Question 1

What is the TSP (Thrift Savings Plan)?

Accepted Answer

The TSP is a retirement savings and investment plan for federal employees and members of the uniformed services. It's similar to a 401(k) plan in the private sector and offers tax advantages for retirement savings. The TSP provides various investment funds and contribution options to help federal employees build retirement wealth.

Question 2

How does TSP growth work?

Accepted Answer

TSP growth occurs through compound interest on your contributions and employer matching. Your contributions are invested in TSP funds, and the returns compound over time. The TSP offers various investment options including lifecycle funds, individual funds (G, F, C, S, I), and the ability to choose between traditional (pre-tax) and Roth (after-tax) contributions.

Question 3

What is the TSP employer match?

Accepted Answer

Federal employees receive automatic agency contributions of 1% of salary plus matching contributions up to 4% of salary. The total employer contribution can be up to 5% of salary. This matching is free money that significantly boosts TSP growth over time. Employees must contribute at least 5% of salary to receive the full employer match.

Question 4

How do I calculate TSP growth?

Accepted Answer

TSP growth is calculated using compound interest formulas that consider your current balance, monthly contributions, employer matching, expected annual returns, and time to retirement. The calculation projects your future TSP balance based on consistent contributions and investment returns over your remaining career.

Question 5

What are TSP contribution limits?

Accepted Answer

For 2024, the TSP contribution limit is $23,000 for employees under 50 and $30,500 for employees 50 and older (including catch-up contributions). These limits apply to employee contributions only and don't include employer matching contributions. The limits are adjusted annually for inflation.

Question 6

What is the difference between traditional and Roth TSP?

Accepted Answer

Traditional TSP contributions are made with pre-tax dollars, reducing your current taxable income, but withdrawals in retirement are taxed. Roth TSP contributions are made with after-tax dollars, so withdrawals in retirement are tax-free. The choice depends on your current tax rate versus expected retirement tax rate.

Question 7

How do TSP loans affect growth?

Accepted Answer

TSP loans reduce your account balance and potential growth because the borrowed amount is no longer invested. While you pay interest back to yourself, you miss out on potential market gains. TSP loans should be used carefully and paid back as quickly as possible to minimize impact on long-term growth.

Question 8

What is a good TSP growth rate?

Accepted Answer

Historically, TSP funds have averaged 6-8% annual returns over long periods. The G Fund (government securities) typically returns 2-3%, while the C Fund (S&P 500) has averaged around 10% over long periods. A diversified TSP portfolio might expect 6-7% annual returns, but this varies based on your investment allocation and market conditions.

Question 9

When can I withdraw from my TSP?

Accepted Answer

You can withdraw from your TSP without penalty after age 59½, upon separation from federal service, or in certain hardship situations. Early withdrawals before age 59½ may incur a 10% penalty plus taxes. TSP offers various withdrawal options including lump sum, monthly payments, and annuities.

Question 10

How much should I contribute to my TSP?

Accepted Answer

Financial experts recommend contributing at least enough to get the full employer match (5% of salary), then increasing contributions as much as possible up to the annual limit. Many advisors suggest contributing 10-15% of salary for a comfortable retirement. The key is to start early and contribute consistently to maximize compound growth.

Year	Age	Balance	Contribution	Growth
1	36	$71,500	$18,000	$3,500
2	37	$94,505	$18,000	$5,005
3	38	$119,120	$18,000	$6,615
4	39	$145,459	$18,000	$8,338
5	40	$173,641	$18,000	$10,182
6	41	$203,796	$18,000	$12,155
7	42	$236,061	$18,000	$14,266
8	43	$270,586	$18,000	$16,524
9	44	$307,527	$18,000	$18,941
10	45	$347,054	$18,000	$21,527

Category	Item	Amount	Description
Current TSP Status	Current Balance	$50,000	Current TSP account balance
Current TSP Status	Monthly Contribution	1000	Employee monthly contribution
Current TSP Status	Employer Match	500	Employer matching contribution
Current TSP Status	Total Monthly Contribution	$1,500	Combined monthly contribution
Growth Projections	Projected Balance	$1,486,479	Projected TSP balance at retirement
Growth Projections	Total Contributions	$500,000	Total contributions over time
Growth Projections	Total Growth	$986,479	Investment growth over time
Growth Projections	Annual Return	7	Expected annual return rate
Retirement Income	Monthly Income	$4,955	Projected monthly retirement income
Retirement Income	Annual Income	$59,459	Projected annual retirement income
Retirement Income	Replacement Ratio	330.3287047868469%	Income replacement percentage
Retirement Income	Withdrawal Rate	4%	Annual withdrawal rate
Additional Factors	Catch-Up Contributions	0	Additional catch-up contributions
Additional Factors	Loan Balance	0	Outstanding TSP loan balance
Additional Factors	Tax Rate	22%	Expected tax rate in retirement

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