Thrift Savings Plan Archives

Table of Contents

The Internal Revenue Service has announced 2025 Thrift Savings Plan (TSP) contributions limits. The TSP is a retirement system for military personnel. It’s a plan that servicemembers pay into and can withdraw from in addition to their retirement pay.

In 2025, Thrift Savings Plan participants can contribute up to $23,500 in elective deferrals, according to the Internal Revenue Service. Participants age 50 and older can make an additional $7,500 contribution, for a total of $31,000. And starting in 2025, participants aged 60 – 63 can contribute an additional $11,250, for a total of $81,250.

The IRS announced the TSP contribution limit in early November of 2024.

The IRS bases Thrift Savings Plan contribution limit adjustments on the cost-of-living index and IRS regulations. The new TSP limits take effect on the first calendar day of the new year, Jan. 1, 2025.

2023-2025 Thrift Savings Plan Contribution Limits

Limit Type	2023	2024	2025	Plan	Description
Elective deferral limit	$22,500	$23,000	$23,500	IRC §402(g)	The Elective deferral limit applies to the combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone.
Annual addition limit	$66,000	$69,000	$70,000	IRC §415(c)	An additional limit imposed on the total of all contributions made on behalf of an employee in a calendar year. This limit is per employer and includes employee contributions (tax-deferred, after-tax, and tax-exempt), agency/service automatic (1%) contributions and matching contributions. For 415(c) purposes, working for multiple federal agencies and/or services in the same year is considered having one employer.
Catch-up contribution limit	$7,500	$7,500	$7,500 (ages 50 - 59) / $11,250 (ages 60 - 63)	IRC §414(v)	The catch-up contribution limit is the The maximum amount of catch-up contributions that can be contributed in a given year by participants aged 50 and older. It is separate from the elective deferral and annual additions limit imposed on regular employee contributions.

The Thrift Savings Plan is a retirement option for federal employees and military members, providing similar tax breaks and savings to those offered in the private sector under 401(k) programs.

Participants can contribute to a traditional or Roth TSP or split contributions between both accounts.

Thrift Savings Plan Contribution Limits: Elective Deferral Limit

In 2025, the elective deferral limit will increase by $500 to $23,500.

The elective deferral limit applies to the combined total of your contributions to Roth and traditional TSP programs.

Service members cannot contribute $23,500 to each program in 2025. The limit indicates the amount you can contribute to one or both TSP accounts.

This limit “includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay,” according to the Thrift Savings Plan website. However, elective deferral limits do not apply to “traditional contributions made from tax-exempt pay earned in a combat zone.

Thrift Savings Plan Annual Additions Contribution Limit

The annual additions limit will increase to $70,000 in 2025, up from $69,000 in 2024 and $66,000 in 2023.

If you’re under 50 years old, the annual additions limit applies to your elective deferrals, employer contributions, agency matching contributions and all other contributions made on your behalf.

The annual additions limit applies per employer. As long you work for a federal agency, the IRS considers you to have one employer.

Thrift Savings Plan Contribution Limits: Catch-up Contribution Limit aka Spillover Method

The catch-up contribution limit for employees and uniformed service members aged 50 – 59 remains at $7,500 in 2025, the same as in 2024.

Catch-up contribution limits are separate from elective deferral and annual addition limits.

New for 2025: Higher Catch-Up Limit for Ages 60 – 63

Starting in 2025, participants aged 60 – 63 will have a higher catch-up contribution limit of $11,250 – an increase from $7,500.

What Military Members Need to Know About Roth TSP Contributions

Roth TSP contributions are subject to the elective deferral limit, regardless of whether such contributions are from taxable or tax-exempt pay.

To contribute tax-exempt pay toward the annual additions limit, you must choose the traditional TSP option.

If you are eligible to make catch-up contributions and draw combat-zone tax-free pay, you cannot make a catch-up contribution to a traditional TSP. You must make it to the Roth TSP instead.

Rules for Guardsmen and Reserve Service Members Contributing to a Military and Civilian TSP

Contributing to a TSP and a civilian retirement plan does not exempt you from the annual limits.

