The Savings Savings Plan ( TSP ) is a defined contribution plan for US civil servants and pensioners as well as for uniformed service members. As of August 31, 2017, there were over 5 million participants, and over $ 500 billion in managed assets.
TSP is one of three components of the Federal Employee Retirement System (FERS; the other is the FERS and Social Security annuity) and is designed to be very similar to the 401 (k) and Roth 401k (Roth TSP plan) dynamics implemented in May 2012). It is also open to employees covered by the older Employee Pension System (CSRS).
TSP is administered by the Federal Retirement Thrift Investment Board.
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The FERS employee is entitled to join TSP immediately after starting work and may join at any time thereafter. Prior to 22 June 2009, new employees must wait at least one year before receiving appropriate contributions (including Automatic Contribution Agencies); after this date, the employee is entitled to automatic contributions from the first day of the work, and immediately qualifies for the appropriate contribution after the employee begins to contribute to the TSP.
CSRS employees and uniformed service members can join at any time.
Maps Thrift Savings Plan
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Employee contributions
All FERS and CSRS employees and uniformed service members can contribute to the limits of the Internal Revenue Code, which is $ 18,500 for 2018. Contributions to FERS and CSRS for civil servants can be a certain amount of dollars per salary (but the amount will be adjusted after the annual IRC limit is reached) or percentage of revenues (but the percentage should be a full percentage, fractional percentage is not allowed), uniformed service members choose only payment percentages. (Prior to 2006 the contribution was limited to a certain percentage of payments.) Once the contribution is selected, it automatically updates annually on the same amount or percentage until the participant chooses otherwise. Beginning in September 2015, new employees will be enrolled in TSP with a 3% deduction of their gross salary deposited to the Lifecycle Fund by age unless they make another choice.
In addition, participants 50 years or older under FERS and CSRS, or uniformed services may also make a "pursue" contribution to the Code limits, which are $ 6,000 for 2017. Contributions earned are deferred taxes and allow age to be eligible for participants delay up to $ 24,000 (for 2017) on their TSP account. However, unlike regular TSP contributions, these elections are not automatically updated annually; employees should specifically make new elections every year.
Uniformed service members are allowed to contribute either from basic salary or from incentives, special, or bonus payments, but are subject to regular contribution limits. Uniformed service members who deploy to the designated battle zone are subject to battle zone tax exemptions, which allows for tax-free income to be earned. Contributions to TSP by uniformed service members in the combat zone were contributed to TSP as tax exempt, and earned tax-deferred income. The tax-exempt contribution is not subject to IRC elective delay limits, but is incorporated by the tax-deferred contribution made and subject to IRC section 415 (c) the annual addition limit of $ 54,000 (per 2017).
Participants who are civilian civil servants and members of uniformed services will have two separate TSP accounts if they choose to contribute temporarily in civil service and/or uniform status, but the total deferred tax contribution of both can not exceed IRC elective delays or pursue limits. In addition, the total deferred taxes, taxes and agency contributions made to both TSP accounts are subject to IRC Section 415 (c) restrictions of $ 54,000 (as of 2017). The resulting catch-up contributions (for one or both TSP accounts) are additional for elective delay limits and 415 (c). Participants may also roll out a 401 (k) or Individual Retirement Account (Traditional IRA only) to TSP.
Matched contributions
Employees under CSRS are not eligible for the appropriate contribution.
The suitable contribution for FERS employees is made dollars per dollar for up to 3% of basic salary, then at fifty cents per dollar for each additional percentage up to 5%. Thereby,
- An employee who contributes 3% of base salary will receive an additional 3% matching equivalent (dollar contribution contribution per dollar for 3% overall) plus an additional 1% automatic agency contribution. The total agency contribution is 4%. An employee who contributes 4% of the base salary will receive a corresponding 3.5% increase (dollar-per-dollar contributions in the first 3%, plus 0.5% for 4% contribution) plus an additional 1% automatic agency contribution. The total agency contribution is 4.5%.
- An employee who contributes 5% of his base salary will receive an additional 4% (dollar contribution per dollar in the first 3%, plus.5% for each fourth and fifth contribution (make 1% total)) plus automatic contribution 1% additional agency. The total agency contribution is 5%.
The FERS employee is automatically registered with a 3% contribution, but can change that amount at any time.
Contributions over 5 percent do not match, nor do they "pursue" matching contributions.
A uniformed service member is eligible to adjust contributions only if the secretary of the designated special service is thus. By 2017, no such special specialties have been established. However, in 2006, Congress enacted a law to sponsor a pilot program to offer suitable contributions to new active duty registries. The program is administered by the Department of the Army from 1 April 2006 to 31 December 2008. Participants eligible for TSP matching during this period (provided completion and return documents processed as initial registration) receive dollars for dollar matching contributions in the first three percent of their contribution of basic salary; and fifty cents for the next two per cent contributed during their first enrollment period.
vesting requirements
Employees of FERS must complete three years of Federal civil service to be fully granted in the agency's automatic contribution and any earnings thereon. Unless vesting requirements for suitable contributions are met
Investment options
Fund selection
TSP offers investors 10 funds to invest. Five are individual funds (one deals with government bonds and four others track specific market indices) while the other five are "Dana Lifecycle" designed to professionally change the mix of investment allocations among individual funds during different stages of employee federal services. All TSP funds are trust funds regulated by the Office of Financial Currency and not the Securities and Exchange Commission; thus, there is no ticker symbol to track actual performance (although with individual funds except the G Fund, comparable indexes are easily trackable).
