Participating in the TSP |
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Which members of the uniformed services are eligible to participate in the TSP?
Uniformed members of the Army, Navy, Air Force, Marine Corps, Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration serving on active duty, and members of the Ready Reserve or National Guard of those services in any pay status, may contribute to the TSP.
What are the basic rules for contributing to the TSP?
Member contributions:
Note: If you are a member of the Ready Reserve and you are already contributing to a TSP account as a civilian employee of the Federal Government, the sum of your contributions to the two TSP accounts during the same calendar year cannot exceed the applicable Internal Revenue Code contribution limit. In addition, civilian FERS employees who also contribute from Reserve pay should take care not to reach their contribution limit before the end of the calendar year or they will miss out on their civilian agency matching contributions.
Service contributions:
The law that extended the TSP to the uniformed services allows the secretary responsible for that service to designate critical specialties for matching contributions. Members serving in these specialties who agree to serve on active duty for 6 years may be eligible for matching contributions. The matching contributions are made during the 6-year active duty obligation. If you are eligible to receive matching contributions, your service will match your basic pay contributions dollar-for-dollar on the first 3 percent of basic pay you contribute and 50 cents per dollar on the next 2 percent of pay per pay period. (As of the date of this publication, matching contributions had not been authorized by any of the uniformed services.)
What kinds of pay can I contribute to the TSP?
You may elect to contribute basic pay, incentive pay, or special pay (including bonus pay) to the TSP. You must contribute basic pay to be eligible to contribute incentive pay or special pay (including bonus pay).
You may elect to contribute from basic pay, incentive pay, or special pay (excluding bonus pay) only during certain periods (upon becoming a member of the uniformed services and during open seasons). You may make an election to contribute from bonus pay at any time, however.
If you are not receiving incentive pay or special pay (including bonus pay) when you make your TSP election, you may elect to contribute from these types of pay in anticipation of becoming entitled to them. If you make such an election, the election will take effect whenever you receive the specified type of pay.
If you have not yet made a TSP contribution election, but you expect to become eligible for bonus pay and want to contribute some or all of it to the TSP, be sure to make a basic pay election before becoming eligible for the bonus pay.
When can I sign up to contribute?
Current members of the uniformed services may enroll in either of the two open seasons held each year. The two open seasons are April 15 through June 30 and October 15 through December 31.
New members of the uniformed services have 60 days after joining the service to enroll in the TSP. For the purpose of making TSP contribution elections, you are considered to have joined the uniformed services on the date you first became eligible to receive basic pay. In that case, your contributions to the TSP will generally begin the first pay period after your service accepts your TSP Election Form. After the initial 60 days, you may enroll only during the semiannual open seasons. (Because of cut-off dates for processing elections, your service will let you know the date your election will be made effective.)
If you are a member of the Ready Reserve and are called to active duty for a period of more than 30 days, you may elect to contribute to the TSP (or change the amount of your contributions) at any time within 60 days of your change in status.
If you leave active duty and enter the Ready Reserve, you may elect to contribute to the TSP (or change the amount of your contributions) at any time within 60 days of your change in status.
What if I rejoin the uniformed services?
If you rejoin the uniformed services or become employed as a Federal civilian employee after a break in service of 31 or more full calendar days, you can sign up to contribute to the TSP within 60 days of the date you rejoin or begin your Federal employment. You are considered to have rejoined the uniformed services on the date you again became eligible to receive basic pay.
If you rejoin the uniformed services after a break in service of less than 31 full calendar days and you were previously contributing to the TSP, your contributions should resume the first pay period after you rejoin or begin employment. You cannot change the amount of your contributions until the next open season. To ensure that your contributions resume properly, you should tell your service that you were previously contributing to the TSP. If you were not previously contributing to the TSP, you must wait until an open season to elect to contribute.
You should inform your service if you have any outstanding TSP loans so that loan payments can continue. You must also make up from your own funds any loan payments you have missed.
What if I am a member of the uniformed services and also a Federal civilian employee?