If you contribute to both a military and civilian TSP account, the sum of your contributions to both accounts cannot exceed the total annual limit. Furthermore, reservists on active duty making TSP contributions from tax-exempt combat zone pay are subject to the annual additions limit.

Who Is Eligible to Contribute to the TSP?

Federal government employees (both military and civilian) are eligible to open and contribute to a Thrift Savings Plan. In general, applicants must be:

Federal Employees Retirement System (FERS) employees hired on or after Jan. 1, 1984
Civil Service Retirement System employees hired before Jan. 1, 1984, who did not choose to convert to FERS
Members of the U.S. military
Civilians listed as working in “certain other categories” of federal government service

If you had a break in service with the federal government, you may be able to resume your previous TSP account contributions if you were gone for 30 days or less. If you had a longer break in service, TSP will automatically enroll you in a new TSP.

If you did not enroll in the TSP before you left government service, you must enroll in the TSP when you return to begin making contributions.

Thrift Savings Plan Contribution Limit History

Year	Annual Contribution Limit	Max Catch-Up Contribution Limit	Annual Addition Limit	Annual Addition Limit With Catch-Up Contribution (ages 50 - 59 / 60 - 63)
2025	$23,500	$7,500 / $11,250	$70,000	$77,500 / $81,250
2024	$23,000	$7,500	$69,000	$76,500
2023	$22,500	$7,500	$66,000	$73,500
2022	$20,500	$6,500	$61,000	$67,500
2021	$19,500	$6,500	$58,000	$64,500
2020	$19,500	$6,500	$57,000	$63,500
2019	$19,000	$6,000	$56,000	$62,000
2018	$18,500	$6,000	$55,000	$61,000
2017	$18,000	$6,000	$54,000	$60,000
2016	$18,000	$6,000	$53,000	$59,000
2015	$18,000	$6,000	$53,000	$59,000
2014	$17,500	$5,500	$52,000	$57,500
2013	$17,500	$5,500	$51,000	$56,500
2012	$17,000	$5,500	$50,000	$55,500
2011	$16,500	$5,500	$49,000	$54,500
2010	$16,500	$5,500	$49,000	$54,500
2009	$16,500	$5,500	$49,000	$54,500
2008	$15,500	$5,000	$46,000	$51,000
2007	$15,500	$5,000	$45,000	$50,000
2006	$15,000	$5,000	$44,000	$49,000
2005	$14,000	$4,000	$42,000	$46,000
2004	$13,000	$3,000	$41,000	$44,000
2003	$12,000	$2,000	$40,000	$42,000
2002	$11,000	N/A	$40,000	$40,000
2001	$10,500	N/A	N/A	N/A
2000	$10,500	N/A	N/A	N/A
1999	$10,000	N/A	N/A	N/A
1998	$10,000	N/A	N/A	N/A
1997	$9,500	N/A	N/A	N/A
1996	$9,500	N/A	N/A	N/A
1995	$9,240	N/A	N/A	N/A
1994	$9,240	N/A	N/A	N/A
1993	$8,994	N/A	N/A	N/A
1992	$8,728	N/A	N/A	N/A
1991	$8,475	N/A	N/A	N/A
1990	$7,979	N/A	N/A	N/A
1989	$7,627	N/A	N/A	N/A
1988	$7,313	N/A	N/A	N/A
1987	$7,000	N/A	N/A	N/A

Written by Jon Rehagen

Jon Rehagan covers financial topics and military news, aimed at helping those who've served our country and everyday civilians

Table of Contents

The Thrift Savings Plan (TSP) is a retirement option for federal employees and military members. It is described by the government’s TSP official site as offering “the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.” It is administered by a government agency known as The Federal Retirement Thrift Investment Board, which is supported by private sector companies that provide call center support and other services.

TSP relies on member and employer contributions-the amount of money you have access to via TSP in your retirement years depends on how much you and your employer pay into the program. TSP is often discussed as a part of a larger financial plan for retirement-it can be quite helpful to think about TSP in this way. From the TSP official site:

“If you are covered by the Federal Employees’ Retirement System (FERS), the TSP is one part of a three-part retirement package that also includes your FERS basic annuity and Social Security. If you are covered by the Civil Service Retirement System (CSRS) or are a member of the uniformed services, the TSP is a supplement to your CSRS annuity or military retired pay.”

