The Thrift Savings Plans Washington (TSP) is a retirement savings and investment plan for Federal employees. Congress established the TSP in the Federal Employees’ Retirement System Act of 1986. The purpose of the TSP is to provide retirement income. The TSP offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under “401(k)” plans.
The Federal Retirement Thrift Investment Board administers the TSP and contracts with the U.S. Department of Agriculture’s National Finance Center (NFC) to serve as the TSP record keeper.
The Federal Retirement Thrift Investment Board is an independent government agency. The Board consists of five members who serve in a part-time capacity. They are by the President and confirmed by the Senate. The five members of the Board and the creative Director are required by law. To manage the TSP y and solely in the interest of the participants and their beneficiaries.
Money in the TSP plans 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.
FERS/CSRS Participants – You can elect to contribute to the TSP at any time: there is no waiting period. The amount you can contribute changes annually. You may elect to contribute any dollar amount or percentage (1 to 100) of your basic pay. However. your annual dollar total cannot exceed the Internal Revenue Code limit. which is currently $18,000 or the catch-up contribution limit of 56.000 for those over 50.
FERS – Once you are eligible, you will receive:
- Agency Automatic (1%) Contributions
- Agency Matching Contributions
- Immediate vesting in Agency Matching Contributions and vesting – generally in three years – in Agency Automatic (1%) Contributions
Thrift Savings Plans Washington Loan Program – Terms of Loan
• Residential is 1 to 15 years.
• General Purpose is 1 to 5 years.
TSP Loan Program – Eligibility
- You are eligible for a TSP Loan Program under the following criteria:
If you are a current employee in a pay status.
- TSP – Your account must have at least $1,000 in employee contributions and associated earnings.
- Your loan balance must be within limits of federal tax law.
- The amount left in your paycheck after the loan payment and other deductions must equal to at least 10% of basic pay.
- You must document expenses for the allowed purposes or demonstrate financial hardship.
- FERS employees must get spousal consent.
Investment on TSP Accounts
Both FERS and CSRS employees have the option of investing in any of the six funds offered through the TSP. Employees also have the option of making 12 inter-fund transfers within one calendar year, subject to one transfer per month. The six funds are as follows:
- C Fund, Common Stock Index: objective is to match the performance of the S&P 500 Index ________%
- F Fund, Fixed Income: objective is to match the performance of Barclays US Aggregate Bond Index _________%
- S Fund, Small Capitalization Stock Index: objective is to match the performance of the Dow Jones US Completion Total Stock Market Index
- 1 Fund, International Stock Index: tracks the Morgan Stanley EAFE Index of mostly large companies in 20 countries in Europe, Australia. Asia, and the Far East _________%
- L Funds: It provide employees with a convenient way to diversify their accounts among the G,F, C,S and I Funds. Using professionally determined investment mixes that are tailored to different time horizons. Your time horizon is the date, after you leave the Federal Service, that you think you will need the money in your TSP account.
When investing in the funds, you will sign a statement that you understand that you are making an investment at your own risk. You will not be protected by the U.S. Government or the Federal Retirement Thrift Investment Board against Investment loss in the Funds, nor do they guarantee a re.turn on your investment.
Thrift Savings Plans Washington TSP Loan Program – Purposes
- Purchase of a Primary Residence as below.
Primary residence includes a house, condominium, townhouse, or mobile home which is not used on a transient basis.
- General Purpose Loans – Loans are available for any purpose according to plan guidelines. You may have one general loan and one residential loan from your TSP account at any one time.
- Financial Hardship – Participants may also qualify for a hardship loan.
Thrift Savings Plans Washington TSP Rules for Age-Based Withdrawals
Employees can make a one-time only in-service withdrawal of all or any portion of their vested account balance. The request must be for at least $1,000. (withdrawals of the entire account balance can be made if it is less than $1,000). Employees who take an age-based withdrawal will not be eligible for a partial withdrawal after separation from federal service
Thrift Savings Plans Washington Withdrawal Options
The TSP provides four basic ways to make withdrawals:
- Have TSP purchase a life annuity.
- Receive your TSP funds in a single payment.
- Thrift Savings Plans funds in a series of monthly payments receive.
- Transfer or rollover your account to another qualified plan.
* This is an estimate only and does not take into consideration actual returns or program rate changes TSP may make.
Thrift Savings Plans Washington TSP In-Service Withdrawals
TSP participants who are still employed by the Federal Government can withdraw from their account for only two purposes:
• Age-based in-service withdrawals for participants who are 591/2 or older
• Financial hardship in-service withdrawals for participants who can document financial hardship Employees who have taken an in-service withdrawal cannot return or repay the money from their account.
TSP Withdrawal Upon Separation or Retirement
When employees leave federal service, their agency will give them a withdrawal package . Which describes TSP withdrawal options and procedures for making them.
Employees must be separated or retired for 31 or more full calendar days to be eligible to withdraw their account. After the account has been disbursed, the request cannot be changed. However, employees receiving a series of monthly payments can request at any time. To have the balance of their account paid out in a single payment or change where the payments are sent.
Thrift Savings Plans Washington TSP Roth
- Employees may designate their own contributions into the Roth or traditional (non-Roth account). All agency matching contributions will only be credited into the non-Roth account.
- All monies already in the TSP account will remain in the non-Roth account. It cannot be transferred into the Roth TSP.
- Contributions made to either the non-Roth TSP or Roth TSP do not affect. The ability to start or contribute to an individual IRA.
- Roth (after-tax)- You pay taxes on your contributions as you make them. (unless you are making tax-exempt contributions). And your earnings are tax-free at withdrawal as long as you meet certain IRS requirements.
- Thrift Savings Plans Washington Roth TSP is similar to a Roth 401(k), not a Roth IRA. There are no income limits for Roth TSP contributions.
- The TSP cannot accept transfers from Roth IRAs.
- Withdrawals are distributed proportionally according to your account balances.