Contributing to the TSP:  A Few Simple Steps

by Miriam Darden Settles, CFP®
Federal Retirement Thrift Investment Board

You’ve heard about the Thrift Savings Plan (TSP), but are you still sitting on the sidelines not contributing?  If so, what are you waiting for?  Don’t miss out on the opportunity to save for your retirement with what is widely regarded as one of the finest retirement savings plans in the world. The sooner you start, the sooner you’ll be able to reap the rewards of participation.

Remember that saving for your retirement with the TSP makes sense no matter how many years you plan to serve in the military.  If you go the full 20 or longer, you’ll have your TSP income as a supplement to your military retired pay.  If you don’t plan to serve that long, you can take a big step now in securing your financial future.

How Do I Get Started?
You first have to sign up with your payroll office.  You cannot sign up on the TSP website because your payroll office, not the TSP, calculates your contribution based on the information you provide them, makes the appropriate adjustments to your pay and tax withholding, and submits your contribution to the TSP. 
You will sign up using your service’s electronic payroll system.  For most members of the uniformed services, that system is myPay.  Or, if an electronic payroll system is not an option, you can complete the Thrift Savings Plan Election form, TSP-U-1, which can be found on the TSP website, or you can call the ThriftLine (1-TSP-YOU-FRST) and request it.  However, if you use the form, you will have to turn it in to your payroll office for processing—do not send it to the TSP.
When you sign up, you will tell your payroll office what type of contribution you’d like to make (traditional (pre-tax), Roth (after-tax)*, or both), and the amount you want contributed from each type of pay you receive (i.e., basic, incentive, special, and/or bonus).

What Happens Next?
Initially, your TSP contributions will automatically go into the TSP’s default investment fund—the Government Securities Investment (G) Fund.  With the G Fund, there is no risk of loss to your principal because it is guaranteed by the U.S. Government.  It also pays interest at a rate that changes monthly.
Keep in mind that, depending on your financial goals, risk tolerance, and time horizon, the G Fund may not necessarily be the most appropriate place to put all of your TSP retirement savings.  With the G Fund, you’re not participating in the stock market and the returns that U.S. and international companies of all sizes may potentially deliver over the long term.  So if you’re just starting out in your career and you have decades ahead of you before retirement, it might make sense to take on the extra risk to have a chance to earn higher returns than what the G Fund pays.

How Do I Change the Way My Contributions are Invested?
It’s easy; you just have to make a contribution allocation. When you make a contribution allocation, you tell the TSP where you want the new money coming into your account to go.  New money could be your payroll deducted employee contributions, money that you transfer from other plans, or any TSP loan repayments that you make.
You can direct new money to a single TSP fund or any combination of the 10 available funds.  The TSP has a selection of five individual funds that offer broad diversification, from short-term U.S. Treasury securities (the G Fund), to domestic and international equity index funds.  It also offers five Lifecycle Funds (L Funds) which are a professionally designed mix of stocks, bonds, and Government securities geared toward a specific time horizon.  For more detailed information about the TSP fund options, including associated risks and performance histories, visit the TSP website at  You can access Investment Funds from the home page.
Participating in the TSP could not be any easier.  It just requires a couple of simple steps on your part.  Once you take those steps, you’ll be joining 4.6 million other Federal employees who already know that the TSP is one of the paths to a secure and comfortable retirement.

*The TSP began accepting Roth contributions on May 7, 2012; however, you should check with your payroll office to see if its system is ready to accommodate the Roth TSP option.

For more information on the TSP:
TSP Rolls Out in May
Roth TSP: More Questions and Answers
Inertia: It Can Work For You or Against You, Which Will You Choose?

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