What Is the TSP and Who Qualifies?
The Thrift Savings Plan (TSP) is the retirement plan for federal government employees and military members, administered by the Federal Retirement Thrift Investment Board (FRTIB). It is the world's largest defined contribution plan, with over $900 billion in assets and more than 7 million participants.
FERS employees (Federal Employees Retirement System): Hired after 1983. Receive automatic 1% TSP contribution + matching up to 4% (5% total with your 5% contribution). TSP is a critical component alongside FERS pension and Social Security.
CSRS employees (Civil Service Retirement System): Hired before 1984. Have a more generous pension but receive no employer TSP match. Can still contribute to TSP up to the annual limit.
The 5 Core TSP Funds — Expense Ratios and Strategy
| Fund | What It Tracks | Expense Ratio | 10-Yr Avg Return | Best For |
|---|---|---|---|---|
| G Fund Government Securities | Short-term U.S. Treasuries (guaranteed no loss) | 0.055% | ~2.5% | Capital preservation; very close to retirement |
| F Fund Fixed Income Index | Bloomberg U.S. Aggregate Bond Index | 0.055% | ~2.1% | Bond allocation for diversification |
| C Fund Common Stock Index | S&P 500 (500 largest U.S. companies) | 0.055% | ~13.1% | Core equity holding; most popular TSP fund |
| S Fund Small Cap Stock Index | Dow Jones U.S. Completion Total Stock Market Index | 0.055% | ~11.8% | Small/mid-cap growth exposure |
| I Fund International Stock Index | MSCI EAFE Index (Europe, Australia, Asia) | 0.055% | ~5.4% | International diversification |
💡 The C Fund vs. Vanguard comparison: The TSP C Fund at 0.055% tracks the same S&P 500 index as Vanguard's VOO ETF (0.03%). Both are effectively free. This is extraordinary — federal employees have access to institutional-quality index funds at near-zero cost that most private-sector workers don't have without careful 401(k) fund selection.
Recommended TSP Allocation Strategies
Aggressive Growth (20–40 years to retirement)
80% C Fund + 20% S Fund. Maximizes U.S. stock market exposure. Some add 10–20% I Fund for international diversification. Zero bond allocation appropriate for long horizons.
Moderate Growth (10–20 years to retirement)
60% C Fund + 20% S Fund + 10% I Fund + 10% F Fund. Adds bond exposure for stability while maintaining equity growth. Classic balanced approach.
Conservative (Under 10 years)
40% C Fund + 15% S Fund + 10% I Fund + 35% G/F Fund. Shifts toward capital preservation. G Fund provides inflation-adjusted return with no market risk.
Lifecycle (L) Funds — Set It and Forget It
L Funds automatically adjust allocation as you approach retirement. L2040 for those retiring around 2040. Simple, diversified, zero management required.
Never Leave the FERS Match on the Table
FERS employees receive one of the most generous employer matching structures in any retirement plan:
| Employee Contribution | Automatic Gov't Contribution | Matching Contribution | Total Gov't Contribution |
|---|---|---|---|
| 0% | 1% | 0% | 1% |
| 1% | 1% | 1% | 2% |
| 3% | 1% | 3% | 4% |
| 5% (minimum recommended) | 1% | 4% | 5% — maximum match |
| 10%+ | 1% | 4% (capped) | 5% (capped) |
At a $70,000 salary, contributing 5% ($3,500/year) earns $3,500 in government match + $700 automatic = $4,200 in free contributions per year. Over 25 years at 7% average return, that $4,200/year grows to approximately $277,000 — all from money you never contributed yourself.
Frequently Asked Questions
- Federal Retirement Thrift Investment Board (FRTIB), TSP.gov — Fund performance, expense ratios, contribution limits 2026
- IRS, Retirement Plan Contribution Limits 2026 (irs.gov)
- SECURE 2.0 Act (Consolidated Appropriations Act, 2023) — Roth TSP RMD exemption, super catch-up
- Office of Personnel Management (OPM), FERS Retirement Guide 2026
- Plootus Research 2026
