As your [tax-deferred TSP] funds grow, so does the government’s share since it is a partner on your savings. But unlike a traditional business partner, Uncle Sam can increase his partnership percentage of your tax-deferred savings WHENEVER he needs more money, and that day is coming soon...
— Retirement Expert Ed Slott, CPA

The Thrift Savings Plan is a Retirement Savings accumulation vehicle available to Federal Employees.  It is a Defined Contribution Plan, similar to a 401(k), that offers 5 different investment funds, multiple Lifecycle funds, and employer matching up to 5% on Traditional and Roth combined contributions.  One of the main benefits offered by the TSP is a low cost of maintenance (relative to many corporate 401(k) plans) which is available because of the huge number of participants paying these fees, keeping the individual costs low.  Contributions made to one's TSP can either be made on a tax-deferred basis (Traditional Contributions) or made on an after-tax basis (Roth Contributions).  The employer match of up to 5% is only made into Traditional balances, regardless of how the employee designates personal contributions ( meaning the agency never contributes on an after-tax basis).  Traditional TSP Contributions are considered Qualified Funds which means that they will not incur Income Taxes until distributed from the TSP in your retirement - at potentially higher future Income Tax rates.




Know the TSP Funds: