Automatic Enrollment Percentage in the TSP Increasing to 5%

A rule change coming this fall will increase the automatic enrollment percentage in the TSP from 3% to 5%.

The automatic enrollment percentage for the Thrift Savings Plan will go from 3% to 5% of basic pay for all federal employees automatically enrolled in the program on or after October 1.

The Federal Retirement Thrift Investment Board, the agency which oversees the TSP, made the announcement in a final rule published in the Federal Register on September 16.

The 5% figure is significant because this is the amount a federal employee must contribute to the TSP in order to take full advantage of the agency match. The TSP explains the details of the agency match process on its website:

The first 3% of pay that you contribute will be matched dollar-for-dollar; the next 2% will be matched at 50 cents on the dollar. Contributions above 5% of your pay will not be matched. If you stop making regular employee contributions, your matching contributions will also stop.

The change has been a long time coming. The FRTIB originally announced the change back in 2019. Then, early this year in February, a proposed rule was published in the Federal Register beginning the formal process of implementing the change.

In its final rule posted today, the FRTIB said it received 3 comments on the proposed rule. Two expressed “strong support” for the change and the third “did not address the substance of the regulation.” Bottom line: the change is moving forward on October 1.

TSP participants who are automatically enrolled as of September 30 will not be affected by the change. Participants who are automatically enrolled in the TSP on or after October 1 will see the higher enrollment percentage. The new regulation will also apply to Blended Retirement Service (BRS) participants who are automatically re-enrolled in the TSP on or after January 1, 2021.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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