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SAVINGS/RETIREMENT

Retirement Programs

The Federal Employees Retirement System (FERS) is a three-tiered plan to provide retirement, disability and survivor benefits for employees and their dependents. In addition to Social Security benefits as a base, FERS offers both an annuity that grows with length of service and a tax-deferred savings plan, the Thrift Savings Plan (TSP). Employees pay less than one percent of salary to qualify for the FERS annuity and are fully vested after five years of service, and for disability benefits, after just 18 months.

Thrift Savings Plan

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees. Congress established the TSP in the Federal Employee's Retirement System Act of 1986. The purpose of the TSP is to provide retirement income. It offers Federal civilian employees the same type of savings and tax benefits that many private corporations offer their employees under "401(k)" plans. The TSP is a defined contribution plan. The retirement income that an employee receives from the TSP account will depend on how much the employee has contributed to the account during the employee's working years and the earnings on these contributions. The contributions that the employee makes to the TSP account are voluntary and are separate from contributions to the FERS Basic Annuity. The Thrift Savings Plan allows employees to invest up to the IRS limit of salary. The Government contributes one percent of salary to employees who do not contribute and will match up to another four percent of salary for employees who do contribute. Because the savings plan is tax-deferred, no income tax is due on either the employee's contributions or the Government matching funds, or the earnings on those amounts until withdrawal. Employees can choose to invest in lower-risk bonds, several stock market index funds, and several "Life Cycle" funds which automatically manage your portfolio for you. For more information, check out this site: http://www.opm.gov/retire/

Bonds

Employees may elect to authorize payroll deductions for U.S. Savings bonds. NOTE: All elected employee contributions for FEHB, FEGLI, and retirement (including TSP) coverage are automatically deducted biweekly from the employee's salary.