The Thrift Savings Plan (TSP) is an investment program for retirement income. It is similar to the 401K plans available in the private sector. The savings plan is tax-deferred (subject to certain limitations). This government-wide program is available to all Federal employees who are covered by either the older Civil Service Retirement System (CSRS) or the current Federal Employees Retirement System (FERS).
If you are covered under FERS, you are strongly encouraged to invest in the TSP to have an adequate retirement income.
| This section provides only a brief overview of the TSP. Other pamphlets or booklets that provide more detail are available from your Benefits Counselors. As the plan changes, updated booklets are provided to all employees. TSP also has a website that provides information on rates of return; allows you to download forms; and allows you to project your account balances. |
Federal Retirement Thrift Investment Board
The Federal Retirement Thrift Investment Board (called the Thrift Board) has five members appointed by the President. The Board is responsible for the investment, management, and administration policies of the Thrift Savings Fund. The Board sends statements and information to all of the TSP participants.
When Can You Sign Up?
Each year there are two open seasons during which you can enroll or change your enrollment. These seasons begin May 15 and October 15. Each season lasts for 2 and one-half months. Click here for more information.
During "Open Season" if you are an eligible employee, you may:
- begin participating in the program
- change your deduction amount
- change your distribution of your funds
- terminate your participation in the program.
If you stop contributions during an open season, you must wait until the next open season to start again. You may terminate from the program outside of open season; however, you must then wait until the second open season before you can contribute again.
Transferring Your Funds
You can make an interfund transfer in any month you wish, without an annual limit. You may move all or part of the money in your account among the five funds, i.e., Government Securities (G) Fund, Common Stock Index Investment (C) Fund, Fixed Income Investment (F) Fund, Small Capitalization (S) Fund, and International Stock Index (I) Fund. Because the interfund transfer involves only money that is already in your account, it does not change the way new contributions are allocated to the five funds. The ThriftLine, (504) 255-8777 or the TSP website, are the most efficient ways to request an interfund transfer. With these two options, your request is recorded immediately, avoiding mailing and processing time. You may also submit a TSP-50 form directly to the TSP Service Office at the address provided on the form. You can obtain this form from your Benefits Counselors.
Making Contributions
Under FERS, you may contribute up to 14 percent of your basic pay to the Thrift Savings Plan. Your contribution is tax deferred -- meaning that you will not pay income taxes on the amount until you withdraw it upon separation or retirement or age 70 ½ .
NASA will automatically contribute an amount equal to 1 percent of your basic pay for each pay period -- whether or not you make contributions. In addition, NASA will contribute a matching amount equal to:
- the first 3 percent you contribute and
- one-half of the amount that you contribute above 3 percent of your salary not to exceed 5 percent.
In plain English -- under FERS, if you contribute 5 percent of your salary -- NASA will contribute a total of 5 percent. You may also contribute up to an additional 7 percent tax deferred -- but unmatched by NASA.
Under CSRS, you may invest up to 9 percent of your basic pay. NASA does not invest in your Thrift Savings Plan account if you are covered under CSRS.
Investment Funds
- Government Securities Investment (G) Fund -- invests in securities of the U.S. Government. The G Fund bears interest at a rate equal to the average market yield on all marketable interest-bearing debts of the United States.
- Fixed Income Investment (F) Fund -- invests primarily in a bond index fund that tracks the Lehman Brothers Aggregate bond index. This bond index consists primarily of high-quality fixed-income securities representing the U.S. Government, corporate, and mortgage-backed securities sectors of the U.S. bond market.
- Common Stock Index Investment (C) Fund -- invests in the Barclays Equity Fund, commingled stock index that tracks the Standard & Poors 500 (S&P 500). The sum of the market value is a reasonably complete representation of the United States equity markets. The Board selects the index.
- Small Capitalization (S) Fund --invests in the Wilshire 4500 stock index fund. The Wilshire 4500 index consists of the stocks of companies which are actively traded in the U.S. stock markets, excluding the companies in the S&P 500 index.
- International Stock Index (I) Fund --invests in a Europe, Australia, and Far East (EAFE) stock index fund. The EAFE index consists of the stocks of companies in 20 (soon to be 21 countries representing 45% of the value of world stock markets.
How Much are You Earning?
Fund performance is updated monthly -- usually by the 11th of the month. You may view the fund performance by accessing the TSP website or by accessing the 24 hours-a-day ThiftLine (see below).
Using the TSP ThriftLine and Website
The ThriftLine is an automated telephone service for the TSP that is available 24 hours a day, 7 days a week. The ThriftLine offers you the monthly rates of return for the three TSP funds, as well as the most recent 12-month rates of return.
