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plan is based on tax-deferred contributions, any contributions made into it will not be taxed until the money is withdrawn, which can be deferred until retirement.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 Automatic Contributions

    A benefit that federal government employees receive for participating ...
  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

    401(k) Investing for Military Veterans

    Military personnel have access to a thrift savings plan, which is similar to a 401(k) plan.
  3. 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.
  4. 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.
  5. Retirement

    5 Companies With the Best Retirement Plans

    Ever wonder how your company retirement plan stacks up against the country's best employers? Take a peek at these great retirement plans.
  6. 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.
  7. Retirement

    Funding Your Retirement Is No Joke

    Saving for your golden years is an important goal, especially since so many Americans don't save a penny.
  8. Retirement

    When Your Employer Cuts Your 401(k) Match

    In hard times, companies may stop matching your 401(k) contribution, but there are ways to offset the hit.
  9. Retirement

    Is a SIMPLE IRA Right for Your Small Business?

    Here's how small businesses can benefit from offering a SIMPLE IRA to their employees.
  10. Retirement

    What's a Defined Contribution Plan?

    A defined contribution plan is a company retirement plan that specifies the amount of money contributed to it.
RELATED FAQS
  1. 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. Leveraged Buyout - LBO

    The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. ...
  2. Current Assets

    A balance sheet account that represents the value of all assets that can reasonably expected to be converted into cash within ...
  3. Tax Liability

    The total amount of tax that an entity is legally obligated to pay to an authority as the result of the occurrence of a taxable ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  5. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  6. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
Trading Center