In a recent bulletin put out by the overseers of the TSP, the Federal Retirement Thrift Investment Board, they outlined their new plan to raise the contributions for those automatically enrolled to 5 percent, up from 3.
This will begin on the 1st of October, in 2020, and was authorized earlier, back in 2009, with the Thrift Savings Plan Enhancement Act. Anyone contributing prior to the October 2020 start date is exempt from the contribution hike.
Payroll and human resources departments received this bulletin to help with the transitioning to the higher percentage contribution rate, with another bulletin forthcoming that will go out to TSP contributors at large that will outline all the upcoming changes in greater detail.
5% is what the government had previously matched back on all TSP contributions. So now the automatic rate will be in line with that, with the breakdown as thus: a dollar for dollar match back on 3 percent, with the next 2 percent matched at a rate of 1 to 2, or fifty cents on every dollar, making the matching contribution, dollar-wise, for your 5 percent, about 4 percent in cash. The TSP also provides an automatic 1 percent return contribution regardless of what you put in yourself, making up the deficit and turning the grand total they match into an even 5 percent as well. You are free to contribute more than 5 percent yourself if you desire, but the agency will not match back more than what we have just outlined here.
All of these new plans and changes should ensure a proper retirement fund built up for anyone taking advantage of it at the end of their government working years.
If you have questions or concerns regarding your own Thrift Savings Plan, please reach out to a trusted financial advisor for guidance.