The main difference is that the TSP is only for Federal employees. A Thrift Savings Plan is essentially a 401(k) for employees of the federal government. It functions in the same ways and is subject to the same limitations. The contribution limits and catch-up limits are the same, as well as the employer contribution limit.
The plan actually has lower fees than most 401(k)s, so that’s one difference. The investment options are fairly limited, but not much more than regular 401(k)s. There are basically 5 index funds to choose from and then a series of target-date funds that blend the index funds.
There is usually a flat 1% employer contribution as well as a match for most employees, but not for most military service members. The match is usually a 100% match up to 3% of employee compensation, and then a 50% match up to 5%, with no matching over that.
Another difference from most 401(k)s is that if a Federal Employee makes an age-based in-service withdrawal of only part of their account balance, he or she may not be eligible to make a partial withdrawal ever again, including after being separated from service. At that point the only option would be a full distribution of some form.
How Does a 401(k) Compare With Other Retirement Plans?
What Are the Contribution Limits For My Thrift Savings Plan?
Capital appreciation is an increase in the value of an owned stock. Capital appreciation occurs when the market price...
Employees can either become participants in a 401(k) by voluntary enrollment or by automatic enrollment with opt-out
As of 2016, workers who have not registered online will receive a letter every 5 years that contains a statement
FERS is essentially comprised of the Thrift Savings Plan (TSP), which is a 401(k)-type plan for federal employees
Some of the most common asset classes are stocks, bonds, cash (and cash equivalents), commodities, and real estate
Health savings accounts, or HSAs, are a popular option for individuals looking to save money on their healthcare expenses while also enjoying tax benefits.
The Price to Earnings ratio is a company’s stock price relative to its net income per share
Counter-party risk is the risk that the person on the other side of the trade will not meet his or her contractual obligations.
An open-end fund is a collective investment product where the issuer can redeem or issue shares at any time
Cash and cash equivalents are negotiable instruments which have a stable value and are highly liquid