DEFINITION of 'Thrift Savings Plan - TSP'

A retirement savings plan created by the Federal Employee's Retirement System Act of 1986 for current or retired employees of the federal civil service. The thrift savings plan is a defined-contribution plan designed to give federal employees the same retirement savings related benefits that workers in the private sector enjoy with 401(k) plans. Contributions to the plan are automatically deducted from each paycheck.

BREAKING DOWN 'Thrift Savings Plan - TSP'

The thrift savings plan offers six different funds (government security fund, fixed-income fund, common stock fund, small cap stock fund, international stock fund and a life cycle fund) in which employees can invest.

Benefits include agency matching contributions, agency automatic contributions, catch up contributions and low expense ratios. Because the thrift savings plan is based on tax-deferred contributions, any contributions made into it will not be taxed until the money is withdrawn, which can be deferred until retirement.

Similar to standard retirement plans, employees can easily move non-government related IRAs and 401(k) plans into the thrift savings plan and vice versa upon employment changes.

RELATED TERMS
  1. Agency Matching Contributions

    A benefit that federal government employees receive under the ...
  2. Thrift

    Thrifts are savings and loans associations. Thrifts also refer ...
  3. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  4. Corporate Pension Plan

    A formal arrangement between a company and its employees - or ...
  5. Thrift Bank

    A financial institution focusing on taking deposits and originating ...
  6. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
Related Articles
  1. Retirement

    This Is Why Your Employer Should Offer a 401(k)

    Understand the unique benefits that come with a small business offering a retirement savings plan such as a 401(k) to current and future employees.
  2. Retirement

    Work for the Government? Top Retirement Strategies

    Government employees don't receive Social Security and 401(k)s for their government work. Learn about other tools to plan for a good retirement.
  3. Retirement

    How We Can Help Close the Retirement Savings Gap

    The majority of Americans are not very confident about having enough for retirement.
  4. Financial Advisor

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  5. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  6. Financial Advisor

    How Would Forced Retirement Saving Work?

    The nation needs an overhaul when it comes to better planning for retirement. Here are some proposed solutions.
  7. Retirement

    How to Really Take Charge of Your Retirement Plan

    Business owners and those who are self-employed may find that their 401(k) plans aren't enough.
  8. Retirement

    Thrift Savings Plan Helps Federal Workers Retire

    The TSP is key component of retirement savings for U.S. government workers and members of uniformed services.
  9. Retirement

    401(k) Planning: How Much Should You Be Saving?

    We look at how much you should contribute to your 401(k) and when. And also, how much you should have in your account during certain times in your life.
  10. Retirement

    What Is the Federal Employees Retirement System (FERS) and How Does It Work?

    If you work in the public sector or plan to, FERS ( Federal Employees Retirement System) is an acronym you will soon know well.
RELATED FAQS
  1. Is a Thrift Savings Plan (TSP) a qualified retirement plan?

    Take advantage of the government's retirement plan for employees with the Thrift Savings Plan. As with a 401(k), contributions ... Read Answer >>
  2. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ... Read Answer >>
  3. How can an entrepreneur save for retirement?

    Learn about the retirement savings plan options for entrepreneurs and small business owners, including administration and ... Read Answer >>
Hot Definitions
  1. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  2. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  3. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  6. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
Trading Center