• Home
  • About Us
  • Toolkit
  • Getting Finances Done
    • Hiring Advisors
    • Debt Management
    • Spending Plan
  • Insurance
    • Life Insurance
    • Health Insurance
    • Disability Insurance
    • Homeowners/Renters Insurance
  • Contact Us
  • Privacy Policy
  • Risk Tolerance Quiz

The Free Financial Advisor

You are here: Home / Retirement / What’s a Thrift Savings Plan?

What’s a Thrift Savings Plan?

January 26, 2022 by Jacob Sensiba Leave a Comment

A thrift savings plan is a retirement plan available to federal employees and members of the uniformed services. 

Real quick…Uniformed services are bodies of people in the employment of a state who wear a distinct uniform that differentiates them from the general public. Their purpose is to maintain the peace, security, safety, and health of the public they serve.

Back to it. A thrift savings plan is a defined contribution plan, like a 401k, that offers federal employees the same benefits as people who work in the private sector.

In this article, we learn about what a thrift savings plan is, as well as the rules and regulations.

What is it?

As mentioned in the introduction, a thrift savings plan (TSP) is a defined contribution retirement plan for federal employees.

A TSP includes deferred contributions from employees and can include matching contributions from the federal agencies. The employee also has the option of contributing pre-tax to a Traditional TSP, or post-tax to a Roth TSP.

If applicable, you can rollover a previous 401k or IRA into a TSP, and vice versa if you retire or move back into the private sector.

Investing

Currently, Blackrock is providing the investment products used in the Federal TSP. The investment options include:

  • The Government Securities Investment (G) Fund
  • The Fixed-Income Index Investment (F) Fund
  • The Common-Stock Index Investment (C) Fund
  • The Small-Capitalization Stock Index Investment (S) Fund
  • The International-Stock Index Investment (I) Fund
  • Specific lifecycle (L) funds designed to include a mix of securities held in each of the other five individual funds

Rules and Regulations

Not only is it a retirement plan, but it’s also a government-sponsored retirement plan. Obviously, there are going to be some regulations that accompany it.

The TSP contribution limit for 2022 is $20,500. The government has a sliding scale match, starting at 1% and topping out at 5%. The match is available even if you don’t contribute, though it is at the 1% base amount. It’s a percentage for a percentage match. If you contribute 2%, the match is 2%. If you contribute 5%, the match is 5%.

Fees are considerably lower with TSPs, usually .05%. Like IRAs, TSPs also have required minimum distributions that must start at 72. IRAs have an early withdrawal penalty of 10% if you pull money before 59 ½ years of age. TSPs will waive that 10% penalty if you retire at 55 or older.

Related reading:

Business Retirement Plan Guide

Ways to Increase Your Wealth

Retirement Costs to Consider

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

(Visited 102 times, 1 visits today)
Jacob Sensiba
Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

 

Filed Under: Investing, money management, Personal Finance, Retirement Tagged With: Retirement, retirement plan, retirement planning, retirement savings, thrift savings plan

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

FOLLOW US

Search this site:


Recent Posts

  • Can My Savings Account Affect My Financial Aid? by Tamila McDonald
  • What Advantages and Disadvantages Are There To… by Jacob Sensiba
  • When Are Manufactured Homes a Good Investment? by Tamila McDonald
  • How to Avoid NJ Exit Tax by Jacob Sensiba
  • Is It Safe to Throw Away Bank Statements? by Jacob Sensiba
  • Financial Planning Basics: The Financial Pyramid by Jacob Sensiba
  • Appreciating vs. Depreciating Assets by Jacob Sensiba

Copyright © 2023 · News Pro Theme on Genesis Framework