How the Thrift Savings Plan works

The Thrift Savings Plan (TSP) is the federal government's version of a 401(k), open to federal civilian employees and members of the uniformed services. A traditional TSP takes pre-tax contributions that lower your taxable income now, grows tax-deferred, and is taxed as ordinary income when you withdraw it in retirement. The single most important feature is the match: contribute at least 5% of your pay and the government adds another 5%, doubling that slice of your savings.

The TSP is not a small program. With more than 7 million participants and over $1 trillion in assets, it is the largest defined contribution plan in the world.

How the TSP fits into federal retirement

The TSP, established in 1986, is a defined contribution plan much like a 401(k) or 403(b). You contribute from each paycheck, the money grows tax-deferred (or tax-free in a Roth TSP), and it is one of three legs of the Federal Employees Retirement System (FERS), alongside the FERS basic pension and Social Security. You manage your account and change your elections through your agency's benefits system or on tsp.gov.

Thrift Savings Plan eligibility

You can hold a TSP if you fall into one of four federal worker categories:

• FERS employees: hired on or after January 1, 1984.
• CSRS employees: hired before January 1, 1984, and never switched to FERS.
• Uniformed services members: active duty or Ready Reserve.
• Other federal civilian service categories.

Your own contributions are yours from day one. The government's automatic 1% contribution requires three years of service to vest; leave federal service before then and you forfeit that 1% and its earnings. Agency matching contributions (the part above the automatic 1%) vest immediately.

Roth TSP and after-tax contributions

The TSP started as pre-tax only, but eligible employees can now use a Roth TSP, contributing after-tax dollars for tax-free qualified withdrawals in retirement. Whether that beats the traditional TSP comes down to your tax bracket now versus later. Many people assume retirement means a lower bracket, but that is not guaranteed, and paying the tax now removes the uncertainty of future rate changes.

If you are in the traditional TSP, you can direct future contributions to the Roth TSP at any time. The switch applies only to new contributions, not to the balance you have already built.

Contribution limits for TSPs

The TSP follows the same annual IRS limits as a 401(k), for both civilians and uniformed members.

2026 TSP contribution limits

• Employee contribution limit: $24,500
• Total limit (employee plus agency): $72,000
• Catch-up (age 50 or older): additional $8,000, for $32,500
• Catch-up (ages 60-63, if you turn one of those ages during the year): $11,250 instead, for $35,750

For comparison, the 2025 figures were $23,500 (employee), $70,000 (total), and $31,000 or $34,750 with catch-up.

Uniformed servicemembers in combat zones

Tax-exempt contributions from combat zone pay are not counted against the standard limits, so deployed servicemembers can contribute above them and build the account faster.

TSP catch-up by birth year (2026)

If you are 50 or older, you can contribute a catch-up amount on top of the $24,500 base.

If you use the $11,250 catch-up, lower your contribution rate the year you turn 64. Keeping it at the higher rate once you are no longer eligible can cause you to hit your annual limit early and miss agency matching for the rest of the year.

How TSP matching works

Under FERS and the military's Blended Retirement System (BRS), the government automatically puts in 1% of your basic pay whether you contribute or not. On top of that, your agency matches your own contributions: dollar-for-dollar on the first 3% of pay, then 50 cents on the dollar for the next 2%. Contribute 5% and the total agency contribution is 5% (1% automatic plus a 4% match).

Contribute at least 5% to capture the full match. You can contribute more, up to the annual limit, but dollars past 5% get no match, so it is worth comparing them against other investment options.

What lands in your account at each contribution rate (FERS/BRS)

At 5%, every dollar you contribute is matched by a dollar from the government, which is why 5% is the floor most advisors recommend.

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Final thoughts

The 5% match is what makes the TSP one of the best retirement deals available. Contribute at least that much, decide between traditional and Roth based on your tax outlook, and then weigh whether contributions beyond the match belong in the TSP or elsewhere. A Certified Financial Planner can help you set the rate and the fund mix, and your agency's retirement counselor can confirm your elections are correct.

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