The main difference is that the TSP is only for Federal employees. A Thrift Savings Plan is essentially a 401(k) for employees of the federal government. It functions in the same ways and is subject to the same limitations. The contribution limits and catch-up limits are the same, as well as the employer contribution limit.

The plan actually has lower fees than most 401(k)s, so that’s one difference. The investment options are fairly limited, but not much more than regular 401(k)s. There are basically 5 index funds to choose from and then a series of target-date funds that blend the index funds.

There is usually a flat 1% employer contribution as well as a match for most employees, but not for most military service members. The match is usually a 100% match up to 3% of employee compensation, and then a 50% match up to 5%, with no matching over that.

Another difference from most 401(k)s is that if a Federal Employee makes an age-based in-service withdrawal of only part of their account balance, he or she may not be eligible to make a partial withdrawal ever again, including after being separated from service. At that point the only option would be a full distribution of some form.

How Does a 401(k) Compare With Other Retirement Plans?
What Are the Contribution Limits For My Thrift Savings Plan?