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Thrift Savings Plan: Everything You Need to Know

thrift savings plan

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees.

The plan is also available for members of the uniformed services, including the Ready Reserve.

The Thrift Savings Plan was established by Congress in the Federal Employees’ Retirement System Act of 1986.  The TSP offers the same type of savings and tax benefits that many private corporations provide their employees under their 401-K plans.

Thrift Savings Plan

The retirement income that you will receive from your TSP will depend on how much you can put into your account during your working years and earnings over time. The TSP will be a supplement to your retired military pay.

Who Administers the Thrift Savings Plan?

The Federal Retirement Thrift Investment Board is who administers the TSP.

How Much Can You Contribute?

  • Uniformed service members elect a percentage of their pay up to the Internal Revenue Code (IRC) which is $18,500 for 2018. Once this is set up, it will renew every year at the same percentage until the service member elects otherwise.
  • If the uniformed service member is 50 years old or older, they can do what is called a “catch-up” contribution up to the code limitation, which was $6,000 for 2018. These are tax-deferred and allow eligible participants to defer up to $24,500 for 2018 in their TSP accounts. These do not automatically renew every year.
  • Service members are allowed to make their contributions from basic pay as well as incentive, special, or bonus pay but are subject to regular contribution limits.
  • If the service member is deployed to a designated combat zone, they are subject to the combat zone tax exclusion. That means that those payments made to the TSP while deployed are tax-exempt and accrue tax-deferred earnings. These TSP payments will not be subject to the IRC elective deferral limit but they are combined with tax-deferred contributions that are made and are subject to the IRC section 415 (c ) annual additions limit of $55,000 for 2018.
  • If a service member is also a civilian federal employee, they will have two separate TSP accounts, but they can not exceed the IRC elective deferral or catch-up limits.
  • Service members are eligible for matching contributions only if the secretary of their specific service designates them. This currently isn’t the case but did happen from April 1st, 2006- December 31st, 2018 and would be something to be aware of if it is allowed again in the future.

Withdrawing From Your Thrift Savings Plan

A partial withdrawal allows service members to make a one time only withdrawal and leave the rest of the money in the TSP until a later date.

You can do so if:

  • You have not made a prior partial withdrawal or have one that is currently pending and
  • You did not make an age-based in-service withdrawal while you were still in the uniform services and
  • You request $1,000 or more from your account.

Full Withdrawals

A full withdrawal is where you can take all of your money out at once, over a period of time, or purchase an annuity that will give you payments for the rest of your life. If you are a uniformed service member, you might also have tax-exempt contributions in your traditional balance if you had served in a combat zone. Those contributions, not the earnings from them, are exempt from federal income taxes when distributed. There will be a tax on the earnings.

In-Service Withdrawals

In-service withdrawals are when you make the withdrawal from your TSP account while you are still actively serving in the uniformed services. There are two types, financial hardship, and age-based.

  • You can’t return or repay the money you remove from your TSP account.
  • You are subject to income taxes on the withdrawal except on any tax-exempt portion, Roth contributions, or qualified Roth earnings. With a hardship withdrawal, you may be subject to the IRS 10% early withdrawal penalty tax.
  • If you have a financial hardship withdrawal, you will not be able to make contributions for six months.
  • If you are married service member, your spouse must sign a consent waiver before you can do an in-service withdrawal.

TSP Loans

TSP loans will allow you to borrow money from your account while in the service.

You can get a general one for any purpose that you will need to pay back within 1-5 years.

You can also get a resident loan used for the purchase or construction of a home that will be your primary residence.

You will need to pay back between 1-15 years.

How To Set Up Your TSP Accounts

  • BRS Members of the Uniformed Services

For those who began serving on or after January 1st, 2018, your service automatically enrolled you.  You would have been enrolled once you served 60 days.

3% of your basic pay is deducted each pay period and deposited in the traditional balance of your TSP account.   You can elect to change or stop your contributions.

  • Non-BRS Members of the Uniformed Services

If you are not covered by the Blended Retirement System (BRS) your account is established by your service.

This occurs after you make a contribution election using your service’s automated system (for example, My Pay).

  • Returning Members

If you were previously in the BRS plan before you left the service, you would be automatically re-enrolled when you re-enter the military.

If you were not in the BRS plan, and you served fewer than 12 years when you left, your service may give you the opportunity to opt-in when you reenter.

If neither of these situations applies to you, you can still start a TSP account or resume as a non-BRS service member.

The Individual Funds

The Thrift Savings Plan has five individual investment funds –

  • 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 (S) Fund
  • International Stock Index Investment (I) Fund


There is a lot of information when it comes to having a Thrift Savings Plan. Contributing to yours over the years can help you immensely once you are retired from the military.

Make sure to take advantage of what the TSP can offer you for your financial future.




About the author

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Lori Waddell serves as Co-director of an emergency response COAD in Montana, a freelance writer, and an Air Force Key Spouse. She is passionate about empowering communities and individuals through knowledge and resources. She currently lives in Montana with her husband and two children.