Understanding The Thrift Savings Plan, by Todd Carmack
If I asked 20 federal employees, “How much does the government match for TSP contributions?” I would get several different answers. The correct answer is 5% if you’re a FERS employee. Providing education is the most important part of my job and I enjoy the benefits that truly educating my clients can bring them.
One of the most important pieces of advice I can provide to employees is to make sure you are contributing a minimum of 5% to your Thrift Savings Plan (TSP). Free money is hard to come by and if you’re contributint to your TSP its about the same as giving yourself a raise just by doing the smart thing! Example: If your salary is $51,450 a year, your 5% contribution is $2572.50 a year and the government will match that figure, which means you will have a total $5145 in contributions to your account – not to mention any TSP fund performance.
Knowing your TSP investment options (TSP Funds) is also vital. Here are the six options:
TSP G Fund – government securities
TSP F Fund – government, corporate and mortgage backed bonds
TSP C Fund – Large/mid cap U.S stocks
TSP S Fund – small cap U.S stocks
TSP I Fund – international
TSP L Fund – lifestyle funds (which is a combination of G,F,C,S, & I)
As for contribution limits, for those age 49 and under, you can contribute a maximum of $17,500 a year. For those who are 50 and above, you can contribute an additional $5500 a year.
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