's 401(k)-style retirement savings plan: you save from each paycheck, FERS employees get an automatic 1 percent agency contribution plus a match of up to 4 percent more, and you choose how the money is invested among five core funds or a ready-made lifecycle fund.
If you have ever opened your Leave and Earnings Statement and wondered what the "TSP" line really means for your retirement, this guide is for you. The Thrift Savings Plan has its own vocabulary: agency automatic, matching, G Fund, L Income, catch-up, Roth balance. It can feel like a second job just to keep the words straight.
In plain terms, the TSP is a savings account that lives inside your federal job. You put money in from each paycheck. If you are under the Federal Employees Retirement System (FERS), your agency adds money on top. You pick how it is invested. When you leave or retire, you decide how and when to take it out. That is the whole deal.
Think of your federal retirement as a three-legged stool: the FERS pension, Social Security, and the TSP. The pension and Social Security are formulas you mostly cannot change. The TSP is the leg you build yourself, and it is the one most affected by the choices you make this year.
This guide covers what the TSP is, how contributions and matching work, the 2026 limits, how the funds fit together, and how to protect the account with a beneficiary designation. FFEBA is an education organization, not an advisor, and nothing here is a recommendation for your account.
01What is the TSP, in plain English?
The TSP is a defined-contribution retirement plan for federal civilian employees and members of the uniformed services, run by the Federal Retirement Thrift Investment Board. "Defined contribution" means the value at retirement depends on what goes in and how the investments perform, not on a formula. That is the opposite of your FERS pension, which is a defined benefit paid by formula for life.
The TSP works much like a private-sector 401(k). It offers a traditional (pre-tax) balance and a Roth (after-tax) balance, it follows the same IRS deferral limits, and it lets you borrow from your own money under set rules. It is not an IRA, although money can move between the TSP and IRAs through rollovers and transfers.
- Traditional balanceMoney contributed before federal income tax. It grows tax-deferred and is taxed as ordinary income when withdrawn.
- Roth balanceMoney contributed after tax. Qualified withdrawals of contributions and earnings are federal-tax free.
- Agency automatic contributionThe 1 percent of basic pay a FERS employee's agency deposits whether or not the employee contributes.
- Agency matching contributionUp to 4 percent more that the agency deposits when the FERS employee contributes their own money.
- VestingThe point at which money in the account is permanently yours. Your own contributions and the match vest right away; the 1 percent automatic contribution vests after a service requirement.
Who can join? Every FERS and CSRS employee can contribute, and new FERS employees hired or rehired on or after October 1, 2020 are enrolled automatically at 5 percent of basic pay unless they choose another amount (NAVFAC Hawaii TSP notice, retrieved 2026-10-11). You can change or stop your contribution at any time through your agency's payroll system.
02How do TSP contributions work?
You contribute a percentage of basic pay (or a flat dollar amount) from each paycheck, and you choose whether it goes to the traditional balance, the Roth balance, or a split of the two. Contributions come out through payroll, so the money is invested before you have a chance to spend it.
The traditional and Roth choice is about when you pay tax, not how much the account earns. Traditional lowers your taxable income now and taxes withdrawals later. Roth taxes the money now and, if you meet the qualifying rules, lets withdrawals come out tax free. Agency contributions always go into the traditional balance, even if your own money goes to Roth (TSP, retrieved 2026-07-05). The full comparison is in our Roth vs traditional TSP guide.
- 01
Pick your percentage
Enter it in your agency's payroll self-service system (for example MyPay, Employee Express, or NFC EPP, depending on your agency).
- 02
Pick traditional, Roth, or both
You can split your contribution between the two balances.
- 03
Pick your investments
New money goes into your chosen funds. If you never choose, it defaults to the age-appropriate L Fund.
- 04
Check your first statement
Confirm on your Leave and Earnings Statement that the percentage, the Roth split and the agency contributions all appear.
- 05
Revisit once a year
Pay raises, step increases and catch-up eligibility change what your percentage buys.
Your record, not our example
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03How does the TSP match work for FERS employees?
