The Thrift Savings Plan is a retirement savings account for federal employees, military members, and former government workers

The Thrift Savings Plan (TSP) is a retirement investment account run by the federal government for people who work or worked for the government. It is not a regular savings account — it is a long-term retirement account similar to a 401(k) that a private employer might offer. You contribute money from your paycheck, the money grows through investments, and you withdraw it after you reach retirement age.

TSP is available to federal civilian employees, members of the military, and people who have left government service but still have money in an old TSP account. You cannot open a TSP account if you have never worked for the federal government or military. The account is managed by the Federal Retirement Thrift Investment Board, a government agency separate from your employer.

The main reason people use TSP instead of a regular savings account is that contributions reduce your taxable income for the year you make them, and the money inside grows without being taxed until you withdraw it in retirement. This makes it a tax-advantaged way to save, not a place to keep emergency money or money you might need soon.

Key Takeaways

  • TSP is a retirement investment account for federal employees, military members, and former government workers, not a general savings account.
  • You contribute money through payroll deductions, and your contributions reduce your taxable income in the year you make them.
  • The money you put in is invested in one or more of five core funds or target-date funds that automatically adjust as you near retirement.
  • You cannot withdraw money before age 59½ without penalty in most cases, which is why TSP is meant for long-term retirement saving, not short-term needs.
  • If you leave federal service, your TSP account stays open and continues to grow, but you cannot make new contributions unless you return to government work.

Who can open and contribute to a TSP account

You can open a TSP account if you are a federal civilian employee, a member of the uniformed services (Army, Navy, Air Force, Marine Corps, Coast Guard, or Space Force), or a member of the National Guard or Reserves. Your employer automatically sets up the account for you when you start — you do not need to open it yourself. You then decide how much of your paycheck to contribute and where to invest that money within the plan.

If you are no longer a federal employee or service member, you cannot make new contributions to TSP, but your existing account remains open and your money continues to grow. You keep access to your account through the TSP website and can move money between the investment options offered. Some people who leave government service later return and resume contributions; others simply leave the money invested until retirement.

Spouses of military members on active duty can also open a TSP account under the Survivor Benefit Plan rules, though this is a narrower category. If you are unsure whether you are covered, your human resources office or military personnel office can confirm your status.

How TSP differs from a regular savings account

A regular savings account at a bank holds money you might need soon and earns a small amount of interest. TSP is different in three important ways. First, it is designed for money you will not touch for decades — the tax benefits only make sense if you leave the money invested long-term. Second, your money is invested in stock and bond funds, not held in cash, so the value goes up and down with the market. Third, you face a 10 percent penalty plus income tax if you withdraw before age 59½, with only a few exceptions.

Because of these rules, TSP is not the right place for an emergency fund or money you might need within the next five to ten years. It is meant to grow steadily over your working years and provide income after you retire. If you need a place to keep money for shorter-term goals, a regular savings account or money market account at a bank is a better choice.

TSP also differs from a savings account in how it is managed. You do not earn interest at a set rate. Instead, your money is invested in funds you choose, and the return depends on how those investments perform. The five core funds are the Government Securities Fund (G Fund), the Fixed Income Fund (F Fund), the Common Stock Index Fund (C Fund), the Small Cap Stock Index Fund (S Fund), and the International Stock Index Fund (I Fund). You can also choose target-date funds that automatically shift from stocks to bonds as you approach retirement.

Contribution limits and how much you can put in

The amount you can contribute to TSP each year is set by the IRS and changes slightly most years. For 2024, the limit is $23,500 for employees under age 50, and $31,000 for employees age 50 and older (the extra $7,500 is called a catch-up contribution). These limits apply to your total contributions across all TSP accounts you might have — for example, if you worked for two different federal agencies, your contributions to both accounts count toward the same annual limit.

You choose your contribution amount when you enroll, and it comes out of your paycheck before taxes. You can change your contribution amount at any time through the TSP website or by contacting your agency's human resources office. Many people start with a small percentage and increase it over time, especially after a raise or promotion.

If you are no longer a federal employee, you cannot make new contributions, but any money already in your account continues to grow. You also cannot make catch-up contributions after you leave service, even if you are over age 50.

Investment options and how your money grows

When you open a TSP account, you choose how to invest your contributions. The five core funds track different parts of the market: the G Fund holds government bonds and is the most stable but has lower returns; the F Fund holds corporate and international bonds; the C Fund tracks the U.S. stock market; the S Fund tracks smaller U.S. companies; and the I Fund tracks international stocks. You can split your contributions among any combination of these funds, and you can change your allocation at any time.

