Frequently Asked Questions about TSPs
On October 30, 2000, the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (Public Law 106-398) was signed into law. One provision of the law extended participation in the TSP, which was originally only for Federal civilian employees, to members of the uniformed services.
The TSP is a defined contribution plan. The retirement income that you receive from your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions.
The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under “401(k)” plans. TSP regulations are published in title 5 of the Code of Federal Regulations, Parts 1600 — 1690, and are periodically supplemented and amended in the Federal Register.
In addition, unlike participation in the uniformed services retirement system, participation in the TSP is optional. To participate in the TSP, you must sign up with your service. You contribute to the TSP from your own pay; the amount you contribute and the earnings attributable to your contributions belong to you. They are yours to keep even if you do not serve the 20 or more years ordinarily necessary to receive uniformed services retired pay.
The Board. The Federal Retirement Thrift Investment Board is an independent Government agency. The five presidentially appointed members of the Board and the Executive Director are required by law to manage the TSP prudently and solely in the interest of the participants and their beneficiaries. The Employee Thrift Advisory Council is a statutorily created Advisory Committee comprising representatives of employee organizations, unions, and the uniformed services. The Council provides advice to the Board and the Executive Director on matters relating to the investment policies and administration of the TSP.
Money in the TSP and earnings on that money cannot be used for any purpose other than providing benefits to participants and their beneficiaries and paying TSP administrative expenses.
The financial statements of the Thrift Savings Fund are required by law to be audited annually. (The Plan year is the calendar year.) You may obtain the audited financial statements from this Web site.
Your Service. While you are a member of the uniformed services, your service is your primary TSP contact. Your service will provide you with TSP forms and informational materials and answer your questions about the TSP. You submit the Election Form (TSP-U-1) to your service to enroll in the TSP. (Your service may use an electronic version of the Election Form, e.g., on MyPay. Ask your service about the availability of this method.) Your service’s payroll office will report to the TSP record keeper the dollar amount of your contributions (and any loan payments, if you have taken a loan from your TSP account) each pay period.
You should compare the information on the leave and earnings statement that you receive each month with your TSP participant statements to ensure that your service provides the TSP record keeper with correct and up-to-date information about your contributions. As long as you are a member of the uniformed services, your service must also provide the record keeper with the personal information that is necessary to maintain your account — for example, your date of birth and your address. If you need to correct your TSP account information, including your address, contact your service TSP representative. Your service is responsible for correcting errors in your personal information and contributions (including loan payments).
Record Keeping Services. The Board has contracted with a number of private sector companies to provide record keeping services for the TSP, which include maintaining the accounts of TSP participants, processing requests for benefits, and call center support.
The TSP processes contribution allocations, interfund transfers, loans, withdrawals and transfers of funds into the TSP from other plans, as well as participants’ designations of beneficiaries. The TSP is also your primary contact after you separate from Federal service.
The TSP offers the following:
- Immediate member contributions
- Before-tax savings and tax-deferred investment earnings
- Daily valuation of accounts
- Low administrative and investment expenses
- Transfers into the TSP from other eligible retirement plans or traditional IRAs and eligible employer plans
A choice of investment funds:
- Government Securities Investment (G) Fund
- Fixed Income Index Investment (F) Fund
- Common Stock Index Investment (C) Fund
- Small Capitalization Stock Index Investment (S) Fund
- International Stock Index Investment (I) Fund
- Lifecycle (L) Funds
- Ability to make contribution allocations daily
- Ability to make interfund transfers daily
- Loans from your own contributions and attributable earnings while you are in service
- Catch-up contributions for participants age 50 or older
- In-service withdrawals for financial hardship or after you reach age 59½
- Portable benefits and a choice of withdrawal options after you separate from service
- Ability to designate beneficiaries for your account balance
- Spouses’ rights protection for loans and withdrawals and recognition of qualifying court orders
- A Web site with general account information, capability for requesting contribution allocations and interfund transfers, the option of initiating (and possibly completing) loan and withdrawal requests on-line, up-to-date TSP materials and information, on-line participant statements, and calculators to estimate account growth, loan payments, and annuity amounts, as well as an elective deferral calculator. (Separated employees can also update their address information on the Web.)
- An automated telephone service (the ThriftLine) for account information and certain transactions