TSP Automatic Enrollment Program: How It Works, Percentages and Updates
Understanding the Thrift Savings Plan (TSP) automatic enrollment process is crucial for maximizing your retirement savings, as it ensures a steady contribution to your TSP account from the start of your military career, leading to significant long-term growth thanks to compounding interest.
Why trust The Military Wallet? We’re a veteran-founded resource that has helped millions make strong financial decisions.
Advertiser Disclosure: The Military Wallet and Three Creeks Media, LLC, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet. For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked; however, this compensation does not affect how, where, and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner,” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings, or lists are fully comprehensive and do not include all companies or available products.
The Military Wallet and Three Creeks Media have partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers. You can read more about our card rating methodology here.
Opinions, reviews, analyses & recommendations are the author’s alone and have not been reviewed, endorsed, or approved by any of these entities. For more information, please see our Advertising Policy.
American Express is an advertiser on The Military Wallet. Terms Apply to American Express benefits and offers.
For those of us who have ever sifted through our daily emails and realized we never subscribed to half of the messages in our inbox, the concept of automatic enrollment is quite familiar. In order to stop receiving unwanted messages, the burden is placed on the individual to opt out. The same principle applies to the TSP automatic enrollment program, you are enrolled by default, and opting out requires action on your part.
Numerous studies have demonstrated the effectiveness of automatic enrollment in retirement accounts such as 401(k) plans and the Thrift Savings Plan. The TSP automatic enrollment feature has numerous benefits that outweigh its costs. Here is what you need to know.
What Is TSP Automatic Enrollment?
The TSP is the U.S. government’s long-term retirement savings and investment plan for federal employees, including members of the military. It is similar to 401(k) plans available across the private sector.
TSP automatic enrollment automatically integrates newly hired federal employees under the Federal Employees Retirement System (FERS) and military members under the Blended Retirement System (BRS) into the Thrift Savings Plan.
The government instituted automatic enrollment in August 2010, and it has dramatically increased the number of people participating in TSP, helping federal employees and service members capitalize on employer matching contributions and build retirement savings from day one of their careers.
Newly hired federal workers and service members can opt out of the TSP if they do not wish to contribute, but doing so means leaving potential matching contributions on the table.
Impact of the TSP Auto-Enrollment Program
The Congressional Budget Office released a study showing the impact the TSP auto-enrollment program had on plan participation, contribution rates, and other factors. The results were positive across the board.
| TSP Behavior | Hired Before AE (Hired between August 2009 and July 2010) | Hired After AE (Hired between August 2010 and July 2011) |
|---|---|---|
| Percentage of workers who contribute | 60.0 | 96.7 |
| Average contribution rate (As a percentage of salary) | 2.9 | 4.4 |
| Average contribution rate for those who contributed (As a percentage of salary) | 4.8 | 4.5 |
| Percentage of workers whose whole portfolio is invested in the G Fund | 76.0 | 79.7 |
| Pecentage of workers’ portfolio invested in the GFund | 84.3 | 85.5 |
| Average ratio of balance to pay | 0.2 | 0.2 |
| Sample Size | 51,732 | 53,386 |
This table covers the period just prior to and just after the auto-enrollment program began for the FERS retirement system. The default contribution at this time was 3%, and the default investment fund was the G Fund.
You will notice a large percentage of the participants left their investments in the G Fund. In 2020, the TSP increased automatic contributions from 3% to 5% and changed the default fund from the G Fund to the most appropriate lifecycle fund based on the participant’s age.
Changes to TSP Automatic Enrollment Percentages
When the government rolled out automatic enrollment in 2010, newly hired or rehired civilian federal workers had 3% of their salary automatically deposited into their TSP accounts each pay period. The military employed the same practice when the Blended Retirement System was introduced: service members who began serving on or after January 1, 2019, were automatically enrolled in TSP, with 3% of their pay deducted from their paychecks after their first 60 days.
