Frustrating Debut for New TSP Account Setup, Features (2024)

FAQs

How do I set up a TSP account for the first time? ›

During the setup process, you'll create a username, password, and ThriftLine PIN to access your account. You'll follow step-by-step prompts to verify your identity, update your contact information, and set up your account security. My Account setup should take 5 to 10 minutes for most TSP participants.

When you place a lock on your account, any new request related to loans or withdrawals will not be processed. With an account lock, you can still access your account normally, manage your savings, and change your TSP investments. You can request an account lock by logging in to My Account.

The rule of 55 is a great feature of your Thrift Savings Plan that helps early retirees. This IRS rule means that those who leave service in the year they turn age 55 or later can take TSP withdrawals without penalty.

Average TSP account balances for Uniformed Service Members crested over $40,000 by the end of 2021, while balances for new 'Blended Retirement System' (BRS) participants reached close to $10,000 in just four years since the BRS became operational.

Average TSP balances

The average TSP balance has grown steadily in the last decade, reaching the six-figure mark in 2013. As of 2021, the average TSP balance for FERS participants was $181,279, while the average TSP balance for CSRS participants was $194,424.

What is the safest TSP fund? The G fund is generally the safest option as it invests in government securities. Although you won't lose money investing in this fund, your rate of return will be low. This may be a good option if you are close to retirement.

In a nutshell, Ramsey advises federal employees to invest at least 5% in a Roth TSP, then invest the rest in a Roth IRA. He also recommends investing in a handful of TSP funds -- funds C,S, and I -- with a higher percent in the C Fund (at least 60 to 80%).

There are approximately six million Thrift Saving Plan (TSP) participants who are federal employees, active military, and federal retirees. The new TSP website needed an overhaul, a fresh look. Six months later, wait times have improved and the beneficiary module seems to be working properly.

The C, S, and I funds are the more aggressive of the funds in the TSP. The reason they are called “aggressive” is because they have a much higher chance of sustaining major growth over time. But because of this, they can also be much more volatile than the G and F funds.

Why can't I withdraw money from TSP account? ›

You are only eligible to receive a financial hardship in-service withdrawal if you are experiencing negative monthly cash flow or have unpaid medical expenses, a casualty loss, or unpaid legal fees incurred for a separation or divorce, or losses due to a major natural disaster declared by the Federal Emergency ...

You can make a one-time-only withdrawal of part of your TSP account and leave the rest in the TSP until a later date. You cannot make a partial withdrawal of less than $1,000.

The 4% rule is a popular retirement withdrawal strategy that suggests retirees can safely withdraw the amount equal to 4 percent of their savings during the year they retire and then adjust for inflation each subsequent year for 30 years.

If you have already separated from federal service, the IRS requires you to make a withdrawal choice before April 1st (of the year following the year you become age 72, referred to as the mandatory TSP Withdrawal Age).

In addition to making regular TSP contributions, you may also make TSP Catch-up contributions, if you are age 50 or older (or will be turning age 50 in 2023). The 2023 IRS annual limit for Catch-up contributions is $7,500. This amount is in addition to the regular TSP limit of $22,500.

Employees should invest at least 5% in the TSP; that is the percentage needed to obtain the maximum available matching funds. Beyond that, Employees need to balance long-term investment needs against other needs.

The largest account balance has gone from $9.3 million in March of this year, to $10 million at the end of June. When the TSP started, there were only a handful of millionaires who brought their...

To receive the maximum Agency or Service Matching Contributions, you must contribute 5% of your basic pay each pay period.

Consider leaving your funds in the TSP unless you don't want to deal with extra paper work or you want more investment options. Otherwise, consider rolling your TSP account assets into your new 401(k) plan if you have one, or one of the other following options.

There is a 3% dollar-for-dollar matching on your pay, and 50 cents on the dollar for the next 2% of pay contributed to the TSP account. Therefore, 5% of your basic pay is the absolute minimum you should contribute to collect the full agency matching contributions.

