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plan is based on tax-deferred contributions, any contributions made into it will not be taxed until the money is withdrawn, which can be deferred until retirement.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

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

    A formal arrangement between a company and its employees - or ...
  4. Agency Automatic Contributions

    A benefit that federal government employees receive for participating ...
  5. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
  6. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
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. Financial Advisor

    The American Savings Account Act: What to Know

    Here's the lowdown on a new bill before Congress that would provide access to retirement savings accounts for workers without access to retirement plans.
  3. 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.
  4. Financial Advisor

    What's a Qualified Retirement Plan?

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

    The Basics of a 401(k) Retirement Plan

    This plan has become one of the most popular retirement options. Here's why.
  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

    6 Companies With the Best Retirement Plans

    Most employers don’t offer any type of retirement plan at all. But there are a few companies that still offer generous retirement benefits.
  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'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. 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 >>
  4. How does an employer benefit from a 401(k) matching plan?

    A 401(k) is a type of qualified retirement plan created by employers, where an employee deposits money into a retirement ... Read Answer >>
Hot Definitions
  1. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  2. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  5. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  6. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
Trading Center