Getting the Most from Your USPS Thrift Savings Plan in 2024
As of January 1, 2023, over 630,000 active and retired postal employees had over $41 billion invested in the federal Thrift Savings Plan (TSP). This tax-advantaged retirement savings program has become an essential component of retirement planning for those spending their careers with the United States Postal Service (USPS).
But how does this federal employee benefit work compared to traditional private sector 401k accounts? What steps should you take to maximize your USPS TSP contributions and growth? This definitive guide for 2024 has all the latest details you need as a postal employee.
USPS TSP vs. 401k (Updated for 2024)
While the TSP functions similar to a traditional 401k retirement account, there are some important differences:
Contribution Limits
- TSP (2023): $22,500 annual limit
- 401k (2023): $22,500 annual limit (+$7,500 catch up for 50+)
Employer Matching
- USPS matches 3-5%
- Private sector average match is 3-4%
Fees
- TSP: 0.052% average expense ratio
- 401k: 0.50%+ expense ratios common
While contribution limits are identical in 2024, USPS employees can benefit from slightly higher matching potential and significantly lower investment fees through the TSP.
Who Can Participate in the USPS Thrift Savings Plan?
Eligibility extends to all career USPS employees including:
- Full and part-time employees
- Postal police officers
- Postmasters
Non-career employees are not TSP eligible. This includes rural carriers, mail handlers, holiday temporary workers.
403,177 active USPS employees contributed to their TSP account in 2022.
Enrolling and Managing Your USPS Thrift Savings Plan Account
Automatic Enrollment
All newly hired postal employees are automatically enrolled into the TSP with a default 3% per paycheck contribution. These funds are invested into an age-appropriate Lifecycle Fund unless the employee elects otherwise.
You can opt-out or change your contribution percentage at any time via PostalEASE or calling USPS HR.
Investment Fund Choices
The TSP offers participants 6 different funds to invest their contributions into:
- Government Securities Investment (G) Fund
- Fixed Income Index (F) Fund
- Common Stock Index (C) Fund
- Small Capitalization Stock Index (S) Fund
- International Stock Index (I) Fund
- Lifecycle (L) Funds
The L Funds function like target date funds in 401ks, adjusting their asset allocation automatically as you near retirement. But participants seeking more control can shift money between the individual TSP funds anytime.
Roth Contribution Option
While TSP contributions default to pre-tax, employees have the choice to designate some or all contributions as Roth instead. Roth contributions don‘t lower your current taxable income, but qualified withdrawals in retirement will be 100% tax-free.
This Roth vs Traditional TSP calculator can help determine the better option for your financial situation.
Loans
One of the lesser known perks of the TSP is the ability to borrow against your balance once vested. Participants can borrow up to $50,000 or 50% of their vested account balance. TSP loans typically have lower interest rates than commercial loans and you pay the interest to yourself.
Withdrawing Money from Your TSP Account
Just as with 401ks and other tax-advantaged retirement accounts, the IRS limits TSP withdrawals to 59 1⁄2 years old+ to avoid penalties.
Employees who leave federal service before age 59 1⁄2 have limited options:
- Leave the money in the TSP
- Transfer to an IRA or eligible plan
- Request to "separate" your account for flexible monthly payments
For those 59 1⁄2 or older, a full menu of withdrawal choices can minimize further taxes owed:
- Single or monthly payments
- Complete withdrawal
- Annuities
- Combination of the above
Rolling over funds into a Roth IRA can enable younger access without penalties. Consulting a financial advisor or tax professional can help maximize withdrawals.
Getting Additional Help with Your USPS Retirement Planning
If you still have questions about your TSP as a postal employee, be sure to take advantage of these resources:
USPS Retirement page – Details on pension, social security supplements, retiree health plans.
TSP.gov – Official Thrift Savings Plan site with overview documents, forms, investment fund comparisons and more.
ThriftLine (1-877-968-3778) – Speak to a TSP representative weekdays from 7am-9pm Eastern time.
As a trusted benefit for over 30 years, properly utilizing your Thrift Savings Plan is one of the smartest retirement planning moves you can make working for the US Postal Service.
