TSP explained! 2025 limits, Roth TSP, matching, fund strategies & rollover options. See full guide below!
What is TSP? A Complete Guide for 2025
TSP (Thrift Savings Plan) is a government-sponsored retirement savings plan for U.S. federal employees and military personnel. It functions similarly to a 401(k) but with significantly lower administrative fees and added government contributions, making it one of the most powerful retirement tools available.
2025 TSP Contribution Limits Updated
For 2025, the standard limit is $23,000 and catch-up contributions for those aged 50+ are $7,500. Combined, you can contribute up to $30,500 annually.
Traditional TSP vs Roth TSP: What’s the Difference?
Traditional TSP uses pre-tax income and is taxed at withdrawal. Roth TSP uses after-tax income and offers tax-free withdrawals. A blended strategy helps optimize taxes long-term.
Don’t Miss the Government’s Free Money – Matching Contributions
The government matches up to 5% of your salary. Not contributing up to the match means losing free money and missing 100% ROI instantly.
TSP Fund Options: Where Does Your Money Go?
G Fund, F Fund, C Fund, S Fund, I Fund, and L Fund offer diverse options. L Funds will be updated in 2025 for better retirement risk adjustment.
TSP Loan Options: Access Your Own Money Without Early Withdrawal Penalty
You can borrow from your TSP account with low interest rates. Loans are categorized into General or Residential purposes.
Early Withdrawal Rules & Exceptions
Withdrawals before 59.5 are penalized 10% plus taxes. Exceptions include disability, hardship, or IRS Rule of 55.
TSP Rollover Options After Leaving a Job
You can keep your funds in TSP, roll them into an IRA, or transfer them to a new employer’s 401(k). Each option has different pros and cons.
Combine TSP with an IRA for Maximum Benefit
TSP and IRAs can be used together for a more diversified and tax-efficient retirement portfolio.
Conclusion: TSP is Not Just a Retirement Option – It’s a Must
With low fees, matching contributions, and powerful investment tools, TSP should be central to your retirement strategy.
