What is the difference between a thrift savings plan and a 401k?

What is the difference between a thrift savings plan and a 401k?

A thrift savings plan is similar to a 401(k) plan but is open only to federal employees and uniformed services personnel. Participants in a TSP can get an immediate tax break for their savings or invest in a Roth for freedom from taxes after retirement.

Who is eligible for Thrift Savings Plan?

Most employees of the United States government are eligible to participate in the TSP. You are eligible if you’re any of the following: A FERS employee (generally if you were hired on or after January 1, 1984) A CSRS employee (generally if you were hired before January 1, 1984 and did not convert to FERS)

What type of plan is a Thrift Savings Plan?

The Thrift Savings Plan (TSP) is a tax-deferred retirement savings and investment plan that offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans.

When can I withdraw from my Thrift Savings Plan without penalty?

Since the TSP is a retirement plan, there is no penalty for withdrawing your money during retirement. If you stop working for the federal government, you can start making retirement withdrawals when you turn 55. If you keep working for the federal government, you need to wait until you turn 59-1/2.

Is Thrift Savings Plan a pension?

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.

Can I withdraw money from my Thrift Savings Plan?

If you are 591/2 or older, you can make withdrawals from your TSP account while you are still employed. This is called an “age-based withdrawal” or “591/2 withdrawal.” You must pay income tax on the taxable portion of your withdrawal unless you transfer or roll it over to an IRA or other eligible employer plan.

Can I take money out of my Thrift Savings Plan?

Can I withdraw my TSP at age 55?

Not to worry, you can withdraw from the TSP knowing that that 10% penalty will be waived. Even if you are deferring your pension until a later date, since you separated from service the year you attained age 55, you are allowed to take a portion or all of the TSP, penalty-free.

What happens to my thrift savings plan when I retire?

Depending on when you begin retirement, you can simply leave the money in the TSP let it continue to grow. If you leave it in, the investment options are limited to funds elected by TSP money managers.

Who is eligible for a Thrift Savings Plan?

Most federal employees are eligible to get a Thrift Savings Plan whether they are working full time or part time, and in active duty. Civil Service Retirement System (CSRS) employees are qualified to join Thrift Savings Plan.

What do you need to know about the Thrift Savings Plan?

Thrift Savings Plan Details Defined Contribution Plan. The TSP is a defined contribution plan, which means each TSP participant has their own individual account. Tax Deferred Retirement Plan. Automatic TSP Contributions for New Employees. Benefits of Automatic Thrift Savings Plan Contributions. TSP Contribution Limits. Traditional and Roth TSP Plan Options.

How to maximize your Thrift Savings Plan?

6 Keys to Maximizing Your Thrift Savings Plan Account. Weigh Your Options. Depending on your income, assets, and situation in life the Thrift Savings Plan may not be the appropriate vehicle to save for Contribute as Much as Possible. Consider the Roth Option. Don’t Withdraw Early. Invest

Is Thrift Savings Plan a public pension?

If you work for the federal government or serve in the U.S. armed forces, you are eligible for the Thrift Savings Plan. Similar to 401k plans in the private sector, the TSP isn’t a pension plan. If you work in the public sector for a state, city or non-federal agency, you probably receive a pension plan.

About the Author

You may also like these