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The thrift savings plan (TSP) is a retirement plan for federal employees and military service members, with benefits similar to those of a 401(k) or IRA. With more than 7 million participants and over $1 trillion in assets, it's one of the largest retirement plans in the country.
Understanding your TSP can help you get the most out of your benefits. Here's what to know about how the TSP works, your options and how to maximize your account.
What Is a Thrift Savings Plan?
A thrift savings plan is a tax-advantaged retirement plan specifically for federal employees and military members. Like 401(k) plans found in the private sector, a TSP offers numerous retirement savings benefits, such as automatic payroll contributions, valuable tax benefits, matching contributions, a variety of investment options and more.
The thrift savings plan program was created by Congress in 1986 to provide federal employees with retirement savings options similar to those in private-sector 401(k)s. It's administered by the Federal Retirement Thrift Investment Board (FRTIB) and is now the largest retirement plan in the United States.
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How Do Thrift Savings Plans Work?
When you enroll in the TSP, a percentage of each paycheck is automatically deducted and deposited into your TSP account. Within your account, you can choose which investment funds you want to contribute to. If you're a new federal employee or service member, you're auto-enrolled at 5% of your pay, the level required to receive the full agency match.
Contribution Limits
For 2026, the maximum employee contribution is $24,500. If you're 50 or older, you can contribute an additional $8,000 in catch-up contributions. Workers between 60 and 63 can contribute up to $11,250 in catch-up contributions.
Employer Match
One of the biggest perks of the TSP is the employer match, which automatically contributes 1% of your salary, regardless of whether you contribute anything. From there, the plan matches your contributions dollar for dollar on the first 3% of your pay, then 50 cents on the dollar for the next 2%. You get the maximum employer match if you contribute at least 5% of your pay. That ensures you're not leaving free money on the table.
Vesting
The money you contribute to your account, along with the government's matching contributions, belongs to you immediately. But the automatic 1% government contribution works differently. Most federal employees must complete three years of service before those funds become vested, although some positions qualify for a shorter two-year vesting period.
Who Qualifies for TSPs?
Most federal government employees qualify to participate in the TSP, but not all. Here's who meets the eligibility criteria:
- Federal employees covered by the Federal Employees' Retirement System (FERS), typically hired on or after January 1, 1984
- Federal employees covered by the Civil Service Retirement System (CSRS), hired before January 1, 1984, who didn't convert to FERS
- Active and reserve members of the uniformed services, which are the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, National Oceanic and Atmospheric Administration and Public Health Service
- Civilians working in eligible sectors of the government
To contribute to a TSP, you also need to be actively employed by the federal government, in a pay status eligible to contribute and working full or part time.
Types of Thrift Savings Plans
When you contribute to your TSP, you can choose between two types of accounts: traditional and Roth.
Traditional TSP
You can deduct your retirement contributions from your gross earnings and save on your annual tax returns. Your retirement savings grow tax-deferred, but you'll pay taxes on your contributions and earnings when you take distributions in retirement.
Roth TSP
With a Roth TSP, your money is taxed before it's added to your retirement account. You won't get the tax deduction now, but your contributions can grow tax-free, and you won't owe any taxes when you make withdrawals in retirement.
Choosing whether to contribute to a traditional or Roth TSP may depend on your tax situation now versus what you expect in retirement. The traditional account may make more sense if you expect to be in a lower tax bracket in retirement than you are now. You may prefer contributing to the Roth TSP, though, if you expect to be in the same or higher tax bracket later because it could save you more over the long run. You can also split your contributions between both for tax diversification.
Note: A Roth in-plan conversion allows you to move money from your traditional TSP balance to your Roth balance. The minimum conversion amount is $500, and you may be limited in how often you can make these conversions each year. You'll owe income taxes on the amount you convert.
TSP Investment Funds
The thrift savings plan (TSP) offers a streamlined set of investment funds, most of which track specific market indexes. Deciding which one is right for you will likely depend on how much risk you're comfortable taking based on your retirement timeline. Here's a brief breakdown of the different TSP investment funds:
- G Fund (Government Securities Investment Fund): This fund invests in short-term U.S. Treasury securities to preserve your principal. TSP gives the G Fund its safest rating, and it has a 4.64% lifetime return rate.
- F Fund (Fixed Income Index Investment Fund): The F Fund tracks the Bloomberg U.S. Aggregate Bond Index, which represents a broad cross-section of U.S. bonds. The risk level is lower than that of stock funds and it earns slightly higher returns than the G Fund.
- C Fund (Common Stock Index Investment Fund): This fund gives you exposure to the S&P 500, which includes 500 of the largest U.S. companies. It's a core stock fund with medium risk and an 11.40% return since its inception in 1988.
- S Fund (Small Cap Stock Index Fund): This medium-high-risk fund is tied to the Dow Jones U.S. Completion Total Stock Market Index, which covers small- and mid-sized U.S. companies that aren't in the S&P 500.
- I Fund (International Stock Index Investment Fund): Invests in stocks from developed and emerging markets outside the U.S. The TSP rates this as its highest-risk individual fund, but you might consider it if you want to diversify your portfolio with international investments.
