The Thrift Savings Plan is the federal government and military version of a 401(k) — same IRS contribution limits, same tax treatment, but with a few real structural differences worth understanding if you are a federal employee or service member.
Same 2026 Contribution Limits as a 401(k)
The TSP uses the identical elective deferral limit as private-sector 401(k) plans: $24,500 for 2026. Catch-up contributions follow the same SECURE 2.0 structure too — an extra $8,000 for participants age 50 and older, or an enhanced $11,250 catch-up specifically for ages 60 through 63, bringing the effective maximum as high as $35,750 for someone in that narrower age band.
Matching: FERS vs. BRS
Civilian federal employees under FERS (most people hired since 1984) get an automatic 1% agency contribution regardless of what they personally contribute, plus up to an additional 4% match if they contribute at least 5% of pay themselves — a full 5% match once you hit that 5% contribution threshold. Service members under the Blended Retirement System get a similar structure: an automatic 1%, plus up to 4% matching after a vesting requirement, once again totaling up to 5% if the member contributes enough to capture the full match. Older CSRS federal retirees generally did not have this TSP matching structure at all, which is part of why the WEP and GPO repeal (see our Social Security WEP/GPO guide) matters disproportionately to that specific generation of retirees.
A Real Military-Specific Quirk
Unlike a civilian 401(k) where you typically elect a flat dollar amount per paycheck, military members contribute as a percentage of base pay, which changes the practical mechanics of hitting the annual limit depending on rank and time in service. There is also a genuinely unusual provision for deployed service members: pay earned in a designated combat zone is federal-income-tax-exempt, and once a service member hits the normal $24,500 elective deferral limit, they can keep contributing from that tax-exempt combat pay into the Traditional TSP specifically, up to the much higher overall 415(c) annual additions limit of $72,000 for 2026 (which also includes the agency/service matching amounts). This lets deployed troops effectively save far more in a single year than the standard elective deferral cap would otherwise allow — a real, underused opportunity that is easy to miss if you are not specifically looking for it.
Why the Fund Lineup Is Genuinely Different
The TSP’s core funds (G, F, C, S, I) and its Lifecycle target-date funds run at expense ratios around 0.055% — meaningfully lower than the 0.08% to 0.68% range typical of private-sector 401(k) target-date offerings covered in our target-date fund cost guide. That gap compounds meaningfully over a multi-decade career, and it is one of the clearest real advantages of the TSP relative to a typical private employer plan.
Portability After You Leave
Leaving federal service or the military does not force an immediate decision on your TSP balance — it can stay in the TSP, or you can roll it into a new employer 401(k) or an IRA, the same set of options covered in our guide on 401(k) rollover mechanics. One real reason people choose to leave money in the TSP even after separating: those low fund expense ratios do not go away just because you are no longer actively serving.
Affiliate Disclosure: This page may contain affiliate links. If you make a purchase or sign up through these links, we may earn a commission at no extra cost to you.
Recent Comments