Agency automatic contributions [1] are a benefit that is offered to federal government employees who participate in the thrift savings plan. It describes how the specific government agency makes contributions, equal to 1% of the individual’s gross salary, whether the person chooses to make contributions of their own or not. As the term “automatic” implies, the employee has no control over this 1% contribution; they can opt to contribute more, though.
Employees who participate in the Federal Employees Retirement System are allowed to contribute up to 10% of their basic pay, per pay period, to their Thrift Savings Plan account. Contributions will be matched as follows:
- The first 3% saved during each pay period will be matched dollar for dollar.
- The next 2% will be matched at 50 cents on the dollar.
Contributions made by the employee and the Agency Matching Contributions [2] belong to the individual immediately. Agency Automatic Contributions and attributable earnings are vested after 3 years of Federal service. In some cases the term is only 2 years, but those are special circumstances.
As with other retirement accounts it makes sense to start investing in a Thrift Savings Plan as soon as you begin to work for the government. Taking advantage of Matching Contributions as well as the Automatic Contributions gives your savings an opportunity to compound over a longer period of time.
In many government agencies participation in the Thrift Savings Plan is involuntary. Furthermore, some agencies require specific contributions and arrange for automatic deposits of such contributions with each pay period.