Thrift Savings Plan (TSP)
The Thrift Savings Plan (TSP) is a defined contribution retirement savings plan for federal employees and uniformed service members, offering the same contribution limits as 401(k) plans with exceptionally low expense ratios and five core investment funds plus lifecycle options.
Exam Tip
TSP = federal 401(k). Same limits as 401(k). G Fund = unique (no principal risk). FERS gets 5% max match (1% auto + 4% matching). Lowest expense ratios in industry.
What is the Thrift Savings Plan (TSP)?
The Thrift Savings Plan is one of the largest defined contribution retirement plans in the world, designed specifically for federal civilian employees and members of the uniformed services. Established in 1986 as part of the Federal Employees' Retirement System (FERS), the TSP offers tax-advantaged retirement savings with some of the lowest expense ratios of any retirement plan.
The TSP functions similarly to a private-sector 401(k) plan, allowing participants to contribute pre-tax (Traditional TSP) or after-tax (Roth TSP) dollars toward retirement savings.
2025/2026 Contribution Limits
| Contribution Type | 2025 | 2026 |
|---|---|---|
| Employee Deferrals | $23,500 | $24,500 |
| Age 50+ Catch-Up | $7,500 | $8,000 |
| Ages 60-63 Super Catch-Up | $11,250 | $11,250 |
| Maximum (Under 50) | $23,500 | $24,500 |
| Maximum (50+) | $31,000 | $32,500 |
| Maximum (60-63) | $34,750 | $35,750 |
TSP Investment Funds
| Fund | Type | Index Tracked |
|---|---|---|
| G Fund | Government Securities | Special Treasury rate (no principal risk) |
| F Fund | Fixed Income | Bloomberg U.S. Aggregate Bond Index |
| C Fund | Common Stock | S&P 500 Index |
| S Fund | Small Cap Stock | Dow Jones U.S. Completion TSM Index |
| I Fund | International | MSCI ACWI IMI ex USA ex China ex HK |
| L Funds | Lifecycle | Blend of G, F, C, S, I (target-date) |
FERS Matching Contributions
| Contribution Level | Agency Match |
|---|---|
| Automatic (1%) | 1% regardless of employee contribution |
| First 3% | Dollar-for-dollar match |
| Next 2% | 50 cents per dollar |
| Maximum Match | 5% (if employee contributes 5%+) |
Key Features
| Feature | Description |
|---|---|
| Expense Ratios | 0.048% - 0.079% (among lowest anywhere) |
| Roth Option | Available since 2012 |
| Loans | General purpose and residential |
| Mutual Fund Window | Access to outside mutual funds |
| In-Plan Roth Conversions | Available starting 2026 |
2026 Changes (SECURE 2.0)
- Mandatory Roth Catch-Up: If 2025 wages exceed $150,000, catch-up contributions must be Roth
- In-Plan Roth Conversions: Convert traditional balance to Roth within TSP
CFP Exam Focus
CFP candidates should know:
- TSP contribution limits match 401(k) limits
- 5% maximum matching for FERS employees
- G Fund has no principal risk (unique to TSP)
- L Funds automatically rebalance toward conservative as target date approaches
- Exceptionally low expense ratios compared to private plans
Study This Term In
Related Terms
401(k)
A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute pre-tax dollars, with potential employer matching, and tax-deferred growth until withdrawal.
Defined Contribution Plan
A defined contribution plan is a retirement plan where contributions are made to individual accounts, with the final benefit depending on contributions and investment performance.
Catch-Up Contributions
Catch-up contributions allow workers age 50+ to contribute extra amounts above normal limits to retirement accounts including 401(k), IRA, and 403(b) plans, with SECURE 2.0 adding super catch-up for ages 60-63.
Target Date Fund
A Target Date Fund (TDF) is a diversified mutual fund that automatically adjusts its asset allocation along a "glide path" from aggressive to conservative as the target retirement date approaches, providing a hands-off investment solution for retirement savers.