How much should I have in my TSP by age 50? ›

By age 50, you would be considered on track if you have three to six times your preretirement gross income saved. And by age 60, you should have 5.5 to 11 times your salary saved in order to be considered on track for retirement.

Taking a loan from your TSP is a bad idea. The money you're putting into your TSP is for retirement, not for buying a new car. If you leave federal employment with an outstanding TSP loan you have to pay back the full loan balance within 90 days.

By this measure, the I Fund is the riskiest, with a maximum drawdown of -60.89%, which occurred during the 2008-2009 global financial crisis.

As a reminder, the IRS announced the new limits for contributions to TSP in 2023. The maximum amount a participant under age 50 can contribute is $22,500. The catch up for investors over age 50 was increased to $7500 for 2023. The total contribution for employees over age 50 for 2023 is $30,000.

As of November 2022, there are 65,000 TSP millionaires. But why do they only makeup 1% of all federal employees and federal retirees? The reasons break down to two main habits: “Procrastination” and “Fear”.

TSP Performance Up in March and Year-to-Date in 2023

The C Fund is up 7.49% so far in 2023. The Fund with the best return so far this year is the I Fund which is up 8.63%. Some investors will note that the I Fund is near the bottom in popularity among TSP investors. 3.6% of participant allocation goes into the I Fund.

It varies with the stock market, but about 1% of Thrift Savings Plans have more than a million dollars in them. Most so-called TSP millionaires have been working for decades.

A software glitch caused by a change to how the Defense Finance and Accounting Service (DFAS) allows users to calculate Thrift Savings Plan (TSP) contributions means users under 50 years old could contribute too much to their accounts this year without realizing it.

January 2023 news and announcements

SECURE 2.0 increases the start age for required minimum distributions from 72 to 73 in 2023 and then further increases the start age to 75 in 2033. We're continuing to assess how SECURE 2.0 will affect the TSP and will provide updates as more details are finalized.

Weaver said the website update was necessary to add more layers of security and better protect participants' personal information. “Because protecting our participants' retirement savings is our highest priority, all TSP participant-specific information is behind the My Account login,” Weaver said.

Which TSP is most conservative? ›

However, the L Income Fund is the most conservative of the L Funds. It focuses on money preservation while providing a small exposure to the riskier funds (C, S, and I Funds) in order to reduce inflation's effect on your purchasing power.

The C Fund is a heavily diversified investment but it does come with the risks. The C Fund is moderately volatile and is subject to market risk as the price of stocks in the S&P 500 Index rise and fall. Further, you are exposed to inflation risk if your C Fund investment does not grow enough to offset inflation.

While they may not have as many funds to choose from, TSP participants do have one big advantage over most 401(k) investors: lower fees. The total expense ratio, which covers both investment and administrative fees, is 0.066% for individual TSP funds.

It generally takes between 7 to 10 business days to process your request once you've properly completed and submitted it. We disburse withdrawals each business day. You can check My Account at tsp.gov or call the ThriftLine to find out the status of your withdrawal request, including whether the payment has been made.

Age-59 ½ in-service withdrawals are withdrawals that you can make from your TSP account when you're age 59½ or older. We determine your age based on the date of birth reported by your employing agency or service. If that date is incorrect, you must ask your agency or service to change it.

After the 6-month waiting period, you must change your contribution election form if you wish to resume contributions. You will not be able to apply for another financial hardship withdrawal request until 6 months have passed.

To request a TSP withdrawal or distribution after you leave federal service, log in to My Account to begin the request or contact the ThriftLine. Withdrawals and distributions cannot be reversed once they've been processed, so think carefully before you make a move.

Once processed, your loan will generally be disbursed within three business days . You can check the status of your loan by logging in to My Account on tsp . gov .

There are two types of TSP loans: general purpose loans and primary residence loans. A general purpose loan can be used for any purpose, including buying or building a house. And you don't have to provide any supporting documentation when you apply.

These rules of thumb say you should have saved ... 2 to 3 times your income by age 40. 3 to 4 times your income by age 45.