Employees may choose from any or all individual funds or Lifecycle to invest (any allocation must be expressed as a percentage intact) and may change the allocation for the next payment period at any time (if the request is received before noon Eastern time is usually effective at the time of business closure that day, otherwise it will be effective on the next business day). If no options are made, the default is a 100 percent allocation into an age-appropriate Lifecycle Fund (L) (except for uniformed services whose default is Dana G). Since all funds except the G Fund have a potential risk of loss of principal, an employee is required to recognize this risk before investing into the fund.
Participants may also choose to change the percentage of their existing funds balance allocation (referred to as "Inter-Fund Transfer"). Prior to May 2008 participants may change the allocation as often as possible (limited to one per day) among all funds; from May 2008 participants are limited to two unlimited transfers per calendar month, all subsequent transfers must enter into G Fund only.
Individual funds
- G Fund - Government Securities Fund. These are unique government securities that are not available to the general public and are supported by full confidence and credit from the US Government. The G Fund is an initial fund established by TSP when it started operations on April 1, 1987.
- Fund F - Fixed Income Funds Fund. Invested in ASRock Debt Index Fund. Tracking the Barclays Joint Equity Index. F Fund was opened for Federal employees in January 1988 but limited to only a portion of the contribution; from January 1991 all restrictions on the contribution of Fund F were revoked.
- C Fund - Common Stock Index Fund. Invested in BlackRock Fund Equity Fund. Reproduce the total version of the S & amp; P 500. C Fund was also opened to employees in January 1988 and subject to the same restrictions as the F Fund until January 1991.
- S Fund - Small Capitals Capitalization Index Fund. Invested in Market Funds Expand the BlackRock Index, which tracks the TSM Index of Dow Jones U.S. Improvements S Fund was opened for employees in May 2001.
- I Fund - International Stock Index Fund. Invested in the BlackRock EAFE Index Fund. Replicate the net version of the MSCI EAFE index. The I Fund was opened for employees in May 2001.
Lifecycle Fund
In 2005, TSP introduced the Lifecycle Fund series. The purpose of the Lifecycle Fund is to enable the automatic reallocation of assets from riskier equity funds (C, I, and S Funds) into less risky funds (F and G Funds) as employees reach retirement age, as employees may lack time, interest , and/or expertise to determine appropriate investments at different stages of life.
The Life Cycle Fund is currently established, along with the appropriate date of retirement window, as follows:
- L2050 - Retirement date 2045 and thereafter
- L2040 - Date of retirement between 2035 and 2044
- L2030 - Date of retirement between 2025 and 2034
- L2020 - Date of retirement between 2015 and 2024
- Earnings - Individuals currently receive monthly payments
The L 2010 Fund has retired on December 31, 2010. Participants planning to approach retirement age can invest in L Income: its allocation is synonymous with the 2010 L fund in mid 2010.
Simulate TSP portfolio
Since CSR funds are not offered in the public market, it may be difficult to link TSP portfolios. However, most TSP funds track the well-known index and can be approached using cheap funds offered to the general public. Below is a list of Vanguard Exchange-Traded Funds (ETFs) equivalent to TSP funds in terms of their content. Please note that TSP funds have a much lower cost ratio than Vanguard funds.
- Dana C - VOO
- S Fund - VXF
- I Funded - VEA
- Dana F - BND
- G Fund - VGSH
TSPs can also be approached by tracking the ETF performance that each fund sought to match.
- C Fund -.INX (S & P 500)
- S Fund - DWCPF (Completion of Dow Jones U.S. Stock Market Indices)
- I Fund - MSCI EAFE (Index of MSCI EAFE (Europe, Australasia, Far East)
- Fund F - XIUSA000MC (Bloomberg Barclays US Savings Bond Index)
Dana L can be approached by mixing the above ETF. For example, the allocation of L 2050 funds can be simulated by a portfolio of 41.9% VOO, 24.9% VEA, 17.95% VXF, 9.77% VGSH, and 5.48% BND.
TSP withdrawal
While working
Loan program
There are two types of loans available (general purpose loans and loans for primary residence); employees can only have two active loans at one time, one from each type.
The minimum loan amount is $ 1,000 and the maximum is $ 50,000, but the employee must have sufficient assets in the account to take out the loan. The minimum period is one year; The maximum period is five years for general purpose loans and 15 years for resident loans. There is a $ 50 processing fee per loan. If an employee or a service member marries a spouse (even if separated) must approve the loan.
