Thrift savings plans or TSP are tax deferred retirement savings and investment plans administered by the Federal Retirement Thrift Investment Board or FRTIB for federal employees. Thrift savings plans work on the same principle as 401 (k) plans offered by many private employers. All the employees who fall under the Federal Employees Retirement System or FERS and the Civil Service Retirement System or CSRS are eligible to participate in TSP. There are different requirements specified for both FERS and CSRS groups. Federal employees have to make voluntary contributions to their TSP accounts. Additionally, these contributions are not in any way considered a part of their regular FERS Basic Annuity or CSRS annuity contributions.
Thrift savings plans are also known as defined contribution plans, because the retirement income obtained from the TSP account depends on the contribution made by employees or their agencies during working years. The earnings accumulated through these contributions also affect the retirement income incurred. FERS employees are entitled to thrift savings plan as an essential part of their entire retirement package, besides the FERS Basic Annuity and Social Security plans. For CSRS employees, a thrift savings plan is not included as a necessary part of the retirement plan, but rather as a supplement to CSRS annuities.
FERS participants are allowed to contribute up to eleven percent of their basic salary into their TSP accounts. This option is available as soon as they join federal employment. Benefits such as Agency Automatic (1%) Contributions, Agency Matching Contributions and immediate vesting in these contributions are also simultaneously activated. CSRS participants are eligible to contribute up to 6 % of their basic salary to their TSP accounts, and they do not receive any agency contributions.
For all types of participants, thrift savings plans offer immediate employee contributions, before-tax savings and tax-deferred investment earnings, low administrative and investment expenses and a choice of five investment funds. These five investment funds are Government Securities Investment (G) Fund, Fixed Income Index Investment (F) Fund, Common Stock Index Investment (C) Fund, Small Capitalization Stock Index Investment (S) Fund, and International Stock Index Investment (I) Fund.
Related Articles of Interest :
-
Small Business Retirement Plans
10 August 2010 8:30 PM |
No Comments
Small business retirement plans are an ideal way for employers to retain employees and also set up a retirement account for themselves. The simplest retirement plan is the Simplified Employee Pension (SEP) plan. Though it is designed for self-employed individuals, partnerships, sole proprietors and independent...
-
401K Retirement Plans
10 August 2010 8:30 PM |
No Comments
A 401K plan is a retirement savings plan that is funded by employee contributions and a matching contribution from the employer. Contributions are made from pre-tax salary and the funds grow tax-free until they are withdrawn. Companies, non-profit and other tax-exempt organizations can establish these...
-
Medical Savings Account
10 August 2010 8:30 PM |
No Comments
A medical savings account is designed particularly to provide retirement benefits by maintaining an account that is used to pay for day-to-day minor medical bills. The plan makes available tax incentives to facilitate purchase of high deductible health insurance and simultaneously sustain an account to...
-
Retirement Plans
10 August 2010 8:30 PM |
No Comments
Retirement is one of life’s biggest worries and retirement plans play a crucial role in providing a source of income in a person’s retired years. Retirement can span up to a third of a lifetime. Retirement plans are much like saving for a 25-year vacation....
-
College Savings
10 August 2010 8:30 PM |
No Comments
The average cost of public, as well as private, education is rising rapidly. According to surveys, the cost of public education has gone up by 40 %. Looking at these trends, it can be safely concluded that the cost of education will continue to rise....
-
What Are The Different Kinds Of 401k Plans
10 August 2010 8:30 PM |
No Comments
There are several different types of 401 K plans to choose from. Funds can be invested into stocks, bonds, real estate, etc. Mutual funds take sums of money from many individuals and pool it together. Each person owns a share of the fund representing a...
-
Health Savings Account
10 August 2010 8:30 PM |
No Comments
A health savings account is a tax-free savings account similar to an individual retirement account. It is designed specifically to pay for medical expenses. These expenses are wholly tax-deductible for self-employed account holders. Cash from these accounts can be withdrawn effortlessly by using a check...
-
Employee Benefit Plans
10 August 2010 8:30 PM |
No Comments
A well-thought-out benefits package understands an employee’s needs and also keeps in mind the employer’s objectives. In prevailing market conditions, a competitive benefits package can serve as a nice recruitment tool and also act as an effective tool for employee retention. Basic benefit plans for...
-
Savings Bond
10 August 2010 8:30 PM |
No Comments
Savings bonds are a safe, risk-free investment guaranteed by the United States government. They offer a low-risk and modest return on investment. Unlike other investments, savings bonds guarantees against any loss on initial investment. Savings bonds are registered securities and can be replaced if lost...
-
Best Savings Accounts
10 August 2010 8:30 PM |
No Comments
Savings accounts are opened by individuals and maintained by banks, credit unions and other financial institutions. Savings accounts pay interest on money that is deposited in the account. However, the money held in the savings account cannot be spent directly, such as by writing a...