Thrift Savings Plan and Investment Partners

Investment Partners: You and the Thrift Savings Plan

Thrift Savings PlanWhen federal employees invest in the Thrift Savings Plan, the Thrift Savings Plan invests in them by way of agency contributions.  It is a partnership of unparalleled financial planning benefits. The IRS maximum contribution remains at $17,500 for 2014.  Employees may contribute up that amount.    When employees contribute 5% to the Thrift Savings Plan (access your account), the agency matches their contribution at a rate of dollar-for-dollar on the first 3% and then 50 cents on the dollars for the next 2%.  So if you contribute 5% into your account, regardless of the Thrift Savings Plan Funds that you select, the agency will contribute 4% to the fund with an automatic contribution of 1% of your basic pay.

Employees may contribute more than 5% so as long as they do not make contributions over the IRS limit.  However, if employees contribute over 5%, the agency will only match the first 5% of the contribution.   Again, the 1% of basic pay automatic agency contribution is made to the Thrift Savings Plan account of each eligible employee, even if the employee is making no contributions.  The money is vested, the automatic 1%, when the employee has worked for 3 years under most circumstances in the federal service.

Mind you, the 3 year tenure requirement does not mean that you must participate in the Thrift Savings Plan for 3 years, but must be employed for that period of time.  All civilian service in the federal government counts towards the 3 year requirement.  Employees do not have to contribute any money to their Thrift Savings Plan account in order to receive the agency automatic 1% contribution.    The only requirement is the vesting requirement of 3 years.

I also think it is important to reiterate here that if you leave the federal service before meeting the vesting requirements, the automatic 1% and its earnings will be forfeited.  If, however, you die before leaving the service and have not met the vesting requirements, all of the monies in your account is considered vested.

Read the quarterly report newsletter of the Thrift Savings Plan, Highlight, to stay abreast of important information and details that can add to retiring with safety and security.

P. S.  Always Remember to Share What You Know
Dianna Tafazoli





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