Page 52 - The Informed Fed--Hearn Wealth Management

CHAPTER FIVE

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The Thrift Savings Plan (TSP) was implemented as part of the
Federal Retirement benefits package and serves as a vehicle to
accumulate retirement funds. Technically it is NOT a 401k because it

falls under the direction and control of Congress. For the purpose of
understanding how it works, it shares most of the pluses and minuses of
all other 401k plans. On the plus side, in 1984 when the FERS program

was started, Congress established 5% matching funds for FERS
employees as an incentive to encourage retirement savings. This is one

of the best programs in the country and provides FREE MONEY to
FERS employees for their retirement. The government will contribute
fund whether they choose

to contribute or not. (This is separate from the FERS retirement fund
and is vested after 3 years.) They will also match the first 3% of an

of the next 2% the employee puts in, making a total of 5% government
funds to match the f bution. These are
funds you cannot make up later, so it is beneficial to maintain a 5%

contribution to the TSP from day one of eligibility. A FERS employee
can build a substantial nest egg by sticking to this savings pattern and

allow the government to provide them a 100% return on this money.

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