Loans must be paid back through payroll deductions (although employees may also make additional payments outside of this process) and the interest rate charged is the rate of return of Fund G at the time the application is processed. After payment, an employee must wait 60 days before applying for the same type of loan. If an employee separates from a federal service before the loan is paid, the employee must pay off the loan within 90 days or will be reported as taxable income.
Withdrawal in-service
Minimum withdrawal is $ 1,000 (or account balance, if smaller). For married FERS employees and uniformed service members, spouses must approve the withdrawal; for married CSRS employees, couples only need to be notified.
An employee over 59 ½ can request a "by age" withdrawal. Withdrawal is not penalized (other than income tax and loss of potential future earnings of investment); however, the employee can not request a partial post-employment withdrawal. An employee can only make one such withdrawal.
An employee may also request the withdrawal of "financial difficulties", limited to one of four special needs:
- negative monthly cashflow,
- medical expenses (including home improvement required for medical treatment),
- personal victim, or
- legal costs for separation or divorce.
Withdrawal of financial difficulties brings steep prices. In addition to the withdrawal of permanent funds (funds can not be paid to TSP) and permanent loss of potential future earnings on investment:
- employees can not contribute to TSP for the next six months and lose appropriate contributions during this time (however, employees will still receive automatic contributions); thus, the employee loses both the benefits of tax deferral and future earning potential,
- after six months, its contribution does not automatically renew; the employee must submit the document to update it, and
- the withdrawal is subject to income tax and, if the employee is under the age of 59Ã,½, withdrawal tax withdrawal early.
Withdrawal of financial difficulties can be done only once every six months.
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Federal employees who go for non-Federal employers can usually "roll" their TSP accounts into an IRA or retirement account with a new company.
Separate participants and retirees are not eligible for TSP loans.
After separation, any balance less than $ 200 (but at least $ 5) will be automatically withdrawn in one payment; the amount less than $ 5 is not automatically thawed and released to TSP, but the participant can then request payment. Participants then have 60 days to complete a rollover of funds to an account eligible to maintain their tax deferral status. There are no other options available in this situation. For participants who have a balance of $ 200 or more, after splitting, the following options are available (right pairs apply when the balance exceeds $ 3,500):
- A participant may request a partial withdrawal provided that 1) the balance is at least $ 1,000 and 2) the participant does not make an age-based withdrawal in the service.
- A participant can request full withdrawal in combination of any or all of the following options:
- Single payment,
- Monthly payment based on dollar amount or TSP request calculates lifetime payment, and/or
- A live annuity (provided there is at least $ 3,500 available in the account to purchase an annuity), based on one of several different features depending on what is chosen (single or joint life, benefits, cash refund or "10-year period ").
- A participant who requests a single payment and/or a certain monthly payment can roll their payments into an eligible pension account.
- A participant who receives a monthly payment can request changes in the dollar amount received each year, or switch from receiving payments based on a life expectancy TSP to receive the dollar amount each month. The remaining TSP accounts continue to accrue earnings and participants can either make interface transfers or change the allocation of contributions to the balance. TSP will also continue to receive rollovers from IRA or eligible packages while a participant receives monthly payments. At any time participants may contact the TSP to request the final single payment of the remaining balance.
- A participant may leave their funds in TSP but must withdraw the entire balance (or receive a monthly payment) before April 1 of the year after the member's year changes the age of 70Ã,½ (or, if members are separated from the Federal service after age 70½, after the breakup).
- If the withdrawal is not done at this time, the participant will be paid an annuity as required by law.
- If the participants do not provide information for TSP to purchase an annuity either for themselves or their partner, the account will be declared abandoned. Participants can then retrieve the account by selecting the withdrawal option, but as long as it is abandoned, the participant will not receive any earnings on the balance.
References
- The text of this article has been adapted from http://www.tsp.gov/uniserv/features/chapter01.html, a work of the United States government and thus in the public domain.
External links
- The TSP Official Page, administered by the Federal Pensioners Investment Board
- FRTIB.gov, the Federal Retirement Thrift Investment Board's official website
- Complete Information on Savings Savings, Tax Implications and Options Options
- The performance and risk characteristics of the TSP Investment Fund, updated daily by TSP Folio
- TSP Monthly Individual Fund Returns
- Summary of TSP Return Since Inception
- Daily price history of TSP funds.
- Official: Starting June 2003.
- Historical TSP Graphs and Returns, managed by TSP Center
- Daily TSP/Weekly/Monthly Returns are retained by TSP Talk
- Extended (before TSP startup funds) returns indexes tracked by TSP funds managed by the TSP Allocation Guide
- Mobile Tracking TSP Funds are managed by the TSP Simulator
- TSP Performance Guidelines: The Best TSP Fund Allocation Method is managed by the TSP Investment Strategy
- How to simulate TSP L 2050 funds using Vanguard ETFs, managed by Hello Money
Source of the article : Wikipedia
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