Saving for Retirement: TSP Contribution Allocations and Interfund Transfers

Saving for Retirement: TSP Contribution Allocations and Interfund Transfers—What’s the Difference?

August 15, 2012
by Miriam Darden Settles, CFP®
Federal Retirement Thrift Investment Board

Contribution allocations and interfund transfers are transactions that you can make so that your TSP money is invested in the funds that you want.  What’s the difference between the two?  One directs the new money coming into your account, while the other lets you move around the money that’s already in your account.

Let’s take them one at a time.

Contribution Allocations
If you want to tell the TSP how you want new money coming into your account to be invested, you’ll want to make a contribution allocation.  New money could be your employee contributions, money that you transfer into your TSP account from other plans, or any TSP loan repayments that you make.  But remember, a contribution allocation will not affect the money that’s already in your TSP account.

You can make or change your contribution allocation at any time, but there’s one thing you should know:  If you have traditional and Roth money in your TSP account, you won’t be able to make a separate contribution allocation for each balance.

[Note:  A contribution allocation does not enroll you in the TSP.  You enroll through your service, not the TSP, by using your service’s electronic payroll system or by completing the TSP election form, TSP-U-1, and turning it into your payroll office for processing.  You must be enrolled before you can make contribution allocations and interfund transfers.] 

Interfund Transfers
Now let’s talk about the money that’s already in your TSP account.  If you want to move that money around, you’ll need to make an interfund transfer.

An interfund transfer allows you to redistribute all or part of your existing TSP account among the different TSP funds.  An interfund transfer does not affect the investment of future deposits into your TSP account. 

You can make an interfund transfer at any time, but there are some important rules to remember:

  • Your first two interfund transfers of any calendar month may be used to redistribute money in your account among any or all of the TSP funds.
  • After that, any additional interfund transfers that you make in the same calendar month can only move money into the G Fund.

If you have both a uniformed services and a civilian account, these rules apply to each account separately.  If you have both traditional (including tax-exempt) and Roth money in your TSP account, your interfund transfer will move a proportional amount from each type of money into the funds that you indicate. 

How to Make Your Request
To make contribution allocations and interfund transfers you can either go to the TSP website or call the TSP (1-TSP-YOU-FRST).

To make your request online, simply log into the My Account section from the home page.  You’ll need your TSP account number (or custom user ID) and your password.

If you prefer to call the TSP, you’ll need your TSP account number and your 4-digit personal identification number (PIN).

You will receive a confirmation of your transaction in the mail.   However, if you make your request online, you will have the option of receiving your confirmation via e-mail. 

For more information about the TSP and the investment funds available, visit us at www.tsp.gov.

Further reading:

Contributing to the TSP: A Few Simple Steps
Roth TSP: More Questions and Answers
TSP Rolls Out Roth In May
Inertia - It Can Work for You or Against You, Which Will You Choose?

Tip of the Day

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