If you are currently both a member of the uniformed services and a Federal civilian employee, you may contribute to the TSP both as a member of the uniformed services and as a Federal civilian employee. For information on the TSP rules that apply to civilian employees, see the Summary of the Thrift Savings Plan for Federal Employees or see the civilian TSP Features on this Web site.
Separate Accounts. Your uniformed services account will be maintained separately from your civilian TSP account and you will be able to contribute to your uniformed services TSP account only from your uniformed services pay. Similarly, you will be able to contribute to your civilian TSP account only from your civilian compensation.
Because you will have two separate accounts, you will need to make contribution allocations for each account and, should you want to make an interfund transfer, you will need to request separate interfund transfers for each account. If you wish to designate a beneficiary, you will need to submit a separate beneficiary designation for each account. If you change your address you will need to instruct your civilian agency and your service to change the address for your applicable TSP accounts. If you are separated, you will need to send a separate change of address to the TSP Service Office for each amount. You will receive a separate participant statement for each account.
However, if you contribute to a uniformed services account and a civilian account,
Combining Accounts. Once you separate from either the uniformed services or Federal civilian service, you will be able to combine your TSP accounts by completing Form TSP-65 and sending it to the TSP Service Office. Your service or agency must notify the TSP that you have separated from service before you can combine your TSP accounts. Tax-exempt contributions (i.e., as a result of the combat zone tax exclusion) in your uniformed services account, however, may not be transferred to your Federal civilian account.
How do I start my contributions to my TSP account?
To start contributing to the TSP, ask your service for the TSP Election Form (TSP-U-1), download it from this Web site, or use your service's electronic version if one is available. Complete the form to show what percentage of basic pay, incentive pay, special pay, or bonus pay you want to contribute, and submit it to your service. Remember, you must be contributing from basic pay in order to contribute from incentive or special pay (including bonus pay). Your service will advise you of the effective date of your election.
Your service will deduct the amount you choose from your pay each pay period and will continue to do so until you submit another Form TSP-U-1 to stop or change the amount. Also, if you elect to contribute from a bonus, your initial election will remain in effect and cover any future installments of that bonus or any other bonus to which you become entitled. If this is not what you intend, you will need to terminate your bonus election once the contribution from the current bonus is complete.
What if I transfer to another service or become a Federal civil service employee?
If you transfer to another service, your new service should continue your contributions and loan payments, if any, without interruption. To avoid any delay, you should notify your new service TSP representative that you have been contributing to the TSP; you should also notify your service if you have a TSP loan.
If you separate from the uniformed services and become a Federal civil service employee covered by FERS, CSRS, or an equivalent plan, you may make a TSP contribution election within 60 days of your appointment or during a TSP open season. TSP accounts for Federal civil service employees are separate from those of members of the uniformed services. You may combine the tax-deferred money in your uniformed services TSP account with your new Federal civil service TSP account or maintain two separate accounts.
How do I change the amount of my contributions?
If you want to change the amount of your contributions from basic, incentive, or special pay, submit Form TSP-U-1 to your service (or use your service's electronic version, if one is available) during a TSP open season.
If you want to change the amount of your contributions from bonus pay, submit Form TSP-U-1 to your service at any time (or use your service's electronic version, if one is available).
How do I stop my contributions?
You can stop contributing to the TSP at any time by completing the appropriate sections of Form TSP-U-1 and submitting it to your service. Your contributions will generally stop no later than the end of the pay period in which your service accepts the form. Because of cut-off dates for processing elections, your service will advise you of the date your election will be made effective. The following rules apply to your termination request:
What is a contribution allocation?
A contribution allocation specifies the way contributions to your account will be invested among the five TSP funds. The contribution allocation applies to all future contributions, as well as loan payments and transfers of funds (or rollovers) from other plans into the TSP. It does not affect the money already in your account. (To change the way your existing account balance is invested, you must make an interfund transfer.)
Before you decide how to allocate your contributions, read "Your Investment Options."
How do I make a contribution allocation?
