Thrift Savings Plan

How will deposits to the thrift savings plan be made?

Learn how deposits to a thrift savings plan are made, and the various types of contributions you can make to the account.

3 min read

A Thrift Savings Plan is a retirement savings plan for federal employees and members of the uniformed services. It is a defined-contribution plan like a 401(k) plan, allowing federal employees to access similar benefits available to private sector employees. If you have access to a TSP account, there are several ways to contribute to the retirement account.

Deposits to a thrift savings plan can only be made through payroll deductions and rollovers from qualified plans. When you enroll for a TSP plan, the agency/service will automatically deduct contributions from your paycheck and deposit these funds to your TSP account. You can roll over your retirement assets from other qualified plans like 401(k) and IRA to your TSP account to enjoy low fees and stable earnings.

TSP automatic enrollment

If you are a FERS or CSRS employee or a Blended Retirement System (BRS) member who joined federal service after October 1, 2022, you will automatically be enrolled in the TSP. Your agency will automatically deduct 5% of your basic salary from your paycheck every pay period and deposit these funds into your TSP account.

If you joined the federal service between August 1, 2010, and September 30, 2020, you will be automatically enrolled into the TSP, and 3% of your paycheck will be automatically deducted and deposited into your TSP account.

Your agency will continue deducting the percentage contributions until you elect to stop contributions, change the contribution percentage, or reach the annual deferral limit. However, if you stop the contributions, you won’t be eligible for agency matching contributions, but you will still receive the 1% automatic contribution from your agency or service.

Types of TSP contributions

Regular employee contributions

Your agency or service will deduct an amount or a percentage of your paycheck that you choose to contribute. If you have not elected a contribution amount, your agency will automatically deduct 3% or 5% of your basic salary depending on the year you rejoined or began your federal service.

You can specify the amount of pre-tax or post-tax contributions you will make depending on the type of TSP account you have. You will need to enter a whole dollar amount or a percentage of basic pay per pay period for each type of contribution. However, your total contributions for the year cannot exceed the TSP elective deferral limit for the year. The IRS elective deferral for 2023 is $22,500 per year.

Agency contributions

When you are automatically enrolled into TSP, your agency or service will make agency matching contributions to your TSP account. You will receive a 1% agency/service automatic match, and you won’t need to make regular employee contributions to receive the match. The 1% agency/service automatic matching is made each pay period and it is not deducted from your paycheck.

If you make regular employee contributions, you will receive agency matching contributions to your TSP account, in addition to the 1% agency/service automatic match. The agency/service will match the first 3% of pay that you contribute to your TSP account dollar-for-dollar, and the next 2% that you contribute will be matched 50 cents on the dollar.

If you contribute 5% of your pay, it means you are saving the equivalent of 10% of your basic pay i.e. 5% employee contribution + 4% agency matching contribution + 1% agency automatic contribution. The agency contributions are made on a pre-tax basis even if you have both traditional and Roth TSP accounts.

Catch-up contributions

If you are 50 or older, you can elect to make an additional catch-up contribution. This contribution is deducted automatically from your pay and you must complete Form TSP-1-C (PDF) and fax it to TSP to make this election.

When electing to make catch-up contributions, you must set a whole dollar amount from your basic pay each calendar year, in addition to the regular contributions you make to your TSP account. For 2023, you can contribute $7,500 in catch-up contributions. However, you will not receive agency/service matching contributions on the amount you deposit to your TSP as catch-up contributions.

If you are contributing to both civilian and uniformed services TSP accounts, the cumulative contributions apply to both accounts during the calendar year.

Can you contribute to a TSP account after retirement?

Once you retire, you will no longer be able to contribute to your TSP account. Typically, a TSP is designed for civilian federal employees and members of the uniformed services, and it is funded using payroll deductions from the participant’s paycheck. However, the retirement savings contributed to the TSP account before retirement will continue growing even after retirement.

Although TSP does not allow employee contributions after retirement, you can transfer retirement assets from other qualified retirement accounts like 401(k) to a TSP to continue accruing earnings. Transferring your retirement money to a TSP can help you enjoy stable returns at low costs compared to other retirement plans. You can also allocate the money into several funds available in a TSP to earn investment returns.

Can you deposit inheritance into TSP?

If you have received a lump sum payment as an inheritance, you won’t be able to deposit the funds into your TSP account. TSP contributions must come from payroll deductions or rollovers from other retirement plans like 401(k) and IRA.

However, while you may not be able to contribute inheritance money to a TSP account, there are certain things you can do to boost your retirement savings. First, if you have not maxed out your TSP contributions, you can increase your payroll deductions to the TSP up to the IRS deferral limit for the year, and use the inheritance to fund your budget and pay other monthly bills. Also, if you are planning to take a TSP loan to finance a large purchase like a car or home, you can instead use your inheritance to pay for the large purchase and leave your retirement assets to continue growing.