The Thrift Savings Plan is one of the best retirement plans in the country, thanks to rock-bottom fees and generous matching. Here’s how to make the most of it.
2026 TSP Contribution Limits
| Category | Limit |
|---|---|
| Employee elective deferral | $23,500 |
| Catch-up contribution (age 50+) | $7,500 |
| Catch-up contribution (age 60-63) | $11,250 |
| Total employee contribution (under 50) | $23,500 |
| Total employee contribution (50+) | $31,000 |
| Total employee contribution (60-63) | $34,750 |
TSP Matching (FERS Employees)
| Your Contribution | Agency Automatic (1%) | Agency Match | Total to Your Account |
|---|---|---|---|
| 0% | 1% | 0% | 1% |
| 1% | 1% | 1% | 3% |
| 2% | 1% | 2% | 5% |
| 3% | 1% | 3% | 7% |
| 4% | 1% | 3.5% | 8.5% |
| 5% | 1% | 4% | 10% |
| 6%+ | 1% | 4% | 11%+ |
At 5% contribution, you get a total of 10% of your salary going to retirement (your 5% + 5% from the government).
The Cost of Not Maximizing the Match
| Salary | Contributing 0% | Contributing 5% (with match) | Money Left on Table |
|---|---|---|---|
| $50,000 | $500/yr (1% auto) | $5,000/yr | $4,500/year |
| $75,000 | $750/yr | $7,500/yr | $6,750/year |
| $100,000 | $1,000/yr | $10,000/yr | $9,000/year |
Over 30 years at 8% growth, leaving $4,500/year on the table costs over $510,000 in retirement savings.
TSP Fund Options
| Fund | What It Tracks | Expense Ratio | 10-Year Avg. Return |
|---|---|---|---|
| G Fund (Government Securities) | Government bonds (guaranteed principal) | 0.049% | 2-3% |
| F Fund (Fixed Income) | US Aggregate Bond Index | 0.049% | 1-3% |
| C Fund (Common Stock) | S&P 500 Index | 0.049% | 10-13% |
| S Fund (Small Cap) | Completion Index (small/mid-cap stocks) | 0.049% | 8-11% |
| I Fund (International) | MSCI EAFE Index (international developed) | 0.049% | 4-7% |
| L Funds (Lifecycle) | Target-date blend of above funds | 0.049% | Varies |
The TSP’s 0.049% expense ratio is among the lowest in the world. A typical 401(k) charges 0.50-1.00%.
Fee Comparison: TSP vs. Others
| Plan | Expense Ratio | Annual Fee on $500,000 |
|---|---|---|
| TSP | 0.049% | $245 |
| Vanguard (average) | 0.06% | $300 |
| Fidelity (index) | 0.015-0.04% | $75-$200 |
| Average 401(k) | 0.50% | $2,500 |
| Financial advisor fund | 1.00% | $5,000 |
TSP Fund Allocation Strategies
Simple Approaches
| Strategy | Allocation | Best For |
|---|---|---|
| Lifecycle Fund | L2060, L2050, etc. (set and forget) | Most people |
| Aggressive growth | 60% C + 20% S + 20% I | Young investors (20+ years to retirement) |
| Moderate | 50% C + 15% S + 15% I + 20% F/G | Mid-career (10-20 years) |
| Conservative | 30% C + 10% S + 10% I + 50% G/F | Near retirement (under 10 years) |
Traditional vs. Roth TSP
| Feature | Traditional TSP | Roth TSP |
|---|---|---|
| Tax on contributions | Pre-tax (reduces current taxable income) | After-tax (no current tax break) |
| Tax on withdrawals | Taxed as ordinary income | Tax-free (if qualified) |
| Required Minimum Distributions | Yes (starting at 73) | No (starting 2024 per SECURE 2.0) |
| Best if | In higher tax bracket now | In lower bracket now, expect higher later |
| Employer match goes to | Traditional (always) | Traditional (even if you choose Roth) |
The Bottom Line
The TSP is one of the best retirement plans available, with the lowest fees in the industry (0.049%) and a generous 5% employer match. At minimum, contribute 5% to capture the full match—anything less is leaving free money on the table. For most people, a Lifecycle (L) fund matched to your expected retirement year is the simplest and most effective allocation strategy. Consider Roth TSP contributions if you expect to be in a higher tax bracket in retirement.