Who Is Eligible For TSP?

“Most employees” of the federal government are eligible to participate. This includes (but may not be limited to) the following categories in general:

A Federal Employees’ Retirement System employee hired on or after Jan. 1, 1984.
A Civil Service Retirement System employee hired before Jan. 1, 1984 who did not convert to FERS.
A member of the uniformed services including members of the Ready Reserve.
A civilian “in certain other categories of Government service” according to TSP.gov.

Additionally, you must be actively employed full or part-time in government service to be eligible to contribute.

Signing up for TSP involves filling out Form TSP-1 (available from the TSP official site) and Election Form TSP-U-1. Applying online is also possible via your agency or military branch’s electronic forms via EBIS, LiteBlue, myPay, or Employee Express.

TSP Login & Sign Up

When signing up for the Thrift Savings Plan, you will need to learn about the investment plan options for your funds, complete contribution allocation paperwork and set up an “interfund transfer”, and name a beneficiary for your funds should you die or become incapacitated. You can learn about how these procedures work at the TSP official website (www.tsp.gov).

Here is the Thrift Savings Plan Login.

Thrift Savings Plans Benefits

Low Fees – Expenses on the accounts are very low about 1/10th the average of a private mutual fund. For instance, the TSP C fund which tracks the S & P 500 consistently has one of the very lowest expense ratios as compared to other funds. This means more more money goes to the servicemembers bottom line.
Automatic Payroll Deductions.
Pre-Tax Contributions – TSP contributions are made before taxes are calculated.
Loan Programs – General purpose and first time home buyer loans are allowed. Repayment terms are typically 1 to 5 years.
Matching Contributions – Each branch of service may contribute matching contributions based on certain stipulations.
After Service Withdrawal – While servicemembers can no longer contribute they can leave their money in the TSP and continue to earn returns on it.

See the Thrift Savings Plan contribution limits.

Common TSP Retirement Terms

Agency/Service Automatic (1%) Contributions: Contributions equal to 1% of your basic pay made each pay period to your TSP account by your agency or service if you are a FERS or BRS participant. CSRS employees and non-BRS members of the uniformed services do not receive automatic contributions.

Agency/Service Matching Contributions: Contributions on the first 5% of pay you contribute every pay period if you’re a FERS or eligible BRS participant.1 The first 3% is matched dollar for dollar by your agency or service; the next 2% is matched at 50 cents on the dollar. This means that when you contribute 5% of your basic pay, your agency or service contributes an amount equal to 4% of your basic pay to your TSP account. Together with the Agency/Service Automatic (1%) Contribution you get, your agency/service puts in a total of 5%. Don’t miss out on this free money: be sure to contribute at least 5% to get the full match.

Annuity: A specified amount paid at regular, defined intervals for a set time period, often the remainder of your life. You can purchase either of two life annuity types through our annuity provider: 1) a single life annuity that provides a monthly benefit or amount only to you for as long as you live, or 2) a joint life annuity with your spouse or with someone other than your spouse. This is an irreversible choice and your TSP money leaves your account permanently. You should know that purchasing an annuity is not your only option for receiving monthly income. You can keep your money with the TSP and choose to get regular monthly payments either in fixed amounts or based on your life expectancy.

Compounding: A principle of investing that makes it possible for your retirement savings to increase exponentially. It allows you to make money not just on what you contribute to your TSP account each pay period, but also on the money that it earns. Compounding is most effective the more years it has to work, so it’s best to start saving as soon as you can and to save consistently.

Contribution Allocation: A choice you make that tells the TSP how future money going into your account should be invested among the TSP funds. You may be eligible for different contribution types and amounts based on your employment status, retirement plan, and age. It’s important to understand your options to maximize your TSP savings so you’ll have enough money at retirement.

Diversification: A strategy for reducing the risk of investing in a single industry/market sector by spreading the risk over various industries/market sectors. Investments that increase in value can help compensate for others that are not changing or decreasing and vice versa. In other words, diversification can help reduce risk and smooth out returns.

Interfund Transfer (IFT): An IFT allows you to redistribute all or part your money already in your account among the different TSP funds. Each month, your first two IFTs can redistribute money among any or all of the TSP funds. After that, for the remainder of the month, you can only move money into the Government Securities Investment (G) Fund. An IFT does not change the way new contributions, transfers or rollovers into the TSP, or loan payments are invested.

Investment Allocation:How to invest your savings in TSP funds. You can choose TSP funds for new money coming into your account with a “contribution allocation,” and you can change how you invest money currently in your account with an “interfund transfer.”

Required minimum distribution (RMD)—You can keep your savings in the TSP as long as you want, even after you separate from service. However, once you’ve separated from service, the Internal Revenue Code requires that you receive a certain portion of your TSP account beginning in the calendar year when you become age 72 (or age 70½ if you reach 70½ before Dec. 31, 2021).

Roth TSP Contributions: Contributions from your pay that have been taxed before they go into your TSP account. Because you pay the taxes on your contributions up front, you don’t pay taxes on that money or any earnings when you make withdrawals as long as you meet certain IRS requirements.

Target Date Funds: An asset mix that automatically changes to become more conservative as you get closer to your retirement “target date.” You determine your target date, sometimes called “time horizon,” based on when you expect to need your money.

Traditional Contributions: Contributions from pay that have not yet been taxed. These contributions are also referred to as “tax-deferred,” “pretax,” or “non-Roth” contributions. When you withdraw money from your retirement account later, you are taxed on the amount you take out. If you are a uniformed services member making tax-exempt contributions, your contributions will be tax-free at withdrawal but your earnings will be subject to tax.

Transfer or Rollover: This is how you move money from your other eligible retirement plans to your TSP account. Transferring eligible Roth or traditional savings to your TSP account allows you to take full advantage of the TSP’s low-cost funds, and we’ll help make the process simple.

Vesting: The time in service that you must have upon separation from federal employment to be entitled to keep any Agency/Service Automatic (1%) Contributions and associated earnings. Most FERS participants are vested in (entitled to keep) these automatic contributions after completing 3 years of service. BRS members and FERS employees in congressional and certain noncareer positions become vested after 2 years of service.

Withdrawal: This is how you receive money from your TSP account. You have flexible withdrawal options with the TSP, including single withdrawals, installment payments, and annuity purchases. You can use one of these methods or any combination of them that you choose. It’s important to plan ahead because withdrawals permanently reduce your account balance and may have different effects on your taxes.

Written by Veteran.com Team

The editorial team here at Veteran.com works to help the U.S. military community discover the many military benefits available to them. Our team is supported by our Veteran Review Board and its Standard of Care, which all content on Veteran.com is reviewed to meet.

Table of Contents

While military members may not have access to an employer’s 401(k) plan, they do have an outstanding alternative – the Thrift Savings Plan. This tax-advantaged retirement account provides service members an incredible savings opportunity. As such, we’ll use this article to provide an overview of some great Thrift Savings Plan strategies.

Specifically, we’ll discuss the following:

An Overview of the Thrift Savings Plan
Different TSP Tax Strategies: Traditional vs. Roth
The Ultimate TSP Tax Savings
The Lifecycle Fund Strategy
TSP Loan Options
Rolling Your TSP into a SDIRA
TSP Withdrawal Strategies
Final Thoughts

An Overview of the Thrift Savings Plan

Before discussing particular strategies, we need to first provide an overview of this retirement option.

The Thrift Savings Program, or TSP, provides military members and eligible federal employees an employer-sponsored retirement savings account. As a result, the TSP is loosely equivalent to the 401(k) plans offered by many civilian employers. More precisely, the TSP acts as a tax-advantaged, defined-contribution retirement plan. Simply put, this means that the TSP: A) provides tax benefits for retirement savings; and B) has a guaranteed government contribution on top of member contributions – on up to the first 5% of the pay you contribute each period (conversely, a pension has a guaranteed benefit).

