What IS the Thrift Savings Plan?

• The Thrift Savings Plan (TSP) is the federal government’s version of a 401(k), a retirement savings account that allows you to invest money in now, so it grows over time.
• For service members in the Blended Retirement System, the TSP is an integral part of your retirement package, complete with automatic contributions and potential matching from the Department of Defense.

Why the TSP Matters for Military Members

• Retirement investing can be confusing. The TSP is designed to simplify planning, offering low fees, simple investment options, and the flexibility to continue contributing whether you’re stateside, deployed, or transitioning out of the service.
• Since your career path may include PCS moves, breaks in service, or early separation, the TSP gives you a portable, long‑term financial foundation that stays with you no matter where the military sends you.

How does the TSP work?

• Think of it as a partnership between you and your future self.
• You choose how much to contribute from your paycheck, and that money goes into your TSP account.
• If you’re in the Blended Retirement System, the DoD also contributes automatically and may match part of what you put in.
• Over time, your contributions and investment growth compound, meaning your money earns money.

What are my contribution options (Traditional vs. Roth)?

• The TSP offers tax-advantaged savings in two ways:
  • Traditional TSP: You don’t pay taxes on the money now, the money grows tax-deferred, and you pay taxes on the amount contributed and the growth when you withdraw it in retirement.
  • Roth TSP: You pay taxes on the contribution amount now, and the investment grows tax-free. Withdrawals in retirement are tax‑free if you follow the rules.
• Both options can be smart—it just depends on your situation and goals.

What are the TSP investment funds?

• The TSP keeps things simple.
• Instead of hundreds of choices, you get a small menu of funds that represent different parts of the market.
• These include the G, F, C, S, and I Funds, plus the Lifecycle (L) Funds that mix them automatically based on your target retirement date.

What does each TSP fund invest in?

• Here’s a quick overview of the different fund options, what each invests in, the level of risk, and how the funds have performed over the past decade:
• Each fund represents a different “slice” of the market and mixing them helps balance risk and reward.

How do the Lifecycle (L) Funds work?

• L Funds are “set it and forget it” options.
• You pick the fund closest to the year you expect to retire, and it automatically adjusts your mix of investments over time—more growth when you’re younger, more stability as you get closer to retirement.

How do I choose the right TSP fund for my goals?

• Start with two questions:
  • How long until I need this money?
  • How comfortable am I with ups and downs in the market?
• Longer timelines usually allow for more growth‑focused funds (C, S, I).
• Shorter timelines or lower risk tolerance lean toward more conservative options (G, F).
• L Funds are a great middle ground if you want simplicity.

How much should I contribute to my TSP?

• A good starting point is enough to get the full DoD match if you’re in the Blended Retirement System.
• From there, increasing your contribution by even 1% each year can make a huge difference over time.
• Investing early in your career enables greater growth opportunities.
• The key is consistency.

What happens to my TSP if I PCS, deploy, or leave the military?

• Your TSP stays with you.
• You can keep contributing while deployed, and if you separate or retire, the account remains yours.
• You can leave it where it is, roll it into another retirement account, or start withdrawing in retirement, typically age 59 1/2.

How do I check or change my TSP allocations?

• You can log into your TSP account online and adjust your contributions or investment choices anytime.
• It’s quick, and even small changes can help you stay aligned with your goals.

What mistakes should I avoid?

• A few common ones:
  • Not investing at all.
  • Leaving money on the table by not contributing enough to receive the government match.
  • Putting everything in the G Fund because it “feels safe.”
  • Forgetting to update contributions after a PCS or promotion.
  • Trying to time the market.
• Slow, steady, and consistent usually wins.

How can the TSP help me build long‑term wealth?

• The combination of low fees, matching contributions, and decades of compound growth makes the TSP a powerful engine for your financial future.
• Even modest contributions can grow significantly over a military career.

Where can I learn more or get help?

• The TSP website is the go-to source for TSP information.
• Your installation’s financial readiness office and Military OneSource are excellent sources for personalized TSP assistance.
• The more you understand, the more confident you’ll feel about the choices you’re making.

Find Out More with My Military Savings and Finances!

