Question
Employment > Retirement > Retirement Savings Plan
Provide a fully portable matching account for retirement savings, even for those working outside the employer-sponsored system
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Background
The Federal Thrift Savings Plan, or TSP, is a retirement savings plan for civilians who are, or previously were, employed by the United States Government and for members of the uniformed services. The TSP encompasses many millions of investors and has substantial assets. As of July 2007, the TSP had US$224,000,000,000 among 3.77 million investors.
The TSP is a defined contribution plan administered by the Federal Retirement Thrift Investment Board. In most ways, the TSP closely resembles the dynamics of 401(k) plans. The retirement assets derived from a TSP account will depend on how much has been contributed to the account (both by the employee, and if applicable, his or her agency) during the account holder's working years and the earnings on those contributions. The government will make automatic and matching contributions, for certain (FERS) civilian employees, based on the employee's contributions. Employees under the CSRS (Civil Service Retirement System) may participate in the TSP, but are not eligible for matching contributions. The typical FERS matching formula is: 1% regardless of employee contribution (even if zero), then 1% for each 1% contributed by the employee (to a maximum of 3%), then 0.5% for each 1% contributed by the employee (to an additional 1% match maximum). In other words, the employee may receive up to 1%+3%+1% = 5% matching contributions. Military members are generally not eligible for matching contributions.
Prior to 2006, the amount that could be contributed was limited to a certain percentage of basic pay. In 2006, this percentage limit was removed; the only remaining restriction on contributions is that imposed by the Internal Revenue Service. However, matching contributions, as outlined above, are limited to 5%. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under 401(k) and similar plans.
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The 401(k) plan is a type of employer-sponsored retirement plan in the United States and some other countries, named after a section of the U.S. Internal Revenue Code. A 401(k) plan allows a worker to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of his or her wage paid directly, or ""deferred"", into his or her 401(k) account. In participant-directed plans (the most common option), the employee can select from a number of investment options, usually an assortment of mutual funds that emphasize stocks, bonds, money market investments, or some mix of the above. Many companies' 401(k) plans also offer the option to purchase the company's stock. The employee can generally re-allocate money among these investment choices at any time. In the less common trustee-directed 401(k) plans, the employer appoints trustees who decide how the plan's assets will be invested.
see more on Wikipedia
The TSP is a defined contribution plan administered by the Federal Retirement Thrift Investment Board. In most ways, the TSP closely resembles the dynamics of 401(k) plans. The retirement assets derived from a TSP account will depend on how much has been contributed to the account (both by the employee, and if applicable, his or her agency) during the account holder's working years and the earnings on those contributions. The government will make automatic and matching contributions, for certain (FERS) civilian employees, based on the employee's contributions. Employees under the CSRS (Civil Service Retirement System) may participate in the TSP, but are not eligible for matching contributions. The typical FERS matching formula is: 1% regardless of employee contribution (even if zero), then 1% for each 1% contributed by the employee (to a maximum of 3%), then 0.5% for each 1% contributed by the employee (to an additional 1% match maximum). In other words, the employee may receive up to 1%+3%+1% = 5% matching contributions. Military members are generally not eligible for matching contributions.
Prior to 2006, the amount that could be contributed was limited to a certain percentage of basic pay. In 2006, this percentage limit was removed; the only remaining restriction on contributions is that imposed by the Internal Revenue Service. However, matching contributions, as outlined above, are limited to 5%. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under 401(k) and similar plans.
see more on Wikipedia
The 401(k) plan is a type of employer-sponsored retirement plan in the United States and some other countries, named after a section of the U.S. Internal Revenue Code. A 401(k) plan allows a worker to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of his or her wage paid directly, or ""deferred"", into his or her 401(k) account. In participant-directed plans (the most common option), the employee can select from a number of investment options, usually an assortment of mutual funds that emphasize stocks, bonds, money market investments, or some mix of the above. Many companies' 401(k) plans also offer the option to purchase the company's stock. The employee can generally re-allocate money among these investment choices at any time. In the less common trustee-directed 401(k) plans, the employer appoints trustees who decide how the plan's assets will be invested.
see more on Wikipedia
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