The Thrift Savings Plan (TSP) is a Defined Contribution plan for United States federal government employees and retirees as well as for members of the uniformed services. Established by the Federal Employees’ Retirement System Act of 1986, the TSP had some 4.61 million participants and more than $358 billion in assets under management as of June 2013. The National Defense Authorization Act for Fiscal Year 2001 extended TSP participation to members of the uniformed services as of October 2001.

TSP is a tax-deferred retirement savings and investment plan that offers federal government employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans. By participating in the TSP, federal employees have the opportunity to save part of their income for retirement, receive matching agency contributions, and reduce their current taxes. The Federal Retirement Thrift Investment Board administers the TSP.

Contributions made by an employee to the TSP are held in trust for him or her in an individual account. The TSP supplements benefits earned by employees under the CSRS or FERS defined benefit pension plans.

The TSP does not fall under ERISA, but the Investment Board honors court orders awarding a portion of the participant’s TSP account to a spouse or former spouse. The Board calls these orders Qualified Retirement Benefits Court Orders.

The former spouse can be awarded a specific dollar amount, or fraction, percentage, or a formula that “does not contain variables founded outside of normal government employment records.” When a spouse or former spouse of a participant receives payment, it is included in the gross income for that year and taxable. The spouse or former spouse can avoid an immediate 20 percent withholding by instructing the Board to transfer the payment to an IRA or eligible retirement plan.