In February 2020, the Federal Retirement Thrift Investment Board announced it would increase the automatic enrollment percentage from 3% to 5% of pay for all participants who automatically enrolled in the TSP on or after October 1, 2020.
Service members and federal workers can change or halt TSP contributions at any time and request refunds for contributions they did not wish to make.
Why the TSP Automatic Enrollment Percentage Was Increased
The logic of increasing the TSP automatic enrollment percentage from 3% to 5% is two-fold.
First, it makes it easier for people to save for retirement and benefit from investing more at a younger age without having to take any action.
Second, federal workers under FERS and service members under the BRS are eligible to receive up to 5% in matching contributions from their agency or service every pay period. With automatic enrollment set at 5%, participants can fully capitalize on matching contributions from day one.
Military members who are not in the BRS do not receive matching TSP contributions. Military members in BRS must complete 2 years of service before they are eligible to receive service-matching contributions, though the automatic 1% government contribution begins after 60 days of service.
With automatic enrollment set at 5%, participants can fully capture matching contributions without taking any action. The agency or service automatically matches up to 4% of a participant’s basic pay plus an additional automatic 1% contribution, totaling 5% in government contributions when you contribute 5% of your own pay.
If you opt out of the TSP altogether, you can no longer receive matching contributions, leaving free money on the table.
| Your Contribution | Automatic 1% Contribution | Agency Matching Contribution | Total Contributions |
|---|---|---|---|
| 0% | 1% | 0% | 1% |
| 1% | 1% | 1% | 3% |
| 2% | 1% | 2% | 5% |
| 3% | 1% | 3% | 7% |
| 4% | 1% | 3.50% | 8.50% |
| 5% | 1% | 4% | 10% |
| More than 5% | 1% | 4% | Your Contribution + 5% |
How Are Automatic Enrollments Invested?
Unless a TSP participant specifically selects investment funds, the full amount of their automatic enrollment percentage will be deposited in the lifecycle fund deemed most appropriate for their age. Previously, funds were deposited into the G Fund by default.
Lifecycle funds can be a good option for novice investors or those most comfortable with set-it-and-forget-it investment strategies. Investors simply select a target retirement date and the fund’s managers handle the gradual shift from growth-oriented to more conservative investments over time.
TSP participants who prefer a more active role in managing their investments can select individual or lifecycle funds on the TSP website or by calling 1-877-968-3778. Participants can also redistribute their existing TSP balance by requesting an interfund transfer, though they are limited to two transfers per month.
Benefits of Increasing Your Auto-Enrollment Amount
While contributing 5% per pay period is an excellent start to saving for retirement, investing more now can significantly accelerate your long-term wealth building. Contributing more than 5% maximizes the benefits of compound interest.
Over time, even small, regular contributions to your retirement account can yield substantial payoffs. Keep in mind that the IRS establishes annual contribution limits for TSP accounts, so it is worth checking the current limits on the TSP or IRS websites to ensure you are contributing as much as possible without exceeding the limit.
Participants aged 50 and older are also eligible for additional catch-up contributions beyond the standard annual limit, and those aged 60 to 63 may qualify for an even higher enhanced catch-up contribution amount. Check the TSP website for the most current figures.
Note: Starting January 1, 2026, TSP participants whose income from the prior year exceeded $150,000 must designate any catch-up contributions as Roth, regardless of their current election. Your payroll office will automatically transfer any catch-up amounts to your Roth balance if applicable.
To determine what contribution percentage will help you reach the maximum amount without exceeding the limit, you can use a TSP calculator with information from your pay statements.
Final Thoughts
TSP automatic enrollment is one of the most effective tools the government has implemented to help federal employees and service members build retirement savings. The increase from 3% to 5% automatic enrollment ensures that BRS participants capture the full government matching contribution from the start of their careers, without having to take any action.
For military members, the combination of automatic enrollment, government-matching contributions, and the TSP’s low-cost investment options makes it one of the most powerful retirement savings vehicles available. At a minimum, contribute enough to capture the full 5% match and consider increasing your contributions over time to take full advantage of compound interest and the generous annual contribution limits.
