THRIFT SAVINGS PLAN

Lisa Hayes

What is the Thrift Savings Plan (TSP)?

Retirement savings and investment plan FERS Employees

One part of 3 part retirement package

CSRS Employees/Uniform Service Supplement to annuity or retirement pay

A defined contribution plan

TSP Accounts – Traditional vs. Roth

Biweekly contributions deducted before taxes

Defer paying taxes on contributions and earnings until withdrawal

Matching contributions

Biweekly contributions deducted after taxes

Pay taxes on contributions as you make them

Earnings can qualify as tax-free upon withdrawal

No Matching contributions

Traditional Contributions (pre-tax)

Roth Contributions (after-tax)

Automatic Contributions

New/Rehired employees are auto-enrolled to contribute 3% of basic pay Hired after July 31, 2012

FERS employees enjoy 1% Agency contribution Agency money; not deducted from your

salary

Agency Contributions

Agency Automatic (1%) Contribution Equal to 1% of basic pay

Agency Matching Contributions (FERS employees) The Department matches up to the first 5%

First 3% matched dollar-for-dollar Last 2% matched 50 cents on the dollar

Not taken out of your pay

CSRS participants do not receive matching contributions

Employee Contributions

Regular employee contributions

Catch-Up contributions (employees 50 and older)

All contributions are made via payroll deductions

Elect, stop, change, or resume contributions at any time

2013 Employee Contribution Limits Yearly dollar amount contribution limits

Elected Deferral: $17,500 Applies to combined total of Roth and

Traditional contributions Catch-up Contribution: $5,500

Calculated by the IRS; can change each year

Vesting

Federal time-in-service requirement 3 years for FERS employees 2 years for Congressional and non-career

employees

Entitles you to Agency Automatic (1%) contributions and their earnings

All Federal civilian service counts Driven by TSP Service Computation Date

Compounding

Compounding is the most important part of your TSP Account growth.

Start Contributing Early

Immediate contributions $200 monthly

6% Rate of Return

40 Years of Investing

Account value at 65 $400,289

Waits 5 years to begin $200 monthly

6% Rate of Return

35 Years of Investing

Account value at 65 $286,367

Employee 1 – Age 25 Employee 2 – Age 25

Moving Money Into the TSP

Two methods to move money into your TSP account: Transfer or “direct rollover”

Rollover

Benefits include: Simplification

Low Administrative Costs

Easy Money Management

Methods of Moving Money

Transfer IRA or plan sends all or part of money

directly to TSP

Rollover IRA or plan send YOU the money and YOU

put it into the TSP yourself. You have 60 days from the date you receive

funds Roll over all or part of money you receive

Transfer/Rollover Eligibility

Must have an existing TSP account

The money must be considered an “eligible rollover distribution” for Federal income tax purposes

You can start a Roth balance with a transfer Must already have a traditional TSP account

Transfer/Rollover into Traditional

Tax-deferred money: Traditional IRA’s SIMPLE IRA’s Eligible employer plans

Use Form TSP-60 to transfer traditional money into TSP

Transfer/Rollover into Roth

Transfers of qualified and non-qualified Roth distributions from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s

Transfer of Roth funds will create a Roth account Must already have a traditional account

Use Form TSP-60-R to transfer Roth money into TSP

Investing in the TSP

The Lifecycle (L) Funds

Individual Funds

The Government Securities Investment (G) Fund The Fixed Income Index Investment (F) Fund The Common Stock Index Investment (C) Fund The Small Capitalization Stock Index (S) Fund International Stock Index Investment (I) Fund

G Fund

Invested in short-term U.S. Treasury securities

Rate set once a month by the Treasury Department

Interest income without risk of loss of principal

Managed by the Federal Retirement Thrift Investment Board

F Fund

Tracks the Barclays Capital U.S. Aggregate Bond Index Government-backed bonds Corporate-backed bonds Mortgage-backed bonds

“Debt Investing” Bonds Interest rates go down, bond prices go up

Value of the F Fund goes up leading to positive returns

C Fund

Replicates the Standard & Poor’s (S&P) 500 stock index 500 companies that represent the U.S. stock

markets

Contains many well-known household-name companies

GE Microsoft Exxon Mobil Coca-cola

S Fund

Tracks the Down Jones U.S. Completion Total Stock Market (TSM) Index

Contains all common stocks actively traded in the daily U.S. stock markets Except those in the S&P 500 index

Allows participants to invest in virtually the entire U.S. stock market by investing in both the C and S Funds

I Fund

Replicates the Morgan Stanley Capital International (MSCI) Europe, Australasia, and Far East (EAFE) Index

