Topic
Thrift Savings Plan (TSP)
The military's tax-advantaged retirement account — start contributing in your first month and let compounding do the heavy lifting.
What TSP Is
The Thrift Savings Plan is the federal government's 401(k)-equivalent. You contribute a percentage of your basic pay (and any incentive/special pay if you want); the money is invested in low-cost index funds and grows tax-advantaged. As of 2025, the annual contribution limit is $23,000, with an additional $7,500 catch-up if you're 50+.
Matching Under the Blended Retirement System (BRS)
If you joined on or after January 1, 2018, you're under BRS. The government automatically contributes 1% of your basic pay to your TSP, and matches dollar-for-dollar up to an additional 4% you contribute — for a total of 5% free money. Always contribute at least 5%. The matching kicks in after you complete 2 years of service; the auto 1% is immediate.
Vesting
Your own contributions are 100% yours immediately. The government's 1% automatic contribution vests after 2 years of service (i.e., if you separate before 2 years, you forfeit the auto-1% portion). The matching 4% is yours immediately.
Roth vs. Traditional TSP
Roth TSP: you pay taxes now (on your contribution) and withdraw tax-free in retirement. Traditional: you defer taxes now (lowers current taxable income) and pay them in retirement. For junior enlisted in the 10–12% federal tax bracket, Roth is almost always better — you'll likely retire in a higher bracket. For higher earners, traditional may make sense.
Investment Choices
Five core funds: G (Government securities — safest, never loses value but barely beats inflation), F (Fixed Income / bonds), C (Common Stock / S&P 500), S (Small-cap Stock), and I (International Stock). Plus 'Lifecycle' (L) funds — target-date funds that auto-rebalance from aggressive (young) to conservative (near retirement). For most service members, an L Fund matching your retirement year is the simplest correct answer.
Combat Zone Contributions
While in a combat zone, your basic pay is tax-free. Any TSP contributions from that tax-free pay go into a special 'tax-exempt' bucket — when you withdraw it, those contributions come out tax-free (only the gains are taxed). Even better, the IRS annual limit can be exceeded with combat-zone tax-exempt contributions (up to $69,000 in 2025 total).
Loans and Hardship Withdrawals
You can borrow from your own TSP balance (general purpose: 1–5 year repayment; primary residence: 5–15 year repayment) at the G Fund rate. Hardship withdrawals are available for documented financial emergencies but incur taxes and a 10% penalty if you're under 59½. In-service withdrawals at age 59½ are allowed without penalty.
What Happens at Separation
Your TSP stays with the federal government if you want (it has some of the lowest fees in the industry, so many people leave it there). You can also roll it to an IRA, your new employer's 401(k), or take a cash distribution (with taxes and penalties).
BRS Continuation Pay
At 8–12 years of service under BRS, you're offered a Continuation Pay bonus — a multiplier of your monthly basic pay (minimum 2.5x active, 0.5x reserve, but can be higher for critical skills) in exchange for 4 more years. Many people put this directly into TSP.
How Much to Contribute
Absolute minimum: 5% to capture the full match. Recommended: 10–15% as a beginner; 20%+ if you can. Even at 5% starting at age 20, with average market returns, you'd retire a millionaire just from TSP.
Verify and Manage
Manage your account at tsp.gov. Use the TSP calculators to model contribution percentages and project your balance at retirement. For BRS specifics: militarypay.defense.gov/BlendedRetirement.
Want personalized answers?
Open the Boot Buddy chat in the corner and ask anything — eligibility, examples, or how a benefit applies to your situation.
Official VA resources