Most people who do not want to pick individual funds use a target-date fund instead. These funds automatically hold a mix of stocks and bonds based on when you plan to retire. For example, the L 2050 Fund is designed for someone who plans to retire around 2050 and starts with more stocks when you are young, then gradually shifts to more bonds as you approach retirement. You pick the fund closest to your expected retirement year, and the fund does the rebalancing for you.

Your money grows through two mechanisms: investment returns (when the value of stocks or bonds goes up) and compound growth (when your earnings generate their own earnings). Because TSP money is not taxed until you withdraw it, all of that growth stays in your account and compounds over time. This is why TSP is most powerful when you contribute for many years — the longer your money sits invested, the more it grows.

Withdrawal rules and when you can access your money

You cannot withdraw money from TSP before age 59½ without facing a 10 percent penalty plus income tax on the amount you withdraw, with a few exceptions. The main exceptions are if you leave federal service and do not return within 31 days (you can then withdraw without penalty, though you still owe income tax), if you are disabled, if you are facing a financial hardship that meets TSP's definition, or if you take substantially equal periodic payments based on your life expectancy.

Once you reach age 59½, you can withdraw money without penalty, though you still owe income tax on the amount. You can take a lump sum, set up monthly payments, or leave the money invested and withdraw it later. Many people keep their TSP invested even after retirement and only withdraw what they need each year.

If you leave federal service before age 59½, you have options. You can leave your money in TSP and let it grow until retirement. You can roll it over to an IRA or another employer's retirement plan (if that plan allows it). Or you can withdraw it, though you will owe the 10 percent penalty and income tax unless one of the exceptions applies. The choice depends on your situation and how soon you need the money.

How to manage your TSP account and track your balance

You manage your TSP account through the TSP website at tsp.gov. You can log in with your username and password to see your current balance, view your investment performance, change how your contributions are invested, and request withdrawals. The website also shows you historical performance of each fund and tools to help you plan for retirement.

You receive a statement at least quarterly showing your balance, contributions, and earnings. You can also set up email alerts to notify you of changes to your account. If you have questions about your account or need help with a transaction, you can call the TSP customer service line at 1-877-968-3778. Wait times can be long during busy periods, so calling early in the day or later in the week often means shorter waits.

If you leave federal service, you keep access to your TSP account and can manage it the same way. You do not need to do anything to keep the account open — it will remain active as long as you have money in it. If your balance drops below $200, TSP may close your account and send you the remaining balance, though this is rare.

Frequently Asked Questions

Can I withdraw money from TSP if I need it for an emergency?

You can request a withdrawal at any time, but if you are under age 59½, you will owe a 10 percent penalty plus income tax on the amount. TSP does allow hardship withdrawals in some cases — for example, if you have a serious financial hardship and have exhausted other resources — but the definition is strict and you must document the hardship. Contact TSP customer service to ask whether your situation qualifies.

What happens to my TSP account if I leave my federal job?

Your account stays open and your money continues to grow. You cannot make new contributions, but you can move money between the investment options and request withdrawals. You can also roll the money into an IRA or another retirement plan if you prefer to manage it elsewhere. Your account will remain active as long as you have money in it.

Is TSP the same as Social Security?

No. TSP is a retirement savings account you contribute to during your working years. Social Security is a separate government program that provides retirement income based on your work history. Federal employees receive both TSP and Social Security, though some older federal employees may be under a different retirement system called FERS or CSRS instead of TSP.

Can I borrow money from my TSP account?

Yes, TSP allows loans for certain purposes — to buy a home, to pay off a loan, or for other reasons. You borrow from your own account and repay yourself with interest. The interest rate is set by TSP and changes quarterly. Loans must be repaid within five years (or longer if the loan is for a home purchase), and if you leave federal service, you typically must repay the loan within 90 days or it is treated as a withdrawal subject to penalties and taxes.

How much should I contribute to TSP?

That depends on your income, expenses, and retirement goals. Many financial advisors suggest saving 10 to 15 percent of your income for retirement across all accounts. If your agency offers a match (some do), contribute at least enough to get the full match — that is assistance programs. Start with what you can afford and increase your contribution when you get a raise. The TSP website has retirement calculators to help you estimate how much you might need.