To specify the way you want your contributions to be invested, use this Web site or the ThriftLine, or submit Form TSP-U-50, Investment Allocation, to the TSP Service Office. (Do not submit Form TSP-U-50 to your service). If you have not previously invested in the F, C, S, or I Fund, you must acknowledge the risk of investing in these funds before you can proceed with your contribution allocation. To request a contribution allocation, follow the instructions and enter the percentages you want invested in each fund each pay period. Percentages must be stated in 1 percent increments and must add up to 100 percent. Whether you are using the Web site or ThriftLine, be sure to follow the instructions to confirm the percentages or your allocation will not be effective.
The Web site and the ThriftLine are the most efficient ways of making a contribution allocation. Contribution allocations generally will become effective within two business days of the date the TSP receives your request.
What if I do not make a contribution allocation?
If you have never made a contribution allocation, all contributions will be invested in the G Fund until you make a contribution allocation on the Web site or the ThriftLine, or submit Form TSP-U-50 to the TSP.
What are "catch-up" contributions?
Catch-up contributions are supplemental tax-deferred contributions available to TSP participants age 50 or older who are already contributing the maximum amount of regular TSP contributions for which they are eligible (that is, the maximum percentage allowed by TSP contribution limits for members of the uniformed services – 9% in 2004), up to the maximum IRS elective deferral limit ($13,000 in 2004). Catch-up contributions have their own annual limit ($3,000 in 2004; $4,000 in 2005; $5,000 in 2006; thereafter, increases will be indexed to inflation). Your catch-up contributions are invested in the TSP funds according to your most recent contribution allocation.
If you are eligible, you can submit an election at any time to make these contributions; you do not have to wait for an open season. Form TSP-U-1-C, Catch-up Contribution Election, will be available in the Forms & Publications section of this Web site or from your service. Some services may use an electronic version of the form — for example, MyPay. Check with your service TSP representative for guidance.
You can change, stop, or restart catch-up contributions at any time. Your contributions will automatically stop at the end of the calendar year or when you reach the maximum dollar limit for the year. You must make a new election each calendar year. If you are currently contributing to both a civilian and a uniformed services TSP account, you can make separate catch-up contributions to each account so long as the total for both accounts combined does not exceed the annual catch-up limit.
Your catch-up contributions are deducted from your taxable basic pay each pay period; therefore, you must be currently employed as a member of the uniformed services and receiving pay. As a member of the uniformed services, you may not make catch-up contributions from tax-exempt basic pay (earned while serving in a combat zone), or from bonus pay, special pay, or incentive pay. In addition, you may not be in the 6-month non-contribution period following receipt of a TSP financial hardship in-service withdrawal. For more information, read the TSP Fact Sheet “Catch-up Contributions.”
Can I transfer or roll over money from an existing retirement plan to the TSP?
Yes. Whether you are an active or a separated member of the uniformed services, you can transfer or roll over money from a traditional IRA or eligible employer plan into your existing TSP account. If you are separated from service, you can transfer money into your TSP account unless you have already made a full withdrawal of your account or are receiving monthly payments.
The TSP can only accept funds that are distributed from a traditional IRA or an eligible employer plan (or its designated financial institution). Also, the money that you are transferring or rolling over must be considered an "eligible distribution" under the Internal Revenue Code. If you are considering a transfer or a rollover, you should check with the administrator of the plan from which you wish to transfer the money (or your tax advisor) to ensure that the funds are eligible for transfer (or rollover).
Note: The TSP can only accept transfers or rollovers that consist of before-tax money. The money will be subject to income tax when it is eventually paid to you from your TSP account.
How do I transfer money into my TSP account?
There are two methods for transferring money into your TSP account from a traditional IRA or eligible employer plan. If you have not received the money from your former plan, but wish to have the IRA or plan transfer money directly to the TSP (also referred to as a "direct rollover"), you must complete Form TSP-U-60, Request for a Transfer Into the TSP, and certify that the distribution is eligible for transfer to the TSP then give it to the administrator of the IRA or plan so that the IRA or plan can certify that your distribution is from an eligible retirement plan. Your former plan can then send the completed Form TSP-U-60 and the funds to the TSP Service Office. In this situation, the money is transferred to the TSP before taxes are withheld.
