2026 TSP changes: everything federal employees need to know

Last Updated: March 1, 2026 Reading Time: 7 min

The TSP crossed $1 trillion in assets in July 2025 and ended the year at $1.073 trillion, with approximately 7.3 million participants and 194,722 TSP millionaires as of January 2026. New funds launched, old funds merged, a Roth conversion feature went live inside MyAccount, and a political proposal put the TSP in national headlines.

Here is what changed in 2025-2026 and what it means for your account. For topics with dedicated FedTools guides, we link out rather than repeat them.

Key takeaways

• TSP expense ratios run 0.036-0.051%, but the TSP is not always the cheapest option. Fidelity beats TSP on C and S fund costs. The G Fund, though, is 3x to 11x cheaper than any private-sector equivalent.
• The L 2025 Fund was retired June 27, 2025. If you were in it, your balance automatically moved to the L Income Fund, the most conservative option in the lineup.
• The L 2075 Fund launched June 30, 2025, with a nearly 99% stock allocation for participants with 47+ year investment horizons.
• The I Fund's underlying index expanded in 2024, from roughly 750 companies to approximately 5,500 across 44 countries, with China and Hong Kong explicitly excluded.
• The "TSP for All" proposal announced February 25, 2026 does not affect existing federal employee TSP accounts.

Expense ratios: the real cost of each TSP fund

The TSP charges roughly $37 per $100,000 invested. Whether that is the best deal available depends on which fund you are in.

The table below shows the 2025 published expense ratios for each TSP fund alongside the closest private-sector equivalents from Vanguard, Fidelity, and Schwab.

TSP Fund	TSP Ratio	Vanguard Equivalent	Vanguard Ratio	Fidelity Equivalent	Fidelity Ratio
C Fund (S&P 500)	0.036%	VOO	0.030%	FXAIX	0.015%
S Fund (Small/Mid)	0.051%	VXF	0.050%	FSMAX	0.035%
I Fund (International)	0.038%	No direct match	--	FSPSX	0.035%
F Fund (Bond Index)	0.037%	BND	0.030%	Schwab SCHZ	0.030%
G Fund (Gov't Securities)	0.037%	VMFXX	0.110%	SPAXX	0.420%

Note: These are 2025 published figures. TSP publishes updated expense ratios annually at tsp.gov/expenses. The 2026 figures are expected mid-year.

What the numbers actually mean

A common misconception is that TSP is always the cheapest option. It is not.

For the C Fund, Fidelity FXAIX charges 0.015%, less than half the TSP rate of 0.036%. Schwab's SWPPX comes in at 0.020%. For the S Fund, Fidelity's FSMAX at 0.035% beats TSP by 0.016%. For F Fund equivalents, both Vanguard BND and Schwab SCHZ are 0.007% cheaper.

The TSP's fee advantage is concentrated in one place: the G Fund.

No private-sector product matches it. Vanguard's VMFXX charges 0.110%, nearly 3x more. Fidelity's SPAXX charges 0.420%, more than 11x more. And neither of them offers what the G Fund does: a government-backed return tied to intermediate-term Treasury yields, with no risk of principal loss.

For large balances, this gap adds up. A $500,000 G Fund balance saves you $365-$1,650 per year in fees compared to the nearest private-sector alternatives.

The actual dollar cost

At 0.037-0.051%, a $100,000 TSP account costs $37-$51 per year in total fees. The average 401(k) mutual fund charges 0.50-1.00%, so that same $100,000 in a typical employer plan costs $500-$1,000 per year. The TSP is 10-20x cheaper than average.

Use the TSP Calculator to model how fee differences compound over a 20-30 year career. Even a 0.10% fee gap can mean tens of thousands of dollars at retirement.

L Fund lifecycle changes: what happened and what to check

The L 2025 Fund is gone

The L 2025 Fund reached its target retirement date and was retired. The timeline:

• June 27, 2025: Last trading day for the L 2025 Fund
• Market close, June 27, 2025: All L 2025 balances automatically transferred to the L Income Fund
• July 1, 2025: L 2025 no longer exists as a separate option

This was automatic. No action was required or available.

What to check: The L Income Fund is the most conservative option in the TSP lineup, holding roughly 74% in the G Fund and 6% in the F Fund, with small allocations to C, S, and I funds. It is designed for participants already in retirement.

If you were in the L 2025 Fund and you have more than five to ten years before you plan to draw down your TSP, the L Income Fund may be too conservative for your actual timeline. Log in to TSP.gov MyAccount and review your current allocation. Our best TSP allocation guide covers how to think through this by age and risk tolerance.

One note on fees: L Funds do not have separate expense ratios. They are composite funds built from the five core funds. The L Income Fund's effective expense ratio is a weighted blend of whatever core funds it holds.

The L 2075 Fund launched

On June 30, 2025, the same day the L 2025 Fund was retired, the TSP launched the L 2075 Fund.

It is designed for participants who plan to begin withdrawing from their TSP in 2073 or later. Its initial allocation at launch:

Fund	Allocation
C Fund	51.48%
I Fund	34.65%
S Fund	12.87%
F Fund	0.64%
G Fund	0.36%

That is approximately 99% stocks and 1% bonds, appropriate for someone with a 47-plus year investment horizon.

The L 2075 will not begin meaningfully shifting toward more conservative assets until around 2047. Like all L Funds, it rebalances quarterly per the FRTIB's glide path. If you are a very young federal employee or a recently commissioned military officer, this fund may be worth a look.

I Fund index expansion: 750 companies became 5,500

This change happened in 2024, but it continues to shape how the I Fund behaves and is directly relevant to 2026 planning.

