Thrift Savings Program (TSP) participants will be able to contribute more money in 2018. Starting January 1, 2018, active duty service members, most reservists and government civilian employees will be able to contribute up to $18,500 a year into TSP accounts — a $500 increase from 2017. Individuals over 50 years old can also contribute an additional $6,000 a year in “catch-up” contributions for a total of $24,500.
TSP Fund Options
The TSP has 5 different investment fund options participants can contribute to:
- C Fund – S&P 500 index stocks
- S Fund – stocks of U.S. companies not included in the S&P 500 Index
- I Fund – international stocks
- F Fund – corporate bonds
- G Fund – US Treasury securities
In addition to these five fund options, there are also Lifecycle Funds (L Funds), which are comprised of differing fund mixes based on the participants expected retirement date. Currently the TSP offers the L2020, L2030, L2040, and L2050 funds, with each fund investment mix adjusted accordingly to match the expected retirement date. The TSP offers both conventional and Roth investment options.
New Blended Retirement Option in 2018
In January 2018 the Blended Retirement System (BRS) will begin for new service members. Current service members with less than 12 years active service will have the option of enrolling in the BRS.
All service members under the BRS will automatically be enrolled to contribute 3 percent of their base pay to the TSP, which can be changed at any time. BRS participants will also receive a TSP matching contribution of 1 percent of their base pay from the government.
After 2 years, the government’s matching contribution will go up to 5 percent of base pay. That means for a contribution of 5 percent or more of base pay to the TSP, the government will match up to 5 percent.
If you decide to leave the military before retirement, you can take the retirement account with you. You are limited on what you can do with your TSP money, usually you can’t take it out until retirement age unless you take out a loan against the account. You can also transfer your money out of the TSP and into a different qualified retirement plan. If you continue to work for the government after leaving the service you can continue putting money into the TSP account. If funds are withdrawn for any other reason there are potential tax penalties.