Broad international market index

Made up of primarily large companies in 22 developed companies

Share prices and returns reflect currency gains/losses

L Funds

Invested according to a professionally designed mix of stocks, bonds, and Government securities

Comprised of 5 existing (G, F, C, S, I) Funds

Based on a “time horizon” The future date you plan to begin

withdrawing money

L 2050 and L 2040 Funds

L 2050 Fund Time horizon 2045 and later

L 2040 Fund Time horizon 2035 thru 2044

Invested primarily in equities (C, S, and I Funds)

L Fund Investment Allocation

L 2040 Fund L 2050 Fund

4%9%

43%18%

26%

G Fund

F Fund

C Fund

14%

9%

39%

16%

22%

G Fund

F Fund

C Fund

L 2030 and L 2020 Funds

L 2030 Fund Time Horizon 2025 thru 2034

L 2020 Fund Time horizon 2015 thru 2024

Invested primarily in the G, C and I Funds

L Fund Investment Allocation

41%

7%28%

9%

16%

G Fund

F Fund

C Fund

L 2020 Fund L 2030 Fund

25%

8%

35%

13%

19%

G Fund

F Fund

C Fund

L Income Fund

For participants already or within 1 year of withdrawing their account

Objective is to achieve a low level of growth with high emphasis on preservation of assets

74%

6%

12%

3%5%

G FundF FundC FundS FundI Fund

TSP Loans: Basics

Borrow money from your account while employed Your own contributions and their earnings

Two types

Must repay loan WITH interest usually thru payroll deductions

FERS participants’ spouse must consent to TSP loan

Spouses’ Right apply

Cost of a Loan

$50 fee – deducted from loan amount disbursed

Interest Rate G Fund rate at time application is processed Fixed for life of loan Not tax deductible

Principal and interest repaid proportionally Both Traditional and Roth (if applicable)

TSP Loan Types

May be used for any purpose

Requires no documentation

Repayment term of 1 to 5 years

Purchase or construction of primary residence only

Requires documentation

Repayment term of 1 to 15 years

General Purpose Residential

Loan payments must start within 60 days of loan being disbursed.

Loan Limits

Minimum loan amount $1,000

Maximum loan amount is the smallest of: Your own contributions and earnings from

them;

50% of vested account balance or $10,000 (whichever is greater); OR

$50,000

In-Service Withdrawals

Financial hardship withdrawals

Spouses’ rights apply

Employee contributions terminate for 6 months No Agency Matching

Contributions

Age-based withdrawals

Age 59 ½ or older

Spouses’ rights apply

Eliminates post-service withdrawal option

Financial Hardship Withdrawal

Financial need must result from: Recurring negative monthly cash flow Medical expenses (unpaid or not covered) Personal casualty loss (unpaid or not

covered) Legal expenses from separation or divorce

from spouse

Request must be for at least $1,000

No documentation required

Age-based In-Service Withdrawal

Must be age 59 ½ or older

One-time withdrawal All or specific dollar amount of account

balance Minimum - $1,000

Can transfer all or a portion of withdrawal

Prohibit you from receiving a partial post-service withdrawal after separation

Spouses’ Rights

Loan and Partial Withdrawal FERS or Uniform Service participant

Spouse must give written consent on withdrawal form Spouses’ signature must be notarized

CSRS participant TSP must notify spouse in writing

Consent/Notice must be given regardless of amount

Spouses’ Rights

Full Withdrawal

FERS or Uniform Service participant Spouse entitled by law to a joint life annuity with:

A 50% survivor benefit, Level payments, and The no cash refund feature

Unless spouse waives their right on the withdrawal form

CSRS participant TSP must notify spouse in writing

Post-Service Withdrawal

Partial Withdrawal Withdrawal of at least $1,000 and leave the

rest One time only

Full Withdrawal Single payment TSP monthly payments TSP life annuity

Employees should use

calculators from the TSP website

to see if the monthly

payments or the annuity is the

best fit.

Death Benefits

Form TSP-3, Designation of Beneficiary Must be used to designate payment of account Participant responsible for submission to TSP

If TSP-3 is not received by TSP prior to death Account balance is paid according to Statutory

Order of Precedence

TSP will NOT honor a Will or any other document

Statutory Order of Precedence

In the event of death, there is no TSP-3 on file with TSP:

1. Spouse2. Natural and adopted children3. Parents4. Estate5. Next of Kin

Leaving Money in the TSP

No more contributions after separation Can transfer in from traditional IRA’s or

eligible employer retirement plans

Can continue to request interfund transfers

By April 1 after you turn 70 ½ and are separated You must begin receiving required minimum

distributions

Questions