Federal Employees and the Military who wish to save for retirement have an option known as a Thrift Savings Plan, or TSP. Federal employees have excellent benefits, but they are unique and complex. We are Federal Retirement Benefits Center, and we help Connecticut federal employees plan for retirement. As a federal employee retirement planning service, we take the mystery out of your federal employee benefits.
As with 401(k)s, you make contributions into yourTSP, and your employer may offer a match. The annual contribution limit is also $18,500, with a $6,000 additional catch-up contribution for anyone 50 or older. TSPs offer both traditional and Roth options. In a traditional TSP, you make pre-tax contributions and pay tax on withdrawals of your money in retirement. If you elect the Roth option, you would contribute post-tax income and would not pay tax on withdrawals. If you have a traditional and a Roth TSP at the same time, the government’s matching contributions can only be made into a traditional TSP.
Thrift Savings Plans for Federal Workers
- Federal Employees' Retirement System (FERS): Federal civilian employees who were hired on or after January 1, 1984, are FERS employees. FERS employees hired after July 31, 2010, are automatically enrolled in a traditional TSP in which 3% of the basic pay is deducted and deposited. FERS employees hired before August, 1, 2010, have TSPs that get a 1% contribution from their agency, and they can choose to contribute more as well.
- Civil Service Retirement System (CSRS): This is the retirement system for federal civilian employees who were hired before January 1, 1984. CSRS employees’ accounts are established by your agency after you make a contribution election
- Blended Retirement System (BRS): A retirement plan for Military Personnel. Since 20 years of service is required to be eligible for a pension, up to 80% of military personnel were walking away with no pension plan. The Blended Retirement System (BRS) was enacted to allow you to choose a pension, a TSP, or both, and the best option for you depends on your current years of service. Anyone entering the military now is automatically in the BRS. You automatically get 1% of your base pay contributed to a TSP, and you can contribute another 4% to get a 5% total match. You’d still get a pension if you complete 20 years of service, but it’ll be a reduced one.
BRS members and FERS employees receive an automatic contribution of 1% of their base pay to their TSP, whether or not they contribute. From there, you’d get a match on your additional contributions up to 5% of your salary.
It’s essential to select beneficiaries for your TSP, and to keep that list of beneficiaries updated in the event you have children, get a divorce, etc. If you have less than $200 in your TSP when you pass away, your beneficiary will receive that money. Over $200, the money remains invested and a beneficiary participant account will be established in their name.
To make sense of your retirement benefits, call Federal Retirement Benefits Center today. The majority of financial advisors do not understand the subtleties and intricacies of your Federal Benefits, but we do. Our financial planners and educators take you through each step, and offer a personal report. Lack of understanding may lead to mistakes that lead to forfeiture of the benefits you have earned. With our help you will be able to make informed decisions about your future. Call today: 844-533-3372.