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DQ #4 Explain the US Government Thrift Savings Plans.
Solution
The US Government Thrift Savings Plans is a defined-contribution plan designed to give federal
employees the same retirement savings related benefits which will be equal to that of workers in
the private sector enjoy with 401(k) plans. Contributions to these plans are automatically
deducted from each paycheck of federal employees.
The thrift savings plan offers six different funds (government security fund, fixed-income fund,
common stock fund, small cap stock fund, international stock fund and a life cycle fund) in
which federal employees can invest.
Because the thrift savings plan is based on tax-deferred contributions, any contributions made
into it will not be taxed until the money is withdrawn, which can be deferred until retirement.
Other Benefits of these US Government Thrift Savings Plans includes 1) agency matching
contributions 2) agency automatic contributions 3) catch up contributions and 4) low expense
ratios.

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  • 1. DQ #4 Explain the US Government Thrift Savings Plans. Solution The US Government Thrift Savings Plans is a defined-contribution plan designed to give federal employees the same retirement savings related benefits which will be equal to that of workers in the private sector enjoy with 401(k) plans. Contributions to these plans are automatically deducted from each paycheck of federal employees. The thrift savings plan offers six different funds (government security fund, fixed-income fund, common stock fund, small cap stock fund, international stock fund and a life cycle fund) in which federal employees can invest. Because the thrift savings plan is based on tax-deferred contributions, any contributions made into it will not be taxed until the money is withdrawn, which can be deferred until retirement. Other Benefits of these US Government Thrift Savings Plans includes 1) agency matching contributions 2) agency automatic contributions 3) catch up contributions and 4) low expense ratios.