How much should I have in my TSP at 40? ›

In order to attain this, Fidelity suggests you focus on achieving certain benchmarks. At 30, you should have half of your annual salary saved. By 40, you should have twice your salary, and by 50, you should aim for about four times your salary in retirement savings.

Follow the 3% Rule for an Average Retirement

If you are fairly confident you won't run out of money, begin by withdrawing 3% of your portfolio annually. Adjust based on inflation but keep an eye on the market, as well.

Eligible rollover distributions of your traditional balance may be rolled over to a traditional IRA, an eligible employer plan, or a Roth IRA. taxed in the current year, and no income tax will be withheld. You won't be taxed on this money until you withdraw it from the traditional IRA or the eligible employer plan.

Withholding taxes

We don't withhold for state or local income tax. This doesn't mean that you don't have to pay state and local taxes on your withdrawals and distributions. We report all TSP payments to your state of residence at the time of the payment (if that state has an income tax).

SECURE 2.0 increases the start age for required minimum distributions from 72 to 73 in 2023 and then further increases the start age to 75 in 2033. We're continuing to assess how SECURE 2.0 will affect the TSP and will provide updates as more details are finalized.

If you over contribute, you may request a refund of the excess amount from the TSP. For a limited in January each year, we make the Refund Request Form available. You can get the form by calling the ThriftLine or logging in to My Account. We must receive your excess deferral refund request no later than March 15.

The first 3% is matched dollar-for-dollar by your agency or service; the next 2% is matched at 50 cents on the dollar. This means that when you contribute 5% of your basic pay, your agency or service contributes an amount equal to 4% of your basic pay to your TSP account.

Your participation in the TSP does not affect your eligibility to contribute to an IRA. However, the Internal Revenue Code (IRC) establishes limits on the dollar amount that you can contribute to eligible employer plans like the TSP and to individual retirement accounts such as traditional IRAs and Roth IRAs.

Because you are automatically enrolled in the TSP, effective your first pay period, SSA will make Agency Matching Contributions to your TSP account. Even if you stop contributing your own money, SSA will make Agency Automatic Contributions that will equal 1% of the basic pay you earn for the pay period.

There are two ways to move money into your TSP account from an eligible plan: our rollover concierge service and the self-service option in My Account.

What is the safest way to invest in TSP? ›

What is the safest TSP fund? The G fund is generally the safest option as it invests in government securities. Although you won't lose money investing in this fund, your rate of return will be low. This may be a good option if you are close to retirement.

Once processed, your loan will generally be disbursed within three business days . You can check the status of your loan by logging in to My Account on tsp . gov .

How long does a TSP loan take to get? If you complete your application for a TSP loan online and are approved, you'll get the money in eight to 13 days. Paper applications submitted by mail take up to several weeks to process.

Because we're making the payment directly to you and not to your other retirement plan or IRA, we are required to withhold 20% of your payment for federal income taxes. This means that in order to roll over your entire payment, you must use other funds to make up for the 20% withheld.

You can find your Thrift Savings Plan (TSP) by checking your quarterly or annual account statement. If you do not have a copy of your statement, you can contact TSP at 1-877-968-3778 to request a mailed copy of your statement.

Your catch-up contributions will be in addition to the 2023 TSP regular contribution limit, which means employees can contribute up to $30,000 in 2023. To maximize the catch-up contribution amount of $7,500 for 2023, employees will need to contribute an additional $288 per pay period ($7,500/26 = $288.46).

You can request to receive a total distribution of your entire TSP account balance if you want to take all of your money out of the TSP. Once processed, your TSP account balance will be $0, and you'll no longer be able to move money into the TSP from eligible plans.

The conservative funds are the G and F funds and the aggressive funds are the C, S, and I funds.

From here on out, all scheduled payments are to be made on the 15th of each month. In a class I taught the first week of June, I had several participants tell me that when they checked their account after setting up the new My Account, they were told they had no beneficiary forms on file when they knew they did.

If you have a 401(k) or TSP through your employer, your contribution is reported in Box 12 of your W-2 with the letter code D. Because your contribution is included in your W-2, do not re-enter it in the retirement section.