Implemented by Congress in the Federal Employee's Retirement System Act of 1986, the Thrift Savings Plan (TSP) is a tax deferred retirement savings and investment plan for Federal employees covered by the Civilian Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) and members of the Uniformed Services. Managed by the Federal Retirement Thrift Investment Board, the program is governed under 5 Code of Federal Regulations (5 CFR), Parts 1600-1699, and offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under '401(k)' plans.
The TSP is a defined contribution plan, which means the retirement income you receive from your TSP account will depend on how much you (and your agency, if you are a FERS employee) have contributed to your account and the earnings on those contributions. This is different from the CSRS/FERS defined benefit programs, as benefits received from your CSRS or FERS annuity are based on years of service and salary earned. By contributing to the TSP, you defer paying taxes on the money you contribute until you withdraw the funds from your TSP account. In addition, over the years, the money in your account will accrue earnings, which are also tax-deferred. Deferring the payment of taxes means that more money stays in your account working for you. The longer your money is invested, the greater will be the benefit of tax-deferred earnings.
Participation in the TSP is voluntary and contributions are separate from contributions to your CSRS/FERS annuity. If you are hired under an appointment covered by CSRS/FERS, you are immediately eligible to participate in the TSP. As a new or rehired employee you have 60 days from the effective date of your appointment to elect to participate in the TSP.
To make a contribution election, you complete form TSP-1 using EBIS. access the Employee Benefits Information System (EBIS) at http://www.dodea.edu/pers/. Once you are on the Human Resources Homepage, click on the Employee Access & Employment Verification link. The first EBIS link provides Log-On Information and Procedures. The Slide Show link is a PowerPoint Presentation that also contains information about EBIS and the second EBIS link takes you directly to the DoDEA's EBIS Website. If you need further assistance with making your election through EBIS, please contact your local Human Resources Representative, email the DoDEA HQ Benefits Unit at Benefits@hq.dodea.edu or call the Benefits Unit directly at 703-588-3981 or DSN 425-3981.
You may specify a whole percentage of basic pay that you want to contribute each pay period up to 15% if you are a FERS employee or 10% if you are covered under CSRS or CSRS (Offset). You may also specify a whole dollar amount. If you specify a dollar amount, this amount cannot exceed 15% of your basic pay if you are FERS or 10% if you are CSRS/CSRS Offset.
If you do not make a contribution within the 60-day timeframe, you must wait until open season to enroll in the TSP program. There are two open seasons held each year, April 15 through June 30 and October 15 through December 31.
Employees may invest in their choice of five investment funds.
To direct the investment of the contributions to be made to your TSP account each pay period you must request a contribution allocation. After the TSP record keeper who is the National Finance Center (NFC) notifies you that your account has been established, you may request a contribution allocation at any time.
To request a contribution allocation, you may use the TSP web-site at http://www.tsp.gov, the ThriftLine (504) 255-8777 or Form TSP-50. If you use form TSP-50 it must be mailed directly to the TSP address listed on the form. The web-site and the ThriftLine are the most efficient ways to make your investment allocation.
Until you request a contribution allocation, the contributions made to your account each period will be invested in the Government Securities Investment (G) Fund.
During the open season employees may elect to participate or change the amount of contributions. Employees may change their contribution allocation, i.e. how you want the money distributed among the funds, at any time on the TSP web-site at http://www.tsp.gov or by calling the ThriftLine at (504) 255-8777.
You may make a contribution election to stop your contributions at any time. However, if you make an election to stop your contributions outside an open season, you must skip an open season before you can resume your contributions.
Currently, FERS employees may contribute to the TSP a maximum of 15% of basic pay each pay period up to the 2005 Internal Revenue Service Annual Deferral Limit of $14,000. As a FERS employee, you will receive the agency automatic 1% contribution to the account even if you are not contributing to the TSP.
Only employees covered by FERS are eligible to receive Agency Automatic (1%) contributions and Agency Matching Contributions; CSRS employees do NOT receive any agency contributions. FERS employees are eligible to begin receiving agency contributions to their TSP account beginning the second open season after you are hired in a position covered by FERS. Agency contributions are not taken out of your pay, nor do they increase your pay for income tax or Social Security purposes.
If you are contributing, your agency will match your contributions dollar for dollar on the first 3% you contribute each pay period, and 50 cents on the dollar for the next 2% you contribute. You will not receive any matching contributions for any amount you contribute over 5%. For example, if you contribute 5%, the agency will match it with 4% and you will also receive the agency automatic 1%, therefore the total contribution to your TSP account would be 10%. If you do not contribute your own money to the TSP, you will not receive Agency Matching Contributions.
If you are covered by CSRS, you are eligible to contribute up to 10% of your basic pay each pay period, up to the 2005 IRS annual limit of $14,000. As a CSRS employee, you are not eligible to receive any agency contributions.