Your agency deposits 1 percent of basic pay automatically, then matches the first 5 percent you contribute: dollar for dollar on the first 3 percent and 50 cents per dollar on the next 2 percent (TSP, retrieved 2026-07-05). Contribute 5 percent and your agency puts in 5 percent. Contribute 3 percent and your agency puts in 4 percent (the automatic 1 percent plus 3 percent matched). Contribute 1 percent and your agency puts in 2 percent. Below 5 percent, the match is smaller every pay period.
This is the single most important number in the TSP. The match is part of your federal compensation, and it is only paid when you contribute.
| You contribute | Agency automatic | Agency match | Agency total | Total going in |
|---|---|---|---|---|
| 0% | 1% | 0% | 1% | 1% |
| 1% | 1% | 1% | 2% | 3% |
| 2% | 1% | 2% | 3% | 5% |
| 3% | 1% | 3% | 4% | 7% |
| 4% | 1% | 3.5% | 4.5% | 8.5% |
| 5% | 1% | 4% | 5% | 10% |
| More than 5% | 1% | 4% | 5% | Your % plus 5% |
Source: match schedule from the Thrift Savings Plan (retrieved 2026-07-05).
Worked example (educational estimate on the assumptions shown). Say your basic pay is $80,000 a year and you contribute 5 percent, or $4,000. Your agency adds the 1 percent automatic contribution ($800) and a $3,200 match ($2,400 on your first 3 percent plus $800 on the next 2 percent). That is $4,000 from your agency and $8,000 going into your account for the year, before any investment gain or loss. Drop to 3 percent and your agency total falls to $3,200. The example uses round numbers and no pay changes; your own figures depend on your actual basic pay.
CSRS employees can contribute to the TSP but receive no agency automatic or matching contributions. Members of the uniformed services under the Blended Retirement System have their own matching rules.
04What are the TSP contribution limits for 2026?
For 2026, you can contribute up to $24,500 of your own money to the TSP, plus a catch-up of $8,000 if you are 50 or older, or $11,250 instead if you are 60 to 63 during the year (IRS, retrieved 2026-10-11). Agency contributions do not count against the $24,500 limit.
Four details trip people up:
- The limit is shared. The $24,500 covers traditional and Roth together, and it is shared with any 401(k) or 403(b) you contribute to at another job in the same year.
- Catch-up is automatic in the TSP. Once you reach the regular limit, eligible contributions continue as catch-up without a separate election, as long as you are eligible that year.
- High earners make catch-up as Roth. Starting in 2026, if your wages from TSP-eligible positions were above $150,000 in 2025, your catch-up contributions must go to the Roth balance (Interior Business Center payroll notice, retrieved 2026-10-11; IRS, retrieved 2026-10-11).
- Front-loading can cost you match. If you hit the limit before the last paycheck of the year, you may miss matching contributions in the pay periods after you stop. Spreading contributions across all pay periods protects the match.
The limits are set by the IRS and usually change each year. We update this section when the IRS publishes new figures.
05Where does the money go once it is in the TSP?
Your contributions are invested in the funds you choose: five core index funds (G, F, C, S and I) or a lifecycle (L) fund that mixes the five for you based on when you expect to need the money (TSP, retrieved 2026-07-05). If you never make a choice, new money goes to the L Fund matched to your age.
- G FundShort-term U.S. Treasury securities issued only to the TSP. The steadiest share price, the lowest long-run growth.
- F FundA broad U.S. investment-grade bond index. Bond prices can fall when interest rates rise.
- C FundThe S&P 500 index of large U.S. companies.
- S FundU.S. stocks not in the S&P 500, mostly small and mid-size companies.
- I FundStocks of companies in developed and emerging markets outside the U.S.
- L FundsTarget-date mixes of the five core funds that shift toward the G and F funds as the target date approaches.
How different are they? In 2022, a hard year for both stocks and bonds, the G Fund returned 2.98 percent while the C Fund returned -18.13 percent. In 2023 the order flipped: the C Fund returned 26.25 percent and the G Fund 4.22 percent (annual returns derived from official TSP share prices, retrieved 2026-09-10). These are historical results, not a prediction of any future year. The full fund-by-fund history is in our TSP funds guide and the dated share price table at /data/tsp-returns/.
The match is the part of the TSP you control completely; the markets are the part you do not.
06How do I name a TSP beneficiary?
You name a TSP beneficiary with a TSP beneficiary designation, which you can complete in My Account on tsp.gov or on the paper form, and it controls who receives the account no matter what your will says. If no valid designation is on file, the TSP pays under the federal order of precedence.
