Thrift Savings Plan - TSP

AAA

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.

INVESTOPEDIA EXPLAINS '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plan is based on tax-deferred contributions, any contributions made into it will not be taxed until the money is withdrawn, which can be deferred until retirement.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. IRS Publication 721: Tax Guide ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Defined-Benefit Plan

    An employer-sponsored retirement plan where employee benefits ...
  3. Defined-Contribution Plan

    A retirement plan in which a certain amount or percentage of ...
  4. Salary Reduction Contribution

    A cash- or deferred-contribution arrangement of an employer-sponsored ...
  5. Catch-Up Contribution

    A type of retirement savings contribution that allows people ...
  6. Agency Matching Contributions

    A benefit that federal government employees receive under the ...
Related Articles
  1. New Retirement Plan Limits For 2011
    Taxes

    New Retirement Plan Limits For 2011

  2. Retire In Style
    Savings

    Retire In Style

  3. Thrift Savings Plan Helps Federal Workers ...
    Retirement

    Thrift Savings Plan Helps Federal Workers ...

  4. The Demise Of The Defined-Benefit Plan ...
    Budgeting

    The Demise Of The Defined-Benefit Plan ...

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center