The Thrift Savings Plan (TSP) is a portion of federal employees’ FERS. Additionally, it also gives federal employees with CSRS and CSRS-Offset a chance to save more rapidly. Established in 1986, it was meant to give employees the option to invest and save more for retirement. Whatever the employee puts in, the federal agency matches. This vehicle is similar to a 401(k) with identical savings and tax benefits.
If a withdrawal is made before the age of 59½, there may be a 10% early withdrawal penalty on top of normal income tax. However, if the participant is 55 or older in the year they plan to retire or separate, that penalty will not apply.
There is an $18,500 limit employees can contribute according to the Internal Revenue Code, however, if 50 or older, $24,500 is the permitted contribution limit, giving employees a chance to catch up.
The TSP offers deferred tax on contributions, ability to take out a loan, hardship withdrawals as well as withdrawals after the age of 591/2, transferring money to and from other qualified accounts, ability to choose five investment funds, as well as additional life cycle funds and lastly, post separation withdrawal options.
To learn more about your Thrift Savings Plan and to set up a complimentary review of your benefits with one of our specialists, contact us today!
Fed Advisors is not affiliated with or endorsed by the Federal Retirement Thrift Investment Board or any government agency. This content is for informational purposes only and should not be used to make any financial decisions.