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Commander, Navy Installations Command
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Thrift Savings Plans

Fleet and Family Support Center
168 Bennion Road
NSA Annapolis, MD 21402

One of the basic needs of living independently is the need to have a sound financial plan.  The sooner you begin following a financial plan, the better off you'll be.  Today is not too soon to start thinking about your financial future. Even if you've only been in the Navy a few months, you can - and should - be making plans for your eventual retirement.  There are countless financial plans available to Sailors who wish to seek them.  One of the easiest plans to get started with is the Thrift Savings Plan.  If you don't already have a sound financial plan, TSP is a good place to start.  Investing in your future doesn't take a large amount of cash, so even if you are on a budget you can benefit from TSP.

Thrift Savings Plan Questions and Answers

What is TSP?
The Thrift Savings Plan (TSP) is a savings and investment plan, similar to a civilian 401(k).  For military personnel, the purpose of TSP is to provide additional retirement income.
How does TSP work?
Military have the flexibility to contribute as little as 1 percent, or as much as 100 percent, of their base pay - plus any amount of incentive or special pay, including bonus pay.   You can diversify your TSP investments among six different investment funds.  The most outstanding feature of TSP is that you control your contribution allocations.
How will this impact my taxes?
The money you invest in TSP is taken out of your pay before federal income tax and, in many cases, state income taxes are calculated.  It's called a before-tax contribution.  The result is that the amount used to calculate your taxes each year is smaller; therefore, you pay less in taxes.
Is this the same thing as military retirement pay?
No. This is an investment plan, not a traditional benefit.  The money you contribute to TSP and any earnings on that investment are yours to keep - even if you do not serve in the military for the 20 years that are usually necessary to receive military retirement pay (Defined Benefit Program).  TSP does not replace your retirement benefit. Think of it as an additional investment toward your retirement, or a means to supplement your retirement income.
What's the difference?
As noted previously, the military retirement pay is a defined benefit program.  The benefit you receive is based on how many years you served and your rank at the time of retirement.  Service members usually are not vested in the Defined Benefit Program until they have 20 years of service or greater. There are no requirements to contribute any money to the Defined Benefit Program.  TSP, on the other hand, is a Defined Contribution Plan.  The amount of money in your TSP account is determined by how much you contribute to the plan during your working years and the earnings on those contributions based on your contribution allocations.
How much may I contribute?
You may contribute as much as 100 percent of your base pay earned each month.  In addition, you may contribute up to 100 percent of any bonus, special or incentive pay you receive. But a service member's total TSP contribution in 2008 cannot exceed $15,500, unless they are in a combat zone, in which case the nontaxable contribution limit (Combat Zone Exclusion) is $45,000.
How are my contributions invested?
You can invest any portion of your TSP account in five investment funds: Government Securities Investment (G) Fund; Fixed Income Investment (F) Fund; Common Stock Index Investment (C) Fund; Small Capitalization Stock Index Investment (S) Fund; International Stock Index Investment (I) Fund and the Lifecycle Fund  (L) Fund (new in 2005).  To find out more about these funds, set up an appointment with the Financial Educator (FE) at the FFSC, talk to your Command Financial Specialist (CFS) or visit the TSP Web site @
How do I control where the money goes?
Upon receipt of your first contribution, TSP will send you an introductory letter and a Personal Identification Number (PIN). Once you receive your PIN, you will be able to use the TSP Web site to allocate your contributions in any of the six investment funds.  Unless otherwise indicated by you, TSP will invest your contributions in the G Fund which is managed by the TSP Board and is the lowest risk fund available.  It is wise to diversify your contributions throughout the various funds in order to earn greater returns on your investment,
Can I withdraw money before I leave the military?
Usually you cannot withdraw the money before you leave the military.  This is a long-term retirement savings plan. However, the law grants two exceptions for in-service withdrawals. You can do it if you're age 59 or older, or if you can document a bona fide financial hardship.  Talk to a Financial Educator or Command Financial Specialist.  The TSP loan program might provide a better option.
What happens to this money after I leave the military?
You've got a few options.  After separation, you may choose to leave your money in TSP.  You may also transfer all or a portion of your account to another retirement plan such as an IRA or 401(k). Or you can purchase a TSP annuity.
Is there a penalty for early withdrawal?
Yes.  Again, this is money for your retirement. While you're in the service, any money you withdraw before age 59 for financial hardship is subject to a 10 percent early withdrawal penalty levied by the Internal Revenue Service (IRS), plus regular income tax.  If you separate from the military before age 55, you can transfer your TSP money to a traditional IRA or eligible employer plan, like a 401(k), without penalty.  If you separate from the military at age 55 or older, your withdrawal will not be subject to penalty.
This seems complicated.  Can anyone explain it to me?
Yes.  Visit the Annapolis FFSC and talk to our Financial Educator or talk to your Command Financial Specialist.
How do I enroll?
Initially, TSP enrollment was conducted via hard copy paper application.  However, most Personnel Detachment offices, Ships personnel offices or Reserve Centers no longer accept hard copy paper forms.  Service members are now encouraged to enroll into TSP on-line through the MyPay Web site.  It is recommended that any questions you have concerning enrollment be directed to your Administrative Officer or Personnel Support Detachment.
When may I enroll?
Service members may enroll at anytime.
Where do I find more information?
For more information about TSP, set up an appointment with your Command Financial Specialist, or the Annapolis Fleet and Family Support Center Financial Educator.  Visit the TSP website @ for additional information.


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