How to Contribute to a Thrift Savings Plan

If you are a civilian or uniformed government employee, you can contribute a large percentage of your income, tax-free, to a retirement savings program called the Thrift Savings Plan (TSP). Eligible contributions include base pay, special pay, bonuses, incentives and federal matching funds. The money is invested, and no tax is paid on the contributions or dividends until funds are withdrawn.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Personal identification number or password for employee benefits website (if needed)
• Thrift Savings Plan enrollment information

Make Regular Contributions

1. Create an automatic payroll contribution of all or part of your salary, up to the annual limit, using Form TSP-1 or TSP-U-1, depending on if you are a civilian or military employee.

2. Add to your agency automatic contribution of 1 percent for Federal Employees Retirement System (FERS) members by increasing your payroll deduction percentage or specifying a dollar amount. Use Form TSP-1 or TSP-U-1 or the TSP tool on your worker benefits website.

3. Determine the current annual contribution limit and use it as a savings goal. Check with your benefits office or the government's TSP website (see Resources below).

4. Review your financial situation periodically and increase what you contribute when you can, especially if it will result in increased matching funds.

Make Other Contributions

5. Augment your regular payroll deduction from your base salary with up to 100 percent of your special, incentive or bonus income. The total combined amount cannot exceed the annual contribution limit.

6. Determine which, if any, matching funds you are eligible for from your employer. See your human relations or employee benefits office or website.

7. Contribute "catch-up" funds when you reach age 50 by taking advantage of an additional contribution ceiling. This amount changes periodically, so check the "Catch-up Contributions" fact sheet on the TSP website for the up-to-date figure.

Tips & Warnings

• The contribution limit exists because this money is not taxed when you receive it, which affects the government's overall operating budget.
• If you are set up to contribute a percentage of your salary to the Thrift Savings Plan, the amount you contribute will automatically increase when you get a pay raise.
• Payroll deductions and matching-fund deposits are the only way to put liquid assets into a TSP. However, you can roll over IRA or certain other savings plan money into your TSP with no contribution limit. See your employee benefits representative to do this.

Resources

• Current contribution rules and limits at the TSP website