2 Replies to “Is the thrift savings plan for military and government worth it?”

  1. Let’s put it this way..if you plan on staying with the government, you can’t afford not to invest – it is the retirement account for all government workers hired after 1983 – no TSP, no retirement. The TSP does not pay interest – it is the same as a 401(k) where your account appreciates depending upon how your investments perform. However, the government matches your contributions at a rate of dollar for dollar up to 3% of your pay and 50 cents on the dollar for the next 2%, so if you contribute 5% of your pay, it is like 80% interest automatically.

  2. Yes, it’s worth it! As for how much you will earn, that depends on how your contributions are allocated. The TSP works just like a 401(k) plan. The plan is funded in pre-tax dollars, and you pay ordinary income tax on all withdrawals. In the meantime, all principal and growth is tax deferred, so money that would otherwise go toward taxes remains in the plan to grow. Also, the government is testing the feasibility of a matching contribution. This means FREE money toward your retirement!

    Also, like any tax qualified retirement plan, it can be rolled over into a self-directed IRA upon retirement or separation, so it can continue to grow tax deferred until your real retirement.

    ADDED: If Steve D is correct, and I suspect he probably is, the government has approved the matching contribution. With this in mind, there’s no excuse for not participating. You can’t beat free money!

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