[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]The Thrift Saving Plan (TSP) is a kind of a retirement saving plan which is more like the popular 401(k) plan but with better terms. It was created by the Federal Employees Retirement System Act of 1986, with the aim of helping federal workers and the members of the military services.
This plan works as a contribution plan meant to offer the federal workers similar retirement benefits as those received by the private sector’s workers. Some of the benefits of TSP include agency matching contributions, catch-up contributions and as well as automatic contributions. With TSP, federal workers can make tax-deferred contributions. This means that the money that gets in their account will be tax-free until it is withdrawn. This way, it is right to say that the account has similar benefits as the 401(k) plans.
Savers are also eligible for saving in a Roth TSP. This allows them to make tax-free contributions to their saving plans while still getting the benefit of making tax-free withdrawals. The TSP and Roth TSP accounts provide up to six different kinds of funds where federal workers can invest their savings. These include the Fixed Income Index Investment Fund, the Small Capitalization Stock Index Investment Fund, the Government Securities Investment Fund, the Common Stock Index Investment Fund, the International Stock Index Investment Fund, and the specific lifecycle funds.
Unlike other saving plans, the TSP contributions entail no management fee, and it is the most preferred for individuals who are trying to save more by evading tax. The plan has shown incredible performance over the years. Probably the best benefit of TSP is that the government can match a military service member’s contribution for up to 5%. Also, the plan can be customized to meet the member’s needs.
All TSP participants are eligible to a loan program, tax deferral on their savings, in-service withdrawals for their later life precisely after the age of 59.5 years and five types of investment funds.
If you have questions about your own TSP plan, please reach out to a trusted financial advisor.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”34602″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
