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, href="http://www.myfederalretirement.com/public/123.cfm">click here to view

the table on Agency

Contributions to the Thrfit Savings Plan for FERS Employees