Types of Contributions

There are two types of employee contributions:

• Regular employee contributions (including automatic enrollment contributions)
• Catch-up contributions (for participants age 50 or older)

Regular Employee Contributions

You can begin making regular employee contributions at any time. These are payroll deductions that are made from your basic pay. Each pay period, your agency or service will deduct your contribution to the TSP from your pay in the amount or percentage that you indicated when you submitted your contribution election information.

Your agency or service will continue to deduct your contribution until you:

• Make a new election changing the amount, or
• Elect to stop your contributions, or
• Reach the IRS contribution limit, or
• Take a financial hardship withdrawal.

For more information, visit Contribution Limits.

Catch-Up Contributions

You can begin making catch-up contributions at any time beginning in the year you turn 50. Catch-up contributions are also deducted from your pay. To be eligible to make catch-up contributions, you must expect to contribute the maximum amount allowed of regular employee contributions for the year to the TSP or to an equivalent tax-deferred employer plan, such as a private sector 401(k) or nonprofit 403(b) employer plan.

Your catch-up contributions will stop automatically when you reach the catch-up contribution limit or at the end of the calendar year, whichever comes first.

For more information, visit Contribution Limits.

A Note for Members of the Uniformed Services

If you are a member of the uniformed services,

• You can also contribute from 1 to 100 percent of any incentive pay, special pay, or bonus pay — as long as you also elect to contribute from your basic pay.
• You can elect to contribute from incentive pay, special pay, or bonus pay, even if you are not currently receiving them. These contributions will be deducted when you do receive any of these types of pay.
• You cannot contribute from sources such as housing or subsistence allowances.
• If you are receiving tax-exempt pay (i.e., pay that is subject to the combat zone tax exclusion), your contributions from that pay will also be tax-exempt. You may also contribute more of your pay to the TSP during the year.
• Be aware that if you do contribute tax-exempt pay, your total contributions from all types of pay must not exceed the Internal Revenue Code (I.R.C.) section 415(c) annual addition limit for the year. This limit does not include catch-up contributions you may make during the year.
• You cannot make catch-up contributions from tax-exempt pay, incentive pay, special pay, or bonus pay.

For more information, visit Contribution Limits.

If you are a FERS employee, your agency will contribute an amount equal to one percent of your basic pay each pay date to your TSP account. These are called Agency Automatic (1%) Contributions. There is no waiting period and you do not need to be making employee contributions to receive them. Your Agency Automatic (1%) Contributions will be automatically invested in the Government Securities Investment (G) Fund until you make a different choice.

Agency Automatic (1%) Contributions are not taken out of your pay and they do not decrease the dollar amount of your pay for income tax purposes.

A Few Words About Vesting

Agency Automatic (1%) Contributions are subject to vesting rules. You are vested in (entitled to keep) all of your Agency Automatic (1%) Contributions, as well as any earnings that they accrue, after a certain period of Federal service.

Most FERS employees become vested after having completed 3 years of service. For those in Congressional and certain other noncareer positions, the service requirement is 2 years. All Federal civilian service counts towards vesting.

If you leave Government service before satisfying the vesting requirement, the Agency Automatic (1%) Contributions and their earnings will be forfeited to the TSP. If you die before separating from service, you are automatically considered vested in all the money in your account.

If you are a FERS employee, you will receive Agency Matching Contributions from your agency based on your regular employee contributions. There is no waiting period but you do have to make regular employee contributions each pay period to receive them. Matching Contributions are not subject to vesting requirements.

As a FERS participant, you receive matching contributions on the first 5% of pay that you contribute each pay period. As the table below shows, the first 3% of pay that you contribute will be matched dollar-for-dollar; the next 2% will be matched at 50 cents on the dollar. Contributions above 5% of your pay will not be matched. If you stop making regular employee contributions, your matching contributions will also stop.

Like Agency Automatic (1%) Contributions, matching contributions are not taken out of your pay. They also do not decrease the dollar amount of your pay for income tax purposes. Combined with the Agency Automatic (1%) Contribution, they can add as much as 5% of basic pay per pay period to your TSP account.

A Note for Members of the Uniformed Services

Currently, members of the uniformed services do not receive Matching Contributions. However, the law that extended participation in the TSP to members of the uniformed services allows the secretary of each individual service to designate critical specialties as eligible for Matching Contributions under certain circumstances.