The I Fund switched from tracking the MSCI EAFE Index to the MSCI ACWI IMI ex USA ex China ex Hong Kong Index. The practical effect:

Before	After
~750 companies	~5,500 companies
21 developed countries	44 countries
Developed markets only	Includes emerging markets

Emerging markets now covered include India, Brazil, South Korea, Taiwan, and others. China and Hong Kong were explicitly excluded following congressional and national security concerns about federal retirement dollars flowing into companies linked to the People's Liberation Army. This was a political decision, not a purely financial one.

The expanded index gave the I Fund exposure to faster-growing economies. For context on how this affected 2025 performance, see our 2025 TSP fund performance review. For strategy guidance on whether to increase or decrease your I Fund allocation, see our I Fund allocation strategy guide.

MyAccount and system improvements in 2026

Roth in-plan conversion: now live

As of January 28, 2026, eligible participants can convert traditional TSP balances to Roth TSP directly inside MyAccount on TSP.gov, without rolling funds to an outside IRA. This had been a long-requested feature.

For full mechanics, eligibility rules, tax implications, and step-by-step instructions, read our dedicated Roth in-plan conversion guide. This post does not duplicate that coverage.

New digital tools

The FRTIB also announced new planning tools for 2026:

• A Roth conversion tax estimator that previews estimated tax impact before converting
• An updated RMD calculator for current required minimum distribution rules
• Improved withdrawal planning tools for modeling retirement distribution decisions

As of March 2026, these tools were announced but full rollout status was not confirmed in all public sources. Check TSP.gov/my-account for current availability.

2026 contribution limits

New limits took effect January 1, 2026. For the full breakdown, including catch-up rules and the mandatory Roth threshold, see our 2026 TSP contribution limits post.

"TSP for All": what the proposal does and does not do

On February 25, 2026, President Trump announced a proposal to create a TSP-style retirement savings plan for private-sector workers who lack access to any employer-sponsored retirement plan. The proposal targets approximately 56 million workers.

Key details as announced:

• Accounts would model TSP's low-cost index fund options
• Government would match contributions up to $1,000 per year (far less than the federal employee 5% match)
• Accounts would be portable across jobs
• Administrative oversight is not yet determined

For federal employees, the bottom line is simple: this proposal does not change your TSP. Your contribution limits, investment options, account rules, and employer match are unchanged unless entirely separate legislation passes to alter them. FedSmith reported: "The President's proposal does not change the existing TSP."

Status as of March 2026: proposal only. It requires Congressional approval, and no legislative text has been published. Nothing here requires action on your part.

Project your TSP balance

If you want to see how these changes affect your numbers, use the free TSP Calculator to model your balance at different contribution rates, fund allocations, and retirement dates. You can also see how fee differences compound over a 20 to 30-year career.

Frequently Asked Questions

What are the TSP expense ratios for each fund in 2026?

The most recently published figures are from 2025: C Fund 0.036%, S Fund 0.051%, I Fund 0.038%, F Fund 0.037%, G Fund approximately 0.037%. L Funds do not have separate expense ratios. They are blended composites of the five core funds. TSP publishes updated figures annually at tsp.gov/expenses; 2026 data is expected mid-year.

Is the TSP cheaper than Vanguard or Fidelity?

It depends on the fund. The G Fund is dramatically cheaper than any private-sector equivalent, 3x to 11x cheaper than comparable money market or stable value funds. For stock funds (C, S, F), Fidelity and Schwab are often slightly cheaper. For the S Fund, TSP and Vanguard are nearly equal. The TSP's primary fee advantage is the G Fund. No private market product offers government-backed returns at this cost.

What happened to the TSP L 2025 Fund?

It was retired June 27, 2025. All balances automatically transferred to the L Income Fund at market close that day. No action was required. The L Income Fund is the most conservative L Fund, heavily weighted toward G and F funds, and is designed for participants already in or near retirement. If you were moved and have a long time horizon remaining, review whether L Income matches your actual needs.

What is the new TSP L 2075 Fund and who is it for?

Launched June 30, 2025, the L 2075 Fund is designed for participants who plan to start TSP withdrawals in 2073 or later, generally very young federal employees or military members. Its initial allocation is approximately 99% stocks (C, S, and I funds) and 1% bonds (G and F funds). It will not meaningfully shift toward conservative assets until around 2047.

What is the TSP for All proposal and does it affect my TSP account?

Announced February 25, 2026, this proposal would create a TSP-style retirement plan for private-sector workers without 401(k) access. It does NOT change existing federal employee TSP accounts. Rules, contribution limits, and investment options remain the same unless entirely separate legislation is enacted. Congressional approval is required; no legislative text has been published.

How much does the TSP cost in actual dollars?

At the 2025 expense ratios of 0.036-0.051%, a $100,000 TSP account costs $36-$51 per year in fees. A typical employer 401(k) with 0.50-1.00% expense ratios costs $500-$1,000 per year on the same balance. The TSP is roughly 10-20x cheaper than average.

Related Resources

• TSP Guide 2026: The complete reference for contribution limits, fund options, withdrawals, and rules
• Best TSP Allocation 2026: Fund-by-fund strategy by age and risk tolerance
• Roth In-Plan Conversion Guide: Step-by-step guide to the new Roth conversion feature
• TSP Mutual Fund Window Guide: How the mutual fund window works, fees, and whether it makes sense for you
• TSP Calculator: Project your balance at retirement under different scenarios

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Sources: TSP.gov Expenses and Fees, TSP L Fund Changes Announcement (June 30, 2025), TSP Roth In-Plan Conversion Bulletin 25-4, FRTIB.gov, FedSmith (February 25, 2026), FedSmith (April 2025 expense ratio data).