There is no such thing as a free lunch even in government. The Thrift Savings Plan (TSP) costs money to run, and you as a TSP participant pay to keep it running.
But for most federal employees, the fee is completely invisible unless you know where to look.
The fees
The reason many people don’t know about TSP fees is because they are paid automatically from your TSP accounts.
The fees are a percentage of how much money you have in different funds. Therefore, the more you have in the TSP, the more you pay.
Here is a chart of the fees for the various funds (as of February 2023), and the total fee is at the bottom of the chart circled in red.
Fee example in dollars
So if you had $500,000 in the S fund (with a fee of 0.09%/year), you would pay:
$500,000 x 0.09% = $450/yr
You can do the rough math based on your allocation to determine what you’ll pay.
What about the L funds?
The L funds are just a combination of the 5 core TSP funds, so the L funds don’t have their own fees, they just have the fees of the underlying funds that are in them.
You can find more information about which funds the L funds use here.
Is it a good deal?
99.9% of the funds in the world (including those in the private sector) have fees just like you have fees in TSP. However, the size of the fee can vary greatly.
The good news is that TSP funds have relatively low fees compared to all the options out there.
Are there funds in the private sector that have lower fees than in the TSP? Yes, there is, but TSP fees are still very competitive.
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