Changes

Both traditional and Roth TSP accounts are available for employee contributions; however, agency automatic and agency matching contributions are automatically deposited into a traditional account as they are tax-deferred contributions.  In addition the TSP allows, in some cases, rollovers from other employer defined contribution plans (but rollovers from IRA's are not allowed).

Both traditional and Roth TSP accounts are available for employee contributions; however, agency automatic and agency matching contributions are automatically deposited into a traditional account as they are tax-deferred contributions.  In addition the TSP allows, in some cases, rollovers from other employer defined contribution plans (but rollovers from IRA's are not allowed).

The TSP offers ten fund options, five of which operate like traditional index [[mutual fund]]s and five are "Lifecycle" (target-date) funds:

The TSP offers 15 fund options, five of which operate like traditional index [[mutual fund]]s and five are "Lifecycle" (target-date) funds:

*G (Government) Fund—invests in special government securities not offered to the general public; the return is specified by law as the weighted average yield of Government securities having at least four years until maturity.  This is the only fund where a positive return on investment (though not necessarily enough to keep up with inflation) is guaranteed as the securities are guaranteed by the "full faith and credit" of the US Government (all other funds require the employee to affirmatively acknowledge the potential risk of loss in the investment).<ref>From time to time G Fund securities issuance is suspended when the overall Federal debt ceiling is reached; in those cases, amounts are credited to the account as if activity was continuing; once the debt ceiling is lifted all amounts due plus accrued interest are paid.</ref>

*G (Government) Fund—invests in special government securities not offered to the general public; the return is specified by law as the weighted average yield of Government securities having at least four years until maturity.  This is the only fund where a positive return on investment (though not necessarily enough to keep up with inflation) is guaranteed as the securities are guaranteed by the "full faith and credit" of the US Government (all other funds require the employee to affirmatively acknowledge the potential risk of loss in the investment).<ref>From time to time G Fund securities issuance is suspended when the overall Federal debt ceiling is reached; in those cases, amounts are credited to the account as if activity was continuing; once the debt ceiling is lifted all amounts due plus accrued interest are paid.</ref>

*C (Common Stock) Fund—invests in the [[BlackRock]] Equity Index Fund, which attempts to match the total return version of the S&P 500.

*C (Common Stock) Fund—invests in the [[BlackRock]] Equity Index Fund, which attempts to match the total return version of the S&P 500.

*S (Small Capitalization Stock) Fund—invests in the BlackRock Extended Market Index Fund, which attempts to track the Dow Jones U.S. Completion TSM index.

*S (Small Capitalization Stock) Fund—invests in the BlackRock Extended Market Index Fund, which attempts to track the Dow Jones U.S. Completion TSM index.

*I (International Stock) Fund—invests in the BlackRock EAFE Index Fund, which attempts to track the net version of the MSCI EAFE index.

*I (International Stock) Fund—invests in the BlackRock EAFE Index Fund, which attempts to track the net version of the MSCI EAFE index.

*L (Lifecycle) Funds—invests in a specified mix of the five traditional funds.  Those funds with target years in the distant future have higher percentages of investments in the C, I, and S Funds, and as the target year approaches the percentages shift to predominantly in the G and F Funds.  Every ten years, in years ending in zero, the fund for that target year is merged into the L Income fund, and a new fund established.<ref>Current legislation has this changing, beginning in 2020, to every five years, consistent with target date funds offered in the private sector, but implementing regulations have not been established.</ref>  Unless a new employee chooses differently, s/he will automatically have all contributions established in an L fund based on an expected retirement date of 62.<ref>Beginning with the new funds, the L fund automatically chosen will be based on an expected retirement age of 63.</ref><ref>Members of the uniformed services have their contributions automatically placed in the G Fund unless chosen differently.</ref>

*L (Lifecycle) Funds—invests in a specified mix of the five traditional funds.  Those funds with target years in the distant future have higher percentages of investments in the C, I, and S Funds, and as the target year approaches the percentages shift to investments with higher percentages in the G and F Funds.  As of 2020 there are ten such Lifecycle funds established, the L Income Fund (primarily for retired employees who are withdrawing from TSP, though any TSP participant may invest) and nine funds for future retirees (named in five year increments, with the fund named for the upcoming year designed for employees close to retirement, and the fund named for the most-distant year designed for newer, younger employees; the current names range from L2025 to L2065).  Each fund for future retirees is designed for retirees planning to retire in that year, or two years on either side.  Every five years, in years ending in zero and five, the fund for that target year is merged into the L Income fund (with its assets shifted to those of the L Income Fund), and a new fund established with its name taking on the year 45 years after its establishment (e.g. in 2025 the L2025 Fund will be merged into the L Income Fund, and a new fund established which will be called the L2070 Fund).

Employees may move their existing and future contributions (each are handled separately) between funds.  In any calendar month the contributions may be moved as twice to whatever fund(s) are desired, but after that all movements are to the G Fund only.

Unless an employee or service member chooses a different fund upon entering Federal or military service, civilian employees will automatically have their contributions established in an L fund based on an expected retirement date of 63, while members of the uniformed services will automatically have their contributions established in the G Fund.  Employees may move their existing and future contributions (each are handled separately) between funds.  In any calendar month the contributions may be moved as twice to whatever fund(s) are desired, but after that all movements are into the G Fund only.

During employment an employee may take out a loan against his/her balance.  Two types of loans are available: a general purpose loan and a primary residence loan; an employee may have only one of each type outstanding.  The minimum loan is $1,000 and the maximum is $50,000 (a $50 processing fee applies and is included in the loan), with terms being five years for the general purpose loan and 15 years for the primary residence loan.  If married the spouse must consent.  Interest is charged at the current G Fund rate of return, and payments are made via mandatory payroll deduction (though additional payments outside of this process may be made).  Once a loan is paid off the employee must wait 60 days until another loan of that type is taken.  If the employee separates from civil service, the loan must be repaid within 60 days or it is considered taxable income.

During employment an employee may take out a loan against his/her balance.  Two types of loans are available: a general purpose loan and a primary residence loan; an employee may have only one of each type outstanding.  The minimum loan is $1,000 and the maximum is $50,000 (a $50 processing fee applies and is included in the loan amount), with terms being five years for the general purpose loan and 15 years for the primary residence loan.  If married the spouse must consent.  Interest is charged at the current G Fund rate of return, and payments are made via mandatory payroll deduction (though additional payments outside of this process may be made).  Once a loan is paid off the employee must wait 60 days until another loan of that type is taken.  If the employee separates from civil service, the loan must be repaid within 60 days or it is considered taxable income.

An employee also may make withdrawals against his/her balance.  These withdrawals are permanent reductions in the balance, and are subject to tax and early withdrawal penalties if applicable:

An employee also may make withdrawals against his/her balance.  These withdrawals are permanent reductions in the balance, and are subject to tax and early withdrawal penalties if applicable: