The Thrift Savings Plan is the largest defined-contribution retirement plan in the United States, with roughly $950 billion in assets under management as of 2025 and more than seven million participants. Created by the Federal Employees' Retirement System Act of 1986, TSP offers only six investment choices — five individual funds and a family of target-date "Lifecycle" funds — and that deliberate simplicity is its main appeal. The funds have some of the lowest expense ratios in the industry (the C Fund's expense ratio in 2024 was 0.035%, roughly one-twentieth of the average mutual fund), but the choice between them still drives most of a participant's lifetime return. This guide walks through each fund, how they fit together, and a framework for matching an allocation to your timeline.
The six TSP fund options
TSP offers five individual funds — G, F, C, S, and I — and a family of ten Lifecycle (L) funds that automatically blend the five individual funds in proportions that change as the target date approaches. The five individual funds are not redundant: each represents a distinct asset class with its own risk and return profile. The G Fund is unique to TSP and has no exact private-sector equivalent. The C, S, and I Funds are index funds tracking well-known benchmarks, while the F Fund tracks a broad bond index.
Participants can allocate contributions across any combination of funds in 1% increments and can rebalance at any time through the TSP website. The L Funds are designed for participants who do not want to manage their own allocation — they automatically glide from aggressive (heavy equity weight) to conservative (heavy G Fund weight) as the target retirement year approaches.
G Fund: safety and yield
The G Fund (Government Securities Investment Fund) invests exclusively in short-term U.S. Treasury securities specially issued to TSP. The interest rate is reset monthly based on the average yield of all U.S. Treasury securities with maturities of four or more years, which means G Fund participants earn a long-term Treasury yield on what is effectively a short-term, principal-protected investment. Yields in recent years have ranged from roughly 1.5% during the zero-interest-rate era of 2020–2021 to 4% to 5% in 2023–2025, when the Federal Reserve raised short-term rates aggressively.
The G Fund is the only TSP fund with no possibility of principal loss — the securities are backed by the full faith and credit of the U.S. government, and the share price is fixed at $1. The trade-off is that the G Fund has the lowest long-term return of any TSP fund, and over periods of a decade or more, G Fund returns have often failed to keep pace with inflation. Participants who hold 100% in G Fund for a working career typically end up with lower retirement income than participants who held even a modest equity allocation.
The G Fund's unique interest-rate mechanism has periodically made it a target of congressional budget proposals — several times since 2011, Congress has floated the idea of changing the G Fund rate formula to save money, which would reduce yields to roughly the 3-month T-bill rate. None of these proposals has become law, but the recurring threat is a reason for participants to diversify beyond G Fund even if their primary goal is capital preservation.
F Fund: bond market exposure
The F Fund (Fixed Income Index Investment Fund) tracks the Bloomberg U.S. Aggregate Bond Index, the same benchmark tracked by the popular AGG and BND exchange-traded funds. The index includes U.S. Treasury bonds, corporate investment-grade bonds, and mortgage-backed securities. Unlike the G Fund, the F Fund's share price fluctuates — when interest rates rise, F Fund shares lose value, and when rates fall, F Fund shares gain value.
Long-term returns on the F Fund have averaged around 4% to 5% annually, with more volatility than the G Fund but a higher yield in most interest-rate environments. In 2022, when the Federal Reserve raised rates aggressively, the F Fund lost about 13% — a sharp reminder that "fixed income" does not mean "loss-free." The G Fund, by contrast, was positive that year, because its rate resets monthly with no principal exposure.
Most TSP participants use the F Fund as a complement to the G Fund rather than a substitute. The G Fund provides stability and a guaranteed positive nominal return, while the F Fund provides higher long-term yield and diversification away from purely government-backed securities. A common bond allocation for older participants is 50% G Fund and 50% F Fund, which smooths out the F Fund's volatility while capturing some of its higher yield.
C, S, and I Funds: equity exposure
The C Fund (Common Stock Index Investment Fund) tracks the S&P 500 — the 500 largest U.S. companies by market capitalization. Long-term annual returns have averaged about 10% before expenses, though with substantial year-to-year volatility: the C Fund lost roughly 19% in 2022 and gained roughly 26% in 2023. The C Fund is the most-held TSP fund and the single largest holding in most L Fund blends.
The S Fund (Small Capitalization Stock Index Investment Fund) tracks the Dow Jones U.S. Completion Total Stock Market Index, which includes U.S. companies outside the S&P 500 — essentially small-cap and mid-cap stocks. Long-term returns have averaged about 9% annually, with higher volatility than the C Fund. The S Fund provides exposure to smaller companies that have historically grown faster than large caps but with more downside in recessions.
The I Fund (International Stock Index Investment Fund) tracks the MSCI EAFE (Europe, Australasia, Far East) Index, which covers developed international markets — primarily Japan, the United Kingdom, France, Germany, and Switzerland. Long-term returns have averaged about 7% annually. In 2024, TSP announced an expansion of the I Fund benchmark to the MSCI All Country World ex-U.S. Investable Market Index, which will add emerging markets and Canadian stocks to the I Fund over a multi-year transition — the most significant change to TSP's fund structure in years.
The three equity funds are not highly correlated with each other, which means holding all three provides diversification benefit. A 70% C / 15% S / 15% I blend roughly mirrors the global equity market and is the allocation used by the most aggressive L Funds (L 2065, L 2070) for participants far from retirement.
L Funds: target-date simplicity
The Lifecycle funds are target-date funds that automatically rebalance among the five individual funds. TSP currently offers 12 L Funds: L Income (for participants already in retirement), and L 2025, L 2030, L 2035, L 2040, L 2045, L 2050, L 2055, L 2060, L 2065, and L 2070 — each named for the year the participant expects to begin withdrawing. The L Fund glidepath starts heavily weighted toward equities (about 99% for the most distant funds) and gradually shifts to G and F Funds as the target date approaches, reaching roughly 70% G/F at the L Income stage.
The L Funds are designed for participants who want a "set it and forget it" allocation. They automatically rebalance daily, which means participants never need to log in to adjust their allocation. The glidepath is conservative by industry standards — L Funds reach their final conservative allocation five years after the target date, slower than most private-sector target-date funds, because TSP assumes participants will draw down their accounts gradually over a long retirement.
The main criticism of the L Funds is that they can be too conservative for participants whose retirement horizon extends well beyond the target date. A 35-year-old planning to retire at 65 would use L 2055 or L 2060, which by 2025 standards means a heavy equity allocation — but a 35-year-old who is also relying on a substantial FERS annuity and Social Security might prefer to stay 100% in equities in TSP to maximize long-term growth. The L Funds are also relatively inflexible: a participant with strong views on, say, international exposure cannot customize the I Fund weight within an L Fund.
Contribution limits and Roth TSP
The 2025 elective deferral limit for TSP is $23,500, the same as the 401(k) limit set by the IRS. Participants age 50 and older can add a $7,500 catch-up contribution, bringing the total to $31,000. SECURE 2.0, enacted in December 2022, added a "super catch-up" of $11,250 for participants aged 60 through 63 — bringing the maximum deferral to $34,750 for that narrow age band, the largest catch-up allowed in any defined-contribution plan.
FERS employees receive agency matching: 1% automatic contribution regardless of the employee's contribution rate, plus a dollar-for-dollar match on the next 3% of pay, plus a 50-cent match on the next 2% — for a total of 5% agency contribution when the employee contributes at least 5%. CSRS employees and members of the uniformed services in a combat zone tax-exclusion period receive only the 1% automatic contribution, with no match. The match is calculated per pay period, so participants who front-load contributions early in the year and reach the IRS limit before the final pay period miss out on matching contributions for the remainder of the year — a costly mistake known as "losing the match."
Roth TSP, available since May 2012, lets participants contribute after-tax dollars that grow tax-free and can be withdrawn tax-free in retirement, provided the account has been open at least five years and the participant is at least 59½. Roth and traditional TSP share the same $23,500 contribution limit — they are not separate buckets — so participants must decide how to split their contributions. Higher-income participants and younger participants generally benefit more from Roth TSP, because their tax bracket in retirement is likely to be the same or higher than their current bracket.
A framework for choosing
A reasonable framework for selecting TSP funds starts with time horizon, then adds risk tolerance, then layers in personal circumstances. Participants more than 20 years from retirement can reasonably hold 80% to 100% in equities (C, S, and I), because the long-term compound growth outweighs the short-term volatility. Participants within 10 years of retirement should gradually shift to a more balanced allocation — perhaps 60% to 70% equities and 30% to 40% bonds (G and F) — to reduce sequence-of-returns risk in the years immediately before and after retirement.
Participants already in retirement should consider the L Income Fund or a custom blend of roughly 40% G, 20% F, 25% C, 7% S, and 8% I, which provides enough growth to outpace inflation while preserving enough stability to weather market downturns. The standard advice to hold "your age in bonds" — for example, 65% bonds for a 65-year-old — is a useful starting point, though many retirement researchers now recommend a lower bond allocation (50% or less) given longer life expectancies and the erosion of bond yields by inflation.
The most common mistake TSP participants make is holding too much in the G Fund during their working years. A 35-year-old with 100% in G Fund will likely end up with less than half the retirement balance of an identical participant holding 100% in C Fund, simply because of the difference in long-term compound returns. The G Fund is a powerful tool for capital preservation, but it is a poor long-term growth vehicle. For help modeling contribution amounts and growth, see our 401(k) contribution calculator, which uses the same IRS limits as TSP, and for the broader federal retirement picture, see our FERS retirement guide.
Last reviewed June 14, 2026. This article is informational and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation.