Description: The following passage mainly focuses on tsp login, in which the author covers the topics of what your TSP is, how it works, some of the resources that you can find on the tsp.gov website and how to make changes to your TSP with your contributions and allocations.
We’re going to spend some time talking about the Thrift Savings Plan, this is one of the three parts of your retirement program, we’re going to cover the topics of what your TSP is, how it works, we are going to guide you through some of the resources that you can find on the tsp.gov website which is the clearinghouse of information for this program.
We’re also going to coach you through how to make changes to your TSP with your contributions and allocations, TSP is a savings based portion of your retirement plan, this is our first visit to the TSP.gov website, we got plan participation, we’ll explain to you that.
This is a program based on your savings, the government matching contributions and how you invest those, first you need to consider why you’re participating, you’re automatically participating but you need to manage that participation.
You’re likely going to need more than an annuity to retire, if you worked for 30 years and had a high three average $50,000 a year, your annuity would work out to be about $15,000 per year, add Social Security to that, you can survive on in a retirement.
The saving is how you’re going to supplement them, the government offers matching contributions depending on how much you choose to contribute, there are tax advantage both current and future based on how you configure your thrift savings plan. This is based on your contributions.
You are the active manager of this program, you’re going to get out of it, you need to know what you put into it and how you decide to manage them, we’re going to discuss two distinct parts of the Thrift Savings Plan, think about it as a savings plan and an investment plan.
The first part is your contributions which are how much you save and in what type of account, this is how you reap the tax benefits and also the matching that the government will offer you, the second part is the investment portion which are the allocations.
This is where that money is being invested, once you’ve decided to save it, you have choice of government securities, stocks or lifecycle funds, you can realize the tax benefits of your TSP by deciding into what type of account you’d like to make your savings.
If you visit tsp.gov, plan participation, eligibility and contributions, traditional and Roth contributions, you’ll find this icon, anytime you find these small camera icons, you’ll know that there’s a video on tsp.gov that’s going to help you understand this particular concept.
For account types traditional in which you’re automatically enrolled at the beginning, you’re making pre-tax contributions, but you will pay tax at the time of distribution, Roth options allow you to make post tax contributions now but you don’t pay tax at the time of distribution.
Your agency makes contributions to your thrift savings plan as well depending on how much you put in, there will be agency matching contributions, regardless of how much you put in, the agency will automatically contribute the equivalent of one percent of your salary to your TSP plan.
Then the government will match up to the first three percent that you contribute dollar for dollar, if you put in a dollar, they put in a dollar, the government will match the fourth and fifth percents that you choose to contribute with fifty cents on the dollar.
If you’re contributing five percent, the agency is automatically contributing one percent, they’re matching it with four percent, your total contribution will be ten percent, you can contribute more than five percent to your TSP, the government will only match up to five percent.
Let’s take a moment to review a few key points, you are automatically enrolled making a three percent contribution to a traditional account, if you wish to increase your contribution or if you wish to change to a Roth account, you must make this decision, you can make these changes through employee express or by submitting TSP one form to the agency.
Agency matching will automatically go into a traditional account even if you choose to make your contributions to a Roth account, there’s also a vesting period to consider, there is no vesting for the agency matching, that’s the up to five percent matching.
However, for the agency automatic one percent, there’s a three-year vesting period, if you look at your TSP annual statement, there will be a TSP service computation date, that’s where the beginning time for that three-year period is. If you separate before achieving three years, you would lose the agency automatic one percent.
There are also some contribution limits, you have an $18,000 a year contribution limit, if you’re over 50 years old, you also have the option to make up to $6,000 in catch-up contributions, there are no matching funds for catch-up contributions, but it is an additional amount that you can put into your TSP plan.
The reason that you don’t want to reach these limits too early in the year is if for example you reach the $18,000 limit in November, you would not receive any matching contributions for the rest of the year, you can go to the tsp.gov website, under planning and tools you’ll find several different calculators, these calculators will allow you to figure out whether or not you’re on track to exceed your contribution limit early in the year.
Here’s a good example of an earnings statement where you can find different information about the TSP elections that you’ve made, this top area up here will tell you whether you’re making a Roth or a traditional contribution and in what dollar amount or percent.
In the deduction section it will tell you how much you’ve been contributing to your TSP both for the current and total year-to-date, in the final section benefits paid by the government, you’ll be able to see how much the agency matching is valued for that pay period and how much the agency automatic 1 percent has been.
They’ll also give you year-to-date values for these amounts, we’re going to switch gears and talk about your allocation options, this is where the money is invested once you’ve decided to save it, there are two key features here.
You’ll need your TSP account number to log in and change your allocations, you’ll receive this account number in the mail a few weeks after you’ve become eligible to participate, National Park Service does not have this account number and cannot give it to you.
You can visit the TSP website before that and start looking at your investment fund up options, the TSP website is large and full of information, I recommend you spend 10 or 15 minutes a week here looking through the different options and information available, it’s a lot to take on at one time.
Work at building your financial literacy, move forward from there, on the TSP website, go to plan participation, look at contribution and allocation, it takes you to another video which is extremely helpful explaining the difference between contribution and allocations.
That’s new money flowing into your TSP, interfund transfers is where you can move money that’s already in your TSP account from one savings plan to another, that camera icon will take you to an extremely helpful video to explain these concepts.
These videos are not very long, they are about 3 minutes, there are also videos covering other topics, I highly recommend you to invest the time watching these videos, you can start exploring the funds available to you even before you have your TSP account number.
Go to the website, under investment funds you’ll find several different options you have, let’s take a look at one of the lifecycle funds as an example, click on lifecycle funds, this will bring us to the example of the life cycle 2040, it gives you monthly returns, annual returns, growth charts.
You can make your decisions by comparing the returns on these programs, lifecycle funds is where you pick time horizon and future and where you think you’re likely to retire, pie charts will show you based on the timeframe how that money is going to be allocated.
You can move this slider forward or backwards, it will tell you how that allocation is going to change over time, you can see in April 2019 the C fund has decreased its percentage and the G fund has increased, if you move farther forward to 2029, you can see how those allocations have changed as well.
You are the active manager of these funds, initially you’re invested in the G fund, that’s government security, if you need more growth than that in order to be able to retire comfortably, you are going to have to make these changes, you can review your annual participant survey, there’s a guide to understand that on the TSP website.
It’s going to tell you how your money is grown and also how it’s invested, finally let’s close with the beneficiary form, if you pass away, they want to know to whom you would like your funds to go, please remember when you are completing this form, do not return this to your agency.
Return it directly to the Thrift Savings Plan, the address and fax number are provided for you, you’ll need to wait for that account number to arrive in the mail before you can complete this form, TSP account number in the mail is the TSP account number you use to complete the form.