And, like 401(k) plans, the TSP allows account holders to set up an automatic contribution for each paycheck, meaning you don’t need to think about retirement contributions – they just happen. Service members choose a percentage or flat amount of their paycheck, and that amount will automatically transfer into your TSP each pay period. Additionally, you can select an option to contribute between 1 to 100% of any incentive, special, or bonus pay, even if you’re not currently receiving them (though BAH and subsistence allowance contributions are prohibited).

Different TSP Tax Strategies: Traditional vs. Roth

With respect to tax-advantaged treatment, the TSP offers two options: traditional or Roth. With a traditional TSP, individuals get a tax benefit now. Every dollar you contribute to a traditional TSP reduces your current taxable income. Conversely, Roth TSPs provide a tax benefit later. You don’t reduce your current taxable income with contributions. But, every dollar you withdraw after retirement age (59 ½) comes out tax-free. This includes both the original contributions and the earnings on those contributions.

The Roth vs. traditional TSP decision largely depends on your thoughts on future taxes. If you believe you’ll be in a lower tax bracket in retirement, taking the tax savings of a traditional TSP now may make more sense. Conversely, if you believe you’ll be in a higher tax bracket in retirement, paying taxes now and withdrawing them tax-free later likely makes more sense.

The Ultimate TSP Tax Savings

When deployed in a combat zone or other select duty stations, service members receive tax-exempt pay. This sets you up for the possibility of triple tax savings. In particular, for Roth account holders, TSP contributions with tax-exempt pay offer the following savings:

No tax on TSP contributions
No tax on TSP account earnings
No tax on TSP withdrawals

Combine this with the fact that troops can contribute significantly higher annual amounts to their TSPs from a combat zone, and this strategy provides incredible tax saving potential.

The Lifecycle Fund Strategy

As military members, many of us don’t like to show vulnerability. That is, we don’t want to admit that we don’t understand something. But, from a personal finance perspective, it’s okay to admit that you’re not an expert! And, the TSP offers an outstanding retirement savings strategy for individuals without a solid grasp of investment fundamentals: lifecycle funds.

From a fund perspective, the TSP lets account holders choose between five different investment options. These five funds represent a variety of different categories of stocks and bonds. If you don’t know how you should balance your portfolio, that is, how you should allocate your money between these stock and bond funds, a lifecycle fund will do all the work for you. These funds target a particular retirement year (e.g. 2040, 2045, 2050, etc.) and automatically balance your portfolio with the optimal mix of stocks and bonds to meet that target retirement date.

Simply put, the TSP’s lifecycle funds let servicemembers “set it and forget it” when it comes to retirement savings.

TSP Loan Options

Many service members don’t realize this, but you can take a loan from your TSP account – a potentially solid strategy in the right situations. More precisely, the TSP allows account holders to take two different types of loans from their accounts – a residential loan and a general purpose loan. For both, you must repay the loan with interest. But, this interest is pegged to the current government fund (G Fund) rate – typically quite low. And, you repay this interest to yourself.

To qualify for a loan, you must still be an active service member. And, you can only have one of the two loan types outstanding at any given time. With that said, here’s a brief overview of each loan type:

TSP Residential Loan

For purchase or construction of a primary residence
Requires documentation
1- to 15-year repayment term

TSP General Purpose Loan

May be used for any purpose
No documentation required
Has a 1- to 5-year repayment term

While these loans do provide a low-interest borrowing option, TSP account holders should also consider what they lose with these loans. When you take money out of your account, you stop earning interest and dividends on those funds, meaning your account balance will be smaller in retirement. Consequently, carefully weigh this reality against your borrowing needs before taking a TSP loan.

Rolling Your TSP into a SDIRA

For separated service members looking for more flexibility in choosing investments, rolling your TSP into a self-directed individual retirement account, or SDIRA, may make sense.

An SDIRA is a unique type of IRA. Unlike their IRA counterparts, SDIRAs allow account holders to invest in a far broader range of asset classes. This represents the primary practical difference between normal IRAs and SDIRAs.