- Lifecycle (L) Funds: The TSP offers 11 L Funds, each holding its own mix of the five individual funds (G, F, C, S, I). You can choose one L Fund based on when you plan to start withdrawing from your account. Then, every quarter, the fund automatically rebalances toward a more conservative mix as your target date gets closer. You take on more risk early on and less risk as you get closer to retirement.
- Mutual fund window: If you want greater flexibility than the core individual funds offer, you may have the option to invest some of your TSP savings in various mutual funds. You may be eligible to use the mutual fund window if you have at least $40,000 in your TSP account and make an initial transfer of at least $10,000. However, no more than 25% of your total TSP balance can be invested in the mutual fund window at any time.
TSP vs. 401(k) vs. IRA
TSPs are similar to 401(k)s, but may be a better option with higher contribution matches and lower fees. The following comparison table illustrates the similarities and differences between the thrift savings plan, 401(k)s and IRAs:
TSP vs. 401(k) vs. IRA
| Thrift Savings Plan | 401(k) | IRA | |
|---|---|---|---|
| Tax savings options | Traditional and Roth | Traditional and Roth | Traditional and Roth |
| Contribution limits (for 2026) | $24,500 | $24,500 | $7,500 |
| Catch-up contributions (for 2026) | Additional $8,000 at age 50+; $11,250 at ages 60—63 | Additional $8,000 at age 50+; $11,250 at ages 60—63 | Additional $1,100 at age 50+ |
| Loan from funds | Allowed; repaid with interest (up to $50,000) | Allowed with most plans; repaid with interest | Not allowed |
| Retirement distributions options | Installment payments, lump-sum payment, convert to an annuity, roll over into an IRA | Depending on the plan, options for lump-sum distribution, periodic distributions, annuity conversion, roll over into an IRA. | You can withdraw funds from your IRA anytime, but you'll owe income taxes on the distribution plus 10% tax if you're younger than 59½ |
| Investment choices | Five individual funds to choose from | Could include a wide range of investment options | Can include most traditional types of investments except life insurance and collectibles |
| Employer contributions | Potential 5% contribution (1% automatic agency contribution plus up to 4% salary match) | Varies by employer; not all plans match contributions but of those that do, the average match ranges from 4% to 6% of your pay | With SIMPLE IRA, employers must contribute either up to 3% of compensation or a 2% nonelective contribution |
| Fees | Total expense ratios range from 0.034% to 0.051% | Vary widely | Varies widely depending on asset |
Alternatives to TSPs for Retirement Savings
If you don't qualify for a thrift savings plan, you can still benefit from tax-advantaged retirement savings through a 401(k) or IRA. Here are some other options that may deserve a spot in your retirement portfolio:
- Investments: You can invest in assets like stocks, bonds, mutual funds, annuities and exchange-traded funds (ETFs) through a standard brokerage account outside of a retirement plan. Many of these same investments are also available inside traditional and Roth IRAs. However, these investments carry risk, so they should align with your goals and risk tolerance.
- Deposit accounts: Certificates of deposit (CDs) and high-yield savings accounts generally don't offer yields high enough to justify using them to grow your retirement savings long term. However, if you're close to retirement, they can provide a safe place to park your nest egg while still earning a modest return. That can be especially beneficial during volatile market periods.
- Health savings accounts (HSAs): These accounts can also be a valuable component of your retirement plan. Your contributions to an HSA are tax deductible, your account grows tax-free and you can make tax-free withdrawals for qualified medical expenses.
- Annuities: Annuities are insurance contracts that offer a source of income during your retirement. You can make one lump-sum payment or a series of payments over time, and your money grows on a tax-deferred basis. Be aware, however, that annuities often come with high fees compared to other retirement vehicles and limited control over investment decisions.
Learn more: How to Save Money for Retirement
Frequently Asked Questions
Is a TSP a Qualified Retirement Plan?
Yes, a thrift savings plan is a qualified retirement plan, but only for federal employees and members of the military. As qualified retirement plans, these accounts offer a wide variety of benefits, including tax advantages, employer-matching contributions and several investment options.
Is a Thrift Savings Plan a 403(b) Plan?
The TSP and 403(b) plan share many of the same retirement-saving features, but they're designed for different types of workers. The thrift savings plan is only available to federal employees and military service members, unlike 403(b) plans, which are available to teachers, nonprofit employees and certain health care workers. In practice, the TSP functions much like a 401(k) built specifically for government employees.
Where Can I Find the TSP Login Page?
You can find the official TSP login page on the official plan website. Once you log in, you can manage your account, including completing transactions, applying for a loan and managing your investment mix. The TSP also offers a mobile app you can download in the App Store or on Google Play.
What Happens to My TSP if I Quit My Job?
If you quit your job, your TSP account will change from an active employee to a separated employee and you won't be able to make payroll contributions. But you can leave the money in the TSP, and it can continue to grow tax-deferred. You can also roll the funds into an IRA or another employer plan or begin taking distributions. Keep in mind that withdrawals could trigger taxes and penalties depending on your age and situation.
Start Saving for Retirement Early
If you work for the federal government and are eligible for the thrift savings plan, you have the opportunity to grow your retirement savings over time in a tax-advantaged account with diverse investing options and low fees. Start by contributing as early as possible to take advantage of compounding interest over time. If possible, contribute at least enough to maximize the matching employer contributions.