The Thrift Savings Plan (TSP) is the third leg of the FERS retirement stool — and for many federal employees, it ends up being the largest source of retirement income. Yet a surprising number of federal employees leave free government money on the table every year by not contributing enough.
2025 TSP Contribution Limits
| Contribution Type | 2025 Limit |
|---|---|
| Employee elective deferrals | ,500 |
| Catch-up contributions (age 50+) | ,500 |
| Total if 50+ | ,000 |
| Total including government contributions | Effectively higher |
These limits apply to your contributions. The government’s automatic and matching contributions do not count against your limit.
The 5% Match — The Most Important Number
As a FERS employee, you receive two types of government TSP contributions:
1. Automatic 1% contribution: OPM contributes 1% of your basic pay to your TSP every pay period — regardless of whether you contribute anything. You vest in this after 3 years (or 2 years for congressional employees).
2. Matching contributions: Up to 4% more is matched dollar-for-dollar based on your own contributions.
Here’s how the match table works:
| Your Contribution | Government Match | Total into TSP |
|---|---|---|
| 0% | 1% (automatic) | 1% |
| 1% | 1% auto + 1% match = 2% | 3% |
| 3% | 1% auto + 3% match = 4% | 7% |
| 5% | 1% auto + 4% match = 5% | 10% |
| 6%+ | Still 5% government total | 11%+ |
The key takeaway: Contributing 5% gives you the full 5% government match for a total of 10% of your salary going into your TSP every pay period. Contributing less than 5% means you are leaving money behind.
Traditional vs. Roth TSP
You can split contributions between Traditional (pre-tax) and Roth (after-tax) TSP:
- Traditional TSP: Contributions reduce taxable income today. Withdrawals in retirement are taxed as ordinary income.
- Roth TSP: Contributions made with after-tax dollars. Qualified withdrawals in retirement are completely tax-free.
A common strategy: contribute Traditional while in your peak earning years (when your tax rate is highest), and shift some contributions to Roth in earlier or lower-earning years.
TSP Investment Funds
The TSP offers five core funds:
- G Fund: Government securities — zero credit risk but low returns
- F Fund: Fixed-income index
- C Fund: Large-cap U.S. stocks (mirrors S&P 500) — historically the highest-returning core fund
- S Fund: Small-cap U.S. stocks
- I Fund: International stocks
Lifecycle (L) Funds automatically adjust the allocation based on your target retirement year — a reasonable default choice if you do not want to manage allocations manually.
The Math of Missing the Match
Say you earn ,000 and contribute 0% to TSP. You miss:
- 1% automatic: /year free
- Up to 4% matching: up to ,800/year free
- Total missed annually: ,500
- Over 20 years at 7% growth: ~,000 in missed wealth
Contributing at least 5% is arguably the single highest-return action any FERS employee can take.
Combine your TSP with your FERS pension estimate using our FERS Calculator — it includes an optional TSP projection.