Like normal IRAs, SDIRAs serve as a form of tax-advantaged retirement account. More precisely, investors can choose between a traditional or Roth version, both of which offer unique tax benefits. With a traditional SDIRA, investors contribute pre-tax funds, which reduces your current taxable income. However, when you withdraw funds from your SDIRA in retirement, you’ll need to pay income taxes. Alternatively, you can opt for a Roth SDIRA. With these, you contribute post-tax funds. This means you don’t receive a current tax benefit, but you have the advantage of withdrawing tax-free funds in retirement.

For current TSP holders, the primary advantage to rolling funds from a TSP into an SDIRA involves investment options. More precisely, you can invest in alternative asset classes not available in the TSP or standard IRAs. Some of these investment options include:

Real estate
Precious metals
Closely-held companies
Real estate tax liens
Cryptocurrencies (e.g. Bitcoin, Ethereum, etc.)
Private loans

However, before making this move, TSP account holders should consider the associated fees. Due to the added complexity of these investment options, SDIRA custodians typically charge far higher fees than the low ones offered in the TSP.

TSP Withdrawal Strategies

When service members separate from the military, they do not need to close their TSP accounts. Instead, the federal government allows you to keep your account open for as long as you’d like. For many service members, this option makes sense for two primary reasons:

Low expense ratios: The available investment fund options in the TSP have extremely low expense ratios (amount you pay to hold the funds).
No account charge: You also do not need to pay the government any sort of administrative charge to keep your account open.

If you choose to keep your TSP account open after separating from the military, you have three withdrawal options once you reach retirement age (59 ½ years old):

Installment Payments

You can choose to receive payments from your account monthly, quarterly (every three months), or annually. Your payments will continue, unless you stop them, until your total account balance equals zero. There are two ways of setting the payment amount: payments of a fixed dollar amount and payments based on life expectancy. With the latter option, the TSP will calculate your distributions based on IRS life-expectancy tables.

Single Withdrawals

You can withdraw any amount of $1,000 or more from your account in a single payment. There is no limit on the number of single withdrawals you can make, but the TSP will not process more than one in any 30-day period. You are allowed to take a single withdrawal of part of your account even if you’re currently receiving the above installment payments.

Annuity Purchases

You can use all or part of your TSP account to purchase a life annuity through the TSP’s outside vendor. Purchasing an annuity means that you pay now to receive monthly payments that last for the rest of your life (or, if you choose a joint life annuity, the life of your joint annuitant). For people worried about running out of money in retirement, annuities can be a great, low-stress option.

Final Thoughts

The Thrift Savings Plan offers service members an outstanding, low-fee retirement plan. But, as with most financial planning topics, retirement savings must be tailored to an individual’s unique situation and needs. By reviewing the above strategies, you’ll be better suited to make the best TSP decisions to support your retirement goals.

Written by Veteran.com Team

The editorial team here at Veteran.com works to help the U.S. military community discover the many military benefits available to them. Our team is supported by our Veteran Review Board and its Standard of Care, which all content on Veteran.com is reviewed to meet.

2025 TSP Contribution Limits

2023-2025 Thrift Savings Plan Contribution Limits

Thrift Savings Plan Contribution Limits: Elective Deferral Limit

Thrift Savings Plan Annual Additions Contribution Limit

Thrift Savings Plan Contribution Limits: Catch-up Contribution Limit aka Spillover Method

New for 2025: Higher Catch-Up Limit for Ages 60 – 63

What Military Members Need to Know About Roth TSP Contributions

Rules for Guardsmen and Reserve Service Members Contributing to a Military and Civilian TSP

Who Is Eligible to Contribute to the TSP?

Thrift Savings Plan Contribution Limit History

Thrift Savings Plan

Who Is Eligible For TSP?

TSP Login & Sign Up

Thrift Savings Plans Benefits

Common TSP Retirement Terms

Thrift Savings Plan Strategies

An Overview of the Thrift Savings Plan

Different TSP Tax Strategies: Traditional vs. Roth

The Ultimate TSP Tax Savings

The Lifecycle Fund Strategy

TSP Loan Options

Rolling Your TSP into a SDIRA

TSP Withdrawal Strategies

Installment Payments

Single Withdrawals

Annuity Purchases

Final Thoughts