The Thrift Savings Plan is a retirement savings account for federal employees and military members
The Thrift Savings Plan (TSP) is a retirement account run by the federal government specifically for people who work for the federal government, the military, or certain other federal agencies. It is not a bank savings account — it is an investment account where your money goes into funds that grow over time. The account is managed by the Federal Retirement Thrift Investment Board, a separate agency that handles only TSP accounts.
TSP works similarly to a 401(k) that a private company might offer, but with lower fees and different rules. You contribute money from your paycheck before taxes are taken out (in most cases), and your employer may match part of what you contribute. The money sits in investment funds you choose, and you do not touch it until you retire or leave federal service.
TSP is not the same as a regular savings account at a bank. You cannot write checks on it, transfer money out easily, or use it for everyday expenses. It is designed to stay locked away until retirement, with penalties if you take money out early.
Key Takeaways
- TSP is a retirement investment account for federal employees and military members, not a bank savings account.
- You contribute money from your paycheck before taxes, and your federal employer may contribute matching funds.
- Your money is invested in funds you select, and you cannot withdraw it without penalty until you reach retirement age or leave federal service.
- TSP has much lower fees than most private retirement plans because it is run by the government.
- You must set up your TSP account through your agency's human resources office, not through a bank.
How contributions work and who can open an account
To open a TSP account, you must be a federal civilian employee, a member of the military, or work for certain other federal agencies. Your agency's human resources or payroll office handles the setup — you do not go to a bank. Once your account is open, you decide what percentage of your paycheck goes into TSP, and that amount is deducted before income tax is calculated.
Your federal employer will match part of your contribution, but the amount varies by agency and your employment status. Most civilian federal employees get a match of up to 5 percent of salary if they contribute at least 5 percent themselves. Military members have different matching rules depending on their branch and when they joined. You can change your contribution amount at any time through your agency's benefits system.
The money you contribute and any employer match go into the investment funds you choose. TSP offers several fund options, ranging from conservative (bonds and stable value) to aggressive (stocks). You can split your contributions across multiple funds or put everything in one.
The difference between Traditional and Roth TSP
TSP offers two types of accounts: Traditional TSP and Roth TSP. The difference is when you pay taxes on the money.
With Traditional TSP, the money you contribute is not taxed when it leaves your paycheck — you pay taxes later, when you withdraw it in retirement. This lowers your taxable income now. With Roth TSP, you contribute money that has already been taxed, but when you withdraw it in retirement, that money and all the growth is tax-free.
Most federal employees can choose one or both. If you choose both, you decide how much of each paycheck goes to each type. The total you can contribute across both accounts is limited by federal law — the limit changes each year and is the same as the limit for 401(k) plans.
Investment funds available in TSP
TSP offers five core index funds and several target-date funds. The core funds are: the C Fund (large U.S. companies), the S Fund (small and mid-size U.S. companies), the I Fund (international stocks), the F Fund (bonds), and the G Fund (government securities). Each fund tracks a different part of the market, so you can mix and match based on how much risk you want to take.
Target-date funds automatically shift your money from riskier investments to safer ones as you get closer to retirement. If you choose a target-date fund, you pick the year you plan to retire, and the fund handles the rest. These are useful if you do not want to manage your investments yourself.
You can change which funds your money is in at any time, and you can move money between funds without penalty. TSP does not charge you a fee to move money or to manage your account — the fees are built into the funds themselves and are much lower than most private investment accounts.
Withdrawal rules and what happens when you leave federal service
You cannot withdraw money from TSP before age 59½ without a penalty, with a few exceptions. If you leave federal service before that age, you can leave the money in TSP and let it grow, or you can roll it over to an Individual Retirement Account (IRA) at a bank or brokerage firm. Rolling over means moving the money to a different retirement account without paying taxes or penalties.
If you stay in federal service until age 59½ or older, you can withdraw money from TSP while still working, though this is uncommon. Once you retire, you must start taking money out at some point — federal law requires you to begin withdrawals by age 73 (this age changes based on federal law).
When you do withdraw, you can take a lump sum, set up monthly payments, or buy an annuity (a contract that pays you a fixed amount each month for life). Each option has different tax consequences, so it is worth understanding the choices before you retire.
TSP fees and how they compare to other retirement accounts
TSP charges very low fees compared to most retirement accounts offered by private employers or banks. The administrative fee is the same for all participants and is currently less than $3 per year. The investment fees (called expense ratios) vary by fund but are typically between 0.02 and 0.05 percent per year — far lower than the average mutual fund.
Because TSP is run by the federal government and serves millions of employees, it can negotiate lower costs with investment managers. This means more of your money stays invested and grows, rather than going to fees. If you were to open a similar account at a private brokerage, you would likely pay two to five times as much in fees.
How to access your TSP account and track your balance
You can view your TSP account balance and make changes through the TSP website (tsp.gov) or by calling the TSP customer service line. You will need to set up a login using your Social Security number and other identifying information. Once logged in, you can see your current balance, how much you have contributed, how your investments are performing, and your transaction history.
You can also download the TSP mobile app to check your balance on your phone. If you need help, TSP customer service is available by phone during business hours, and the website has detailed guides and calculators to help you plan for retirement.
Your agency's human resources office can also answer questions about how TSP works with your specific job or military status, since rules vary slightly between civilian agencies and military branches.
Frequently Asked Questions
Can I withdraw money from my TSP account before I retire?
You generally cannot withdraw money before age 59½ without paying a 10 percent penalty plus taxes on the amount withdrawn. If you leave federal service before that age, you can roll the money into an IRA instead of withdrawing it. A few exceptions exist for financial hardship, but they are rare and require approval.
What happens to my TSP if I leave my federal job?
Your TSP account stays yours. You can leave the money in TSP and let it grow, roll it into an IRA at a bank or brokerage, or transfer it to a new employer's retirement plan if that plan allows it. You do not have to do anything immediately — the money can sit in TSP for years after you leave federal service.
Is TSP the same as Social Security?
No. TSP is a retirement savings account you build yourself through paycheck contributions. Social Security is a separate federal benefit based on your work history. Federal employees receive both, though some federal employees under certain older pension systems receive reduced Social Security benefits.
Can I have both Traditional and Roth TSP at the same time?
Yes. You can split your contributions between Traditional and Roth TSP however you want. For example, you could put 3 percent of your paycheck into Traditional and 2 percent into Roth. The total across both cannot exceed the annual federal limit, which changes each year.
What if I do not choose any investment funds when I open my account?
If you do not make a choice, your money is automatically placed in a target-date fund based on your age and expected retirement year. You can change this at any time by logging into your TSP account and selecting different funds.