Thrift Savings Plan (TSP) for FERS Employees
The Thrift Savings Plan (TSP) for FERS employees is one of the three parts
of your retirement package, along with your FERS Basic Annuity and Social
Security.
Participating in the TSP does not affect the amount of your Social Security
benefit or your FERS Basic Annuity.
The money that you save and earn through your TSP account will provide an
important source of retirement income. The TSP is especially important to
FERS employees because the formula used to compute your FERS Basic Annuity is
less generous than the formula used to compute the CSRS annuity.
As a FERS employee, you may elect to contribute any dollar amount or
percentage (1 to 100) of your basic pay to the Thrift Savings Plan.
However, your annual dollar total cannot exceed the Internal Revenue Code
limit, which is $15,500 for 2007.
Agency Contributions
Once you are eligible as a FERS employee, you are entitled to receive
agency contributions. If you are a FERS employee, your agency makes two
different types of contributions to your TSP account as part of your FERS
benefits. These contributions are not taken out of your pay, nor do they
increase your pay for income tax or Social Security purposes.
1. Agency Automatic 1% Contributions
When you become eligible for agency contributions, your agency will
automatically contribute to your TSP account an amount equal to 1 percent of
your basic pay each pay period. These are your agency automatic (1%)
Contributions. You will receive these contributions whether or not you
contribute your own money to your TSP account.
2. Agency Matching Contributions
If you are contributing to your TSP account, your agency also makes agency
matching Contributions once you are eligible for them. If you do not
contribute your own money, you will not receive agency matching
contributions. Matching contributions apply to the first five percent of
pay that you contribute each pay period. Your contributions are matched
dollar-for-dollar on the first three percent of pay you contribute each pay
period and 50 cents on the dollar for the next two percent of pay. Your
agency will not match the contributions that you make above five percent of your
pay. However, you will still benefit from before-tax savings and
tax-deferred earnings on those contributions.
The fact that your agency adds to your contributions will make your TSP
account grow faster. Your Agency Automatic (1%) and Matching Contributions
can add up to five percent of your basic pay. To see how it works, click here to view
the table on Agency
Contributions to the Thrfit Savings Plan for FERS Employees
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Overview - CSRS