You can use the ThriftLine or the TSP website to obtain information about your account. You can find out your account balance, request an interfund transfer, change your fund allocations, receive the amount you are eligible to borrow, and the current interest rate for a loan.
You will need your Social Security Number and your Personal Identification Number (PIN) to use the entire range of features offered by the ThriftLine at (504) 255-8777. If you do not remember your PIN you can call the ThriftLine to request to have a new PIN mailed to you. Receipt of the PIN normally takes about three days. You can also ask to change your existing PIN to a four-digit number of your choice.
Your Participant Statement
Twice each year, in late May and late November, you will receive a participant statement. The statement includes current information on your plan balance and a summary of your account activity during the previous 6-month period. The statement also provides additional information.
Vesting
Under CSRS and FERS, you have immediate vested rights to all your own contributions and their investment earnings. Under FERS, you are also 100 percent vested in the matching contributions the Government adds, as well as in their investment earnings. Under FERS, you become vested in the Government's 1 percent contribution after you have completed 3 years of Federal civilian service. Because there is no matching for CSRS participants, you are immediately vested in your contributions and earnings from those contributions.
Loans
There are types of loans: general purpose and residential. You may obtain a general purpose loan for any purpose. Your repayment period is from one to four years and no documentation is required. You may obtain a residential loan to purchase your primary residence. Your repayment period is from one to fifteen years and documentation is required. You may borrow only your own contributions and earnings; you may not borrow NASA’s contributions or their earnings. In addition, a qualifying court order against your account will affect your ability to receive a loan.
The smallest amount you will be able to borrow is $1,000. The largest amount you will be able to borrow will depend upon the amount of your contributions and their earnings. Federal tax law governs loans from plans like the Thrift Savings Plan and the amount you can pay back through payroll deductions.
The interest rate will be the G Fund rate at the time you apply for the loan. The rate remains at that level for the life of the loan. The interest you pay on the loan will go back into your own plan account (not tax deductible).
Loans must be repaid through regular payroll deductions. If you leave the Government with an outstanding loan, you may still pay off the loan. If you do not repay the loan, the unpaid loan balance is taxed accordingly.
Choosing TSP Benefits
When you separate or retire from Federal civil service, you become eligible to withdraw your TSP account. You have several options for receiving benefits from your TSP account: 1) you may transfer the balance to an IRA or other eligible retirement plan; 2) you may receive an immediate or deferred TSP life annuity; or 3) you may receive your account in a lump sum or in a series of payments over a fixed number of months.
If you do not want to withdraw your account when you leave NASA, you can leave your entire balance in the TSP; however, you must withdraw your TSP account or begin receiving monthly annuity payments by April 1st of the later of :
- the year following the year in which you reach age 70½ or;
- the year following the year you separate or retire from Government service.
If you leave your money in your TSP account, you may not make contributions to your account. You may change your mix of investment funds by using the Interfund Transfer feature up until the time you start withdrawing money from your account. You will continue to receive a participant statement every 6 months -- in May and November.
Tax on TSP Benefits
All of the money from your TSP account will be taxed as ordinary income for Federal tax purposes in the year (or years) that you receive it. This is because your contributions to your account are taken out of your pay before your Federal income tax. Also, your earnings on your account are not subject to tax while your money is in the TSP.
The way that you withdraw your account determines when you must pay the income tax. Because some withdrawal methods defer your receipt of the money in your account, your tax liability is also deferred. For example, if you have the TSP transfer all or part of you payment(s) to an IRA, you will not pay Federal income tax until you receive payments from your IRA.
However, there is mandatory 20 percent Federal income tax withholding on payments that you receive directly. If you receive the money directly -- even if you plan to roll it over to an IRA within 60 days -- the TSP must withhold 20 percent.
In addition, if you leave Government service before the year you turn 55, the IRS imposes a 10 percent early withdrawal penalty on all direct payments you receive before age 591/2.
Eligibility for Rehired Participants
If you leave Federal service and are later rehired, your options to leave your money in your TSP account or to withdraw depends on the length of your break in service. As of January 1991, your break in service must be 31 full days or more for you to be eligible to withdraw your TSP account balance. For more detailed information, consult your Employee Benefits Counselors.
Death Benefits
Your Designation of Beneficiary Form (Form TSP-3) determines who will receive your account balance and in what portion. If you did not complete this form, your account is paid by the order of precedence required by law. If you retire, buy a TSP annuity, and then die, benefits are payable according to the annuity contract.
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