Federal Employee Resource · Updated for 2025
Thrift Savings Plan
Complete Retirement Guide
Everything federal employees need to know about their TSP: funds, contribution strategies, withdrawal options, and how to coordinate TSP with FERS and Social Security.
The 6 TSP Investment Funds
The TSP offers 5 individual funds plus a suite of Lifecycle (L) funds that automatically blend them based on your target retirement date.
Capital preservation; near-retirement allocation
Bond diversification; moderate income
Core growth; broad US market exposure
Small/mid-cap growth alongside C Fund
International diversification
Set-it-and-forget-it; auto-rebalancing
The TSP Agency Match — Free Money You Can't Ignore
FERS employees receive one of the best matching contributions in the country. Here's exactly how it works:
The 1% automatic contribution is deposited by your agency regardless of whether you contribute anything. Contribute at least 5% to receive the full match — anything less is leaving money on the table.
TSP Withdrawal Options at Retirement
You have several ways to access your TSP at or after retirement. Most retirees combine strategies.
Single payment
Take all your TSP as a one-time lump sum. Fully taxable in the year of withdrawal. Generally not recommended unless you have a specific need.
Monthly payments
Receive fixed monthly payments or payments based on IRS life expectancy tables. Flexible — you can change the amount annually.
Annuity purchase
Use your TSP balance to purchase an annuity from MetLife (TSP's annuity provider) for guaranteed lifetime income. Rates depend on your balance and age at purchase.
Partial withdrawal
Take a portion out and leave the rest invested. Can combine with monthly payments for ongoing income. Available after separation.
Rollover to IRA
Roll your TSP into a Traditional or Roth IRA for more investment flexibility. No tax due if rolled directly. May lose TSP's low expense ratio advantage.
TSP Frequently Asked Questions
TSP Withdrawal Strategy in Retirement
Choosing the right TSP withdrawal strategy can mean tens of thousands of dollars more over a 25-year retirement. Here's how to think through each option.
Strategy 1: Keep TSP — Don't Touch It Yet
Most OverlookedMany retirees don't need their TSP immediately. If you have a FERS pension, Social Security, and/or a FERS Supplement covering expenses, let the TSP continue growing tax-deferred. The G Fund earns long-term bond rates with zero principal risk — a unique advantage unavailable anywhere else. RMDs don't start until age 73 (SECURE 2.0).
Strategy 2: Monthly Payments from TSP
Most FlexibleSet up fixed monthly payments (e.g., $1,000/month) or IRS life expectancy-based payments. You can change the amount once per year. This keeps the bulk of your TSP invested while providing steady income. Best combined with the G Fund for the portion you plan to draw down in the next 5 years.
Strategy 3: Roll TSP to IRA (Partial or Full)
Most Flexible for Tax PlanningRolling some or all of your TSP into a Traditional IRA opens up Roth conversion opportunities, more investment choices, and no RMDs on Roth balances. The tradeoff: you lose the G Fund's unique guarantee and TSP's ultra-low expense ratio (~0.04% vs. 0.50–1.0% at brokerages). Consider rolling only the portion you want flexibility with.
Strategy 4: FERS Bridge — Delay Social Security
Best Long-Term ValueIf you retire before 62, use TSP withdrawals as a bridge to delay Social Security past Full Retirement Age (FRA). Every year you delay past FRA adds 8% to your SS benefit permanently. Drawing TSP from 60–70 while delaying SS to 70 can maximize your total lifetime income — especially if you're in good health. Calculate your break-even with our Social Security Bridge Calculator.
Strategy 5: TSP Annuity (Rarely Best)
Use with CautionThe TSP offers a life annuity through MetLife. While it provides guaranteed income, the rates are often lower than commercial MYGAs or immediate annuities. You lose all flexibility and death benefit. Before purchasing a TSP annuity, compare rates with independent fixed annuity options — you may get significantly more income per dollar.
The Bottom Line on TSP Withdrawal Strategy
Most federal retirees do best with a hybrid approach: keep the G Fund for near-term income (years 1–5), keep the C/S/I funds invested for long-term growth, and use TSP withdrawals strategically to bridge the gap to Social Security at 70. Avoid the TSP annuity unless you've compared rates externally.
Federal Income Planner
Combine TSP + FERS + Social Security
OpenRMD Calculator
Calculate your TSP Required Minimum Distributions
OpenRoth Conversion Calculator
Should you convert TSP to Roth IRA?
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