The tax-deferred TSP operates similarly to a 401(k) plan that allows federal employees and some members of the military to make contributions that are matched by government agencies. While former employees can no longer contribute to the plan, they can still transfer money into their account online, through the app or over the phone.
The Federal Retirement Thrift Investment Board, which administers the TSP, reported in 2024 that the plan had a “record year,” with $986 billion in assets under management and approximately 7 million participants, according to the TSP governing board. Congress established TSP in the Federal Employees’ Retirement System Act of 1986.
Congress has long hoped to help more private sector Americans save for retirement similarly to the TSP, with proposed legislation called the Retirement Savings for Americans Act (RSAA), first introduced in Congress in 2023. The bill would “help low- and middle-income Americans build wealth and save for retirement,” said economist Kevin Hassett, who is the new Director of the White House National Economic Council.
Hassett co-wrote the Economic Innovation Group’s white paper, Inclusive Wealth-Building Initiative, which was the basis for the RSAA legislation that would give private sector workers access to a portable, tax-advantaged retirement plan.
“For example, employers would be less likely to offer a plan because the proposal’s federal match tax credit would effectively subsidize some portion of the employer’s contributions. This impacts retirement-income adequacy because savings rates in defined contribution plans are a lot higher than the bill’s 3% default rate. This is also true for lower-income workers.”