If you receive the money from your former plan before you decide to transfer it into the TSP you can do a rollover. You will have 60 days to roll over the funds, beginning on the date you receive the funds. After that time, the distribution will not be eligible for rollover. You may roll over all or part of the distribution. However, because your former plan should have withheld the appropriate amount of taxes when it sent you the distribution, you will have to make up the difference from your own funds if you want to roll over the entire amount.
To roll over the distribution you received into the TSP, you must complete Form TSP-U-60. You must specify the date on which you received the distribution from your former IRA or plan and you must also certify that the distribution meets the requirements to be eligible for transfer to the TSP; then have the administrator of your former IRA or plan certify on the form that the funds were distributed from an eligible retirement plan and return the form to you. You must then submit the form to the TSP along with a personal check or money order. Checks or money orders must be made payable to the Thrift Savings Plan for the entire amount you are rolling over. The TSP must receive the form and the check within 60 days of the date you received the funds.
Whether you or your IRA or plan sends a check to the TSP, the check and other attached documents must have your Social Security number written on it to ensure that it is credited to the proper account. If the account cannot be identified, the check will be returned to the sender.
What happens to my transfer or rollover when it is deposited into the TSP?
The TSP will invest the funds according to your most recent contribution allocation, once a properly completed Form TSP-U-60 and a check or money order is received and processed. If you have not made a contribution allocation requesting a different allocation, the funds will automatically be invested in the G Fund.
These funds will be treated as member contributions, but they will not be subject to the IRS annual elective deferral limit. Once the money is received by the TSP, it will be available for the same purposes as the rest of your member contributions. It will not be segregated from the rest of the money in your account, and any elections (e.g., interfund transfers, withdrawals, etc.) you make will apply to your entire account balance, including the transferred money.
Transferred funds and rollovers will be subject to the same rules and regulations as any other member contributions to the TSP. For example, spouses' rights' rules affect all the money in your account, including money that was transferred or rolled over from an IRA or plan. In addition, because the money becomes part of your account, it can be subject to a court order against your account.
Whether you or your IRA or plan sends a check to the TSP, the check or any other attached document must have your Social Security number to ensure that it will be credited to the proper account. If the account cannot be identified, the money will be returned to the sender.
How do I designate beneficiaries for my TSP account?
To designate beneficiaries to receive your account in the event of your death, download Form TSP-U-3, Designation of Beneficiary, from the TSP Web site, or ask your service TSP representative for a copy of the form. If you have left service, you can also obtain the form from the TSP Service Office. If you do not file Form TSP-U-3, your account will be distributed after your death according to the order of precedence required by law.
Submit Form TSP-U-3 to the TSP Service Office at the address on the form. Do not submit Form TSP-U-3 to your service. Your beneficiary designation will not be valid unless it is received by the TSP record keeper on or before the date of your death. Follow the instructions on the form carefully. The TSP may not be able to honor an improperly completed form; mistakes may make your form invalid.
Mention of your TSP account in your will (or another document, such as a prenuptial agreement) has no effect on the disposition of your account after your death. A will is not a substitute for Form TSP-U-3. However, you can use Form TSP-U-3 to designate your estate or a trust to receive your TSP account.
You should review your designation of beneficiary whenever your personal situation changes (for example, as a result of marriage, birth or adoption of a child, or divorce). Your participant statement will show whether you have a designation on file and the date of your most recent designation. To cancel or change your designation of beneficiary, submit another Form TSP-U-3 to the TSP Service Office.
Remember, Form TSP-U-3 will apply only to your uniformed services account. Therefore, if you also have a civilian TSP account and you would like to designate a beneficiary (or beneficiaries) to receive money from that account, you must submit the civilian Form TSP-3, Designation of Beneficiary, to the TSP recordkeeper.