What Is the Thrift Savings Plan (TSP)?

A thrift savings plan (TSP) is a retirement investment program open only to federal employees and uniformed service members, including the Ready Reserve. It is a defined-contribution (DC) plan that offers federal employees many of the same benefits that are available to workers in the private sector.

A TSP closely resembles a 401(k) plan offered by private employers.
A thrift savings plan is similar to a 401(k) plan for federal employees and uniformed services personnel.
Participants in a TSP can get an immediate tax break for their savings.
They can also choose to invest in a Roth for freedom from taxes after retirement.
Plan participants can put their money into any of six investing options.
You can roll over a 401(k) and IRAs into a TSP if you leave the private sector to work in a public one. If you leave a public service job with a TSP, you can also roll it over to a 401(k) or IRA.

How the Thrift Savings Plan (TSP) Works

There are several ways to invest in a Thrift Savings Plan. These can include:
Automatic payroll contributions
Agency matching contributions
Tax-deferred contributions into a traditional TSP (withdrawals are taxed in retirement)
After-tax investments in a Roth TSP (withdrawals are untaxed in retirement)

The TSP Investment Options
The TSP offers a choice of six funds and a mutual fund option:

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
Mutual Fund Window
The F, S, C, and I funds in the TSP are index funds currently managed by the BlackRock Institutional Trust Company under contract by the Federal Retirement Thrift Investment Board (FRTIB). This independent government agency administers the TSP and acts as a fiduciary that is legally liable to manage the TSP prudently and in the best interests of participants and their beneficiaries.

Index funds in the TSP are designed to mimic the return characteristics of the corresponding benchmark index. For example, the C Fund is invested in a fund that replicates the SP 500 Index, which is made up of the stocks of 500 large- to medium-sized U.S. companies.

L funds are invested in the five individual TSP funds, and their asset allocations are based on the individual investor’s time horizon.