5 U.S.C. § 8432 — Contributions

(a) Employee^* and Member^* contributions.
(1) In any pay period, an employee or Member can contribute part of their basic pay^* to the Thrift Savings Fund^*, up to the maximum percentage allowed under paragraph (2). This only happens if they've made an election under subsection (b). Once someone elects to contribute, the contributions continue automatically each pay period under rules set by the Executive Director^*, until the person changes or stops them.
(2) The maximum percentage of pay someone could contribute increased over time, by fiscal year: 2001, 11 percent. 2002, 12 percent. 2003, 13 percent. 2004, 14 percent. 2005, 15 percent. 2006 and later, 100 percent (no percentage cap).
(3) People who qualify as "eligible participants" under a special tax-code provision (26 U.S.C. section 414(v)), generally older workers, can make extra "catch-up" contributions on top of any other limit, as allowed by that tax provision and the Executive Director's regulations.

(b) Elections to contribute.
(1)(A) The Executive Director^* writes the rules for how employees and Members can start contributing, change their contribution amount, or stop contributing. An election to start or change contributions can be made at any time; it takes effect as soon as administratively possible after the election; and it stays in effect until the person changes or ends it.
(B) When someone contributes, the amount is whatever percentage of pay or dollar amount they chose.
(2)(A) The Executive Director must, by regulation, automatically enroll eligible people to contribute at a "default percentage" of their pay, even if they never made an election.
(B) That default percentage is 3 percent, unless the Board^* sets a different one, but it can never be set below 2 percent or above 5 percent.
(C) The regulations must let anyone who's automatically enrolled either (i) change the automatic percentage or amount, effective by the first full pay period after their request is received, or (ii) opt out of automatic enrollment entirely.
(D) An "eligible individual" for automatic enrollment is generally anyone appointed, transferred, or reappointed to a job that lets them contribute to the Fund, once the auto-enrollment regulations are in effect, except that members of the uniformed services are not automatically enrolled unless they are a "full TSP member" as defined in section 8440e(a).
(E) Several other sections covering different groups (8351(a)(1), 8440a(a)(1), 8440b(a)(1), 8440c(a)(1), 8440d(a)(1), and 8440e(b)(1)) must be applied consistently with this auto-enrollment rule.
(F) If a full TSP member opted out of automatic enrollment for a year, they get automatically re-enrolled the next January 1, contributing again at the default percentage.

(c) Agency (government^*) contributions.
(1)(A) The employing agency must contribute, for each employee or Member, an amount equal to 1 percent of that person's basic pay for the pay period, whether or not the employee chose to contribute anything themselves. This must happen no later than 12 days after the end of the relevant pay period (the Executive Director sets the exact schedule).
(B) For someone who was already an employee or Member on January 1, 1987, and stayed employed without a break through April 1, 1987, the agency owes 1 percent of all the basic pay that person earned during that stretch.
(C) If instead that person separated from government before April 1, 1987, but had already built up enough years of civilian service^* (as defined in subsection (g)(2)), the agency still owes 1 percent of the basic pay earned from January 1, 1987, until the separation date.
(2)(A) On top of the automatic 1 percent, if an employee or Member contributes their own money under subsection (a) in a pay period, the agency must also make a matching contribution, again within 12 days after that pay period ends.
(B) The normal matching formula is: the agency matches, dollar-for-dollar, the first 3 percent of pay the employee contributes, plus 50 cents for every dollar of the next 2 percent (between 3 and 5 percent of pay). Contributions above 5 percent get no match.
(C) A special, temporary formula applied to contributions made under an election described in subsection (b)(4) (as it existed then) during pay periods before July 1, 1987: the agency matched 2-for-1 on the first 3 percent of pay, and dollar-for-dollar on the next 2 percent (3 to 5 percent).
(3)(A)-(D) A special one-time credit applies to certain employees or Members who were already working on January 1, 1987, had certain "creditable service" from before the Fund existed (under section 8411(b)(2)), and had not gotten a refund of their old retirement contributions for that service. For them, the government contributes 1 percent of the basic pay they earned during that earlier creditable service, plus interest calculated the same way interest is calculated under section 8334(e). The Secretary of the Treasury must credit the Fund with whatever money is needed to cover this.

(d) Overall contribution limit. No contribution can be made under this section for a year if it would push the year's total contributions over the limit in section 415 of the Internal Revenue Code. However, the special one-time credit under subsection (c)(3) does not count toward, and is not limited by, that cap.

(e) Where the money comes from. The agency's contributions under subsection (c) must be paid from the same appropriation or fund that pays that employee's or Member's salary. For legislative-branch employees or Members paid by the House's Chief Administrative Officer, that officer may instead pay the contribution from House accounts.

(f) Depositing the money. Both the employee's contributions under (a) and the agency's contributions under (c) must be deposited into that employee's or Member's individual Fund account^*, following procedures the Secretary of the Treasury sets in consultation with the Executive Director.

(g) Vesting (nonforfeitability).
(1) In general, all contributions made under this section belong to the employee immediately and can't be taken back, except as this subsection says.
(2) The automatic 1 percent agency contribution under (c)(1), plus any earnings on it, is forfeited if the employee leaves government before completing: (A) 2 years of civilian service, if at separation they held certain high-level or politically-appointed positions (Senior Executive Service noncareer appointee, top Executive Schedule-type positions, or a confidential or policy-making position excepted from the competitive service); or (B) 3 years of civilian service, for everyone else; or (C) 2 years of service, for a member of the uniformed services.
(3) The same 1 percent contribution for a Member of Congress or a congressional employee is forfeited if they leave before completing 2 years of civilian service.
(4) None of this forfeiture happens if the person dies while still employed. The money stays theirs (or their beneficiary's) even if they hadn't hit the time requirement yet.
(5) Separately, if someone's pension itself gets forfeited under the older retirement law (subchapter II of chapter 83), for example due to certain crimes, the government's contributions and their earnings are forfeited too.

(h) No side-door contributions. Nobody may transfer or contribute money into the Thrift Savings Fund except as this chapter or section 8351 allows.

(i) Employees returning from military service^*.
(1) This subsection covers an employee who is protected by section 8432b and who, during their time away in military service, either could have elected to contribute under subsection (b)(1), or would have been able to, except that they either stopped their contributions within 2 months before starting military service or separated from their job to go serve.
(2) The Executive Director must make sure that, once such an employee is reinstated or reemployed, they get a reasonable chance to make the same kind of contribution election they could have made if they'd stayed employed.

(j) Rollovers into the Fund.
(1) "Eligible rollover distribution" and "qualified trust" have the same meanings as in the federal tax code (sections 402(c)(4) and 402(c)(8)).
(2) An employee or Member may roll over into the Fund any eligible rollover amount that a qualified trust could otherwise accept under the tax code, using the rollover method described in section 401(a)(31) of that code. The amount rolled in can't be more than what would have counted as taxable income for the person.
(3) The Executive Director writes the rules to carry this out.

(k) CIA pilot-program bonus contributions.
(1) CIA employees taking part in a specific pilot bonus-pay project (under the 2003 Intelligence Authorization Act) who are already contributing from their basic pay may also directly transfer part of their pilot-program bonus pay into the Fund.
(2) These bonus contributions are still subject to the overall cap in subsection (d).
(3) For purposes of the agency-contribution rules in subsection (c), this bonus pay counts as part of that CIA employee's "basic pay."