The Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services. It works like a 401(k) with low-cost fund options (0.049% expense ratio), employer matching (up to 5% for FERS employees), and both traditional and Roth contributions.

How much should I contribute to TSP?

At minimum, contribute 5% to get the full employer match (that's free money). Ideally, contribute $23,500 per year (the 2026 maximum). The TSP offers some of the lowest fees of any retirement plan—lower than Vanguard, Fidelity, or Schwab.

What is the best TSP fund allocation?

The Lifecycle (L) funds are the easiest choice—pick the one closest to your retirement year and it auto-adjusts. For DIY investors, a common approach is 60% C Fund (S&P 500), 20% S Fund (small-cap), and 20% I Fund (international), adjusted for age and risk tolerance.

Thrift Savings Plan (TSP): The Federal Employee Retirement Guide (2026)

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.