What is TSP? – The Thrift Savings Plan (TSP) is the retirement savings and investment vehicle for federal government employees and members of the uniformed services. Established by Congress in 1986, the TSP offers a service similar to private sector 401k plans. It allows you to set aside money for retirement in a wide selection of funds to meet your savings goals, timeframes, and risk tolerance.

How much can I contribute? – Employees and military members may contribute up to $23,000 in 2024. If you’re 50 or older you may also contribute additional “catch-up” contributions of up to $7,500. Military members assigned to a tax-exempt zone can make traditional tax-exempt contributions. The total that may be made is $69,000 including Traditional and Roth contributions, employer/agency matches, and tax-free combat zone contributions. The $69,000 does not include any catch-up contributions.

Is my contribution matched? – Military members who are enrolled in the Blended Retirements System (members with a Date of Initial Entry into Military Service (DIEMS) date of January 1, 2018, or later or eligible members with a DIEMS date of December 31, 2017, or earlier who elect (opt in) to be covered by BRS) will receive an automatic contribution of 1% of their basic pay from the DoD beginning 60 days from enrollment. After two years of service, the DoD will also match the service member’s contribution through the end of their 26^th year of service. The DoD matches your contribution dollar for dollar for the first 3% then 50 cents per dollar for the next 2%.

What are my investment options? – TSP offers five different types of individual funds, each with its own objectives, risks, and associated expenses. TSP also offers 10 different Lifecycle Funds that are mixes of the five individual funds, based on your anticipated retirement date, and managed to periodically grow less aggressive and more conservative as you approach retirement like how commercial target date funds work.

Individual Funds

G Fund – Government Securities Investment Fund – The objective is to ensure the preservation of capital and generate returns that are higher than what you can get through short-term U. S. Treasury securities. This is the safest of the funds because the fund’s principal and interest are guaranteed by the U. S. Government. This investment carries inflation risk, the possibility that the returns will not keep pace with inflation and reduce purchasing power.

F Fund – Fixed Income Index Investment Fund – The objective is to generate higher returns than available in short-term securities like the G Fund by investing in debt instruments like bonds issued by governments and corporations to generate income. The fund is designed to match the performance of the Bloomberg U. S. Aggregate Bond index. Bond investments carry market risk because the investments can fluctuate in value, credit default risk because the issuer may not be able to pay their debt, and inflation risk because the earnings may not be enough to offset inflation.

C Fund – Common Stock Index Investment Fund – This fund aims to offer the opportunity to gain from the equity ownership of stock in a broad market of large and mid-sized U. S. companies. The fund is designed to match the performance of the Standard and Poor’s (S&P 500) Index. This fund has market risk as the value of stocks rise and fall and inflation risk if the investments do not outpace inflation.

S Fund – Small Cap Stock Index Investment Fund – The objective of this fund is to offer the opportunity to experience the gain from the equity in small to mid-sized U.S. companies. This fund is designed to match the Dow Jones U. S. Completion Total Stock Market Index. As with other stock-based investments, this fund also carries market and inflation risk.

I Fund – International Stock Index Investment Fund – This fund offers the opportunity to invest in the ownership of non-U. S. companies and represents many developed countries. This fund’s objective is to match the returns of the MSCI EAFE (Europe, Australasia, Far East) Index. Risks include currency risk, the fluctuation of the value of foreign currencies in relationship to U. S. currency as well as market and inflation risk.

Lifecycle Funds

There are 10 Lifecycle Funds, each with a diversified mix of the five individual funds designed to get the best-expected return for the risk appropriate for your age. The 10 funds are named for the target year closest to your retirement date: 2025, 2030, 2035, 2040,2045,2050,2055,2060, and the L Income Fund. Once the year of the fund date is reached, the funds are rolled into the L Income Fund. Funds are reallocated each quarter to a lower-risk profile.  

What are the taxability options? – There are two types of tax treatment for your TSP, regardless of which funds you select, Traditional and Roth. Traditional contributions are made pre-tax and reduce your taxable income in the year of the contribution.  Traditional contributions reduce your current year’s tax in the year of contribution and grow tax-deferred until withdrawal when all withdrawals, including contribution and growth, are taxed in retirement. Roth contributions are made with after-tax dollars, do not offer a tax break, but grow tax-free until retirement. Roth withdrawals are not taxed in retirement.

Find Out More with MyMilitarySavings.com and Finances!