The order of precedence is the default line: your spouse; if none, your children (and the descendants of a deceased child) in equal shares; if none, your parents; if none, the executor or administrator of your estate; and if none, your next of kin under the laws of your state. For many families the default is fine. For blended families, people who have divorced, or anyone who wants to leave money to a sibling, a friend or a trust, it often is not.
- A TSP designation is separate from your FEGLI, FERS and unpaid compensation designations. Each benefit has its own form.
- Divorce does not cancel an old designation automatically. A former spouse named on file can still receive the account.
- A spouse who inherits can keep the money in a TSP beneficiary participant account. Other beneficiaries receive a payment or can roll it over.
- Review the designation after marriage, divorce, a birth or a death in the family.
Our federal beneficiary checklist walks through all four federal forms side by side.
07What happens to the TSP when I leave or retire?
When you separate from federal service, your TSP stays put and keeps its investments until you decide what to do with it. You can leave it in the plan, take partial or full withdrawals, set up monthly payments, buy a life annuity, or roll money to an IRA or another employer plan.
There is no rush to decide on day one. The TSP does not force a payout at retirement, but federal tax law does require minimum distributions from the traditional balance starting at a set age. The rules on timing, taxes and the age 55 exception are in our TSP withdrawal guide, and if you have an outstanding loan, read what happens to a TSP loan at separation first, because an unpaid balance can become taxable.
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08What are the trade-offs of the TSP?
The TSP's strengths are low costs, a simple fund menu and the match. Its limits are a short menu and rules that are less flexible than an IRA in some situations.
| Strengths | Limits |
|---|---|
| Low administrative and investment expenses, published annually by the TSP | Only five core funds plus L Funds inside the main menu |
| The FERS match adds up to 5 percent of pay for contributing 5 percent | You must choose whether a withdrawal comes from traditional, Roth or both, and the choice changes your tax bill |
| Payroll deduction makes saving automatic | Loans must be repaid on schedule or become taxable after separation |
| The G Fund holds Treasury securities issued only to the TSP | The G Fund's steadiness comes with lower long-run growth than stock funds |
| Roth and traditional options in the same plan | Required minimum distributions apply to the traditional balance |
Neither column is a reason to avoid the TSP. They are reasons to understand it, because the choices you make now (how much, which balance, which funds) compound for decades.
09Moving forward with your TSP
The TSP is one piece of a federal retirement plan, not the whole thing. The right contribution level and fund mix depend on your pension, your Social Security, your other savings, your spouse's benefits and when you want to stop working. If you want to see how a TSP balance might translate into monthly income, our TSP income calculator runs an educational estimate on your own assumptions; it is not a projection or a promise.
FFEBA is an education organization. If you want someone to look at your own numbers, we can match you with a Federal Retirement Consultant (FRC), a professional trained on federal benefits. The FRC designation is listed with FINRA. The first review is free, nothing is booked until you choose a time, and you are never obligated to work with anyone we introduce. Get matched with an FRC.
Reviewed by the FFEBA education team. Last reviewed October 2026.
Sources
- Thrift Savings Plan, making contributions (agency automatic and matching contributions), retrieved 2026-07-05
- Thrift Savings Plan, traditional and Roth contributions, retrieved 2026-07-05
- Thrift Savings Plan, individual funds, retrieved 2026-07-05
- Thrift Savings Plan, lifecycle funds, retrieved 2026-07-05
- Thrift Savings Plan, fund price history CSV (share prices as of 2026-09-09), retrieved 2026-09-10
- Internal Revenue Service, 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500, retrieved 2026-10-11
- Internal Revenue Service, retirement topics: catch-up contributions, retrieved 2026-10-11
- U.S. Department of the Interior, Interior Business Center payroll notice on 2026 TSP limits (December 1, 2025), retrieved 2026-10-11
- Naval Facilities Engineering Systems Command Hawaii, information about TSP for new or rehired employees under FERS (5 percent automatic enrollment), retrieved 2026-10-11
Every government figure on this page carries its source and retrieval date. Worked examples are educational estimates on the assumptions shown, not a projection of any person's benefit. FFEBA is an education organization, not a financial advisor.
