Thrift Savings Plan (TSP)

Learn the ins and outs

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The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan. Congress established the TSP in the Federal Employees' Retirement System Act of 1986. The purpose of the TSP is to provide retirement income.

On October 30, 2000, the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398) was signed into law. One provision of the law extended participation in the TSP, which was originally only for Federal civilian employees, to members of the uniformed services.

The TSP is a defined contribution plan. The retirement income that service members receive from their TSP account will depend on how much they have contributed to the account during their working years, and the earnings on those contributions.

The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under so-called "401(k)" plans. TSP regulations are published in title 5 of the Code of Federal Regulations, Parts 1600-1699, and are periodically supplemented and amended in the Federal Register.

Active duty members can contribute up to 8 percent of their basic pay each pay period to their TSP account. If they contribute to the TSP from their basic pay, they may also contribute from one to 100 percent of any incentive pay or special pay (including bonus pay) they receive, up to the limits established by the Internal Revenue Code.

What are spouses' rights under the TSP?

The law gives certain rights to the spouse (including a separated spouse). The TSP must take these rights into consideration when the service member withdraws or borrows from their account.

The TSP will take action to prosecute any participant who denies (or attempts to deny) his or her spouse these rights by, for example, forging the spouse's signature.

1. Making an in-service withdrawal — The service member must obtain their spouse's consent to an in-service withdrawal, regardless of the amount, before the withdrawal can be approved.
2. Making a withdrawal after separation from military service — After the service member separates from service, spouses' rights provisions apply only if the account is more than $3,500. If the service member is married, the spouse is entitled to a joint and survivor annuity with 50 percent survivor benefit, level payments, and no cash refund feature. If the service member chooses a withdrawal method other than the prescribed survivor annuity, the spouse must waive his or her right to that annuity. If the service member does not elect the prescribed annuity, or does not obtain their spouse's waiver by the date on which they are required to make an election, then TSP is required to purchase the prescribed joint and survivor annuity for the service member and their spouse with the TSP account. If the service member does not provide the necessary information for the TSP to purchase an annuity, the account will be declared abandoned.

Find more details about the Thrift Savings Plan at tsp.gov