When you vest, and what you keep if you leave

Because the pieces of your retirement come from different programs with different rules. It’s easy to assume one date makes you "vested," but in practice three separate clocks start on your first day and finish years apart.

Vesting has a narrow meaning worth being precise about. It isn’t when money appears in your account, and it is not when you can retire. In simple terms, it’s whether the money stays yours if you walk away tomorrow.

The three clocks are your own contributions and the agency match, which are yours from day one, the agency automatic 1% contribution at three years, and the Federal Employees Retirement System (FERS) pension at five years.

That spread is why a two-year employee and a four-year employee leave with genuinely different things. Each clock gets its own slide below, from day one through year five.

Two of the three pieces, and they’re the ones people worry about needlessly. The money you contribute to the Thrift Savings Plan (TSP) is yours immediately, and so are the agency matching contributions on top of it.

There’s no waiting period on either. If you contribute in your first pay period and leave federal service the following month, both your contribution and the match on it go with you, along with any earnings.

That has a practical consequence for new hires who aren’t sure how long they will stay. Contributing enough to capture the full match is not a bet on staying, because the match is not at risk. The 5% match lesson covers how the match is structured and how to capture all of it.

One piece of agency money is different: the automatic 1% contribution, covered next. It’s the only part of your TSP with a waiting period.

The agency's automatic 1% contribution vests. This is the contribution your agency makes whether or not you contribute anything yourself, and it is the only part of your TSP account with a cliff.

A cliff means all or nothing. You’re vested after completing three years of federal service, generally civilian service. If you leave at two years and eleven months, you forfeit the automatic contributions and their earnings; leave a month later, and they are entirely yours.

A smaller group vests in two years instead. The two-year schedule applies to noncareer Senior Executive Service positions, Executive Level positions, Schedule C positions, and Members of Congress and Congressional employees. Most federal employees are on the three-year schedule.

Your TSP account statement shows your vesting status, and your agency reports a TSP Service Computation Date that the clock runs from. That date isn’t always the same as your retirement service computation date, which is worth checking if you have prior federal service.

A pension you can claim later, even if you leave long before retirement age. Five years of creditable civilian service is the threshold at which you become vested in the FERS basic annuity.

What it buys is a right, not a payment. If you’re vested and you separate, you can leave your retirement deductions where they are and claim a deferred annuity at 62. You are not eligible to collect anything before then on this route.

The amount is computed from the service you actually had, so five years of service produces a five-year pension, which is small. With that said, it’s a lifetime, inflation-adjusted benefit you no longer have to be a federal employee to receive.

The deferred and postponed retirement lesson covers how the deferred route works and how it differs from postponing an immediate annuity. This slide covers only the threshold that creates the option.

It comes down to which clocks you’ve finished. The table below is the whole question in one view, and it’s the reason a departure date a few months either side of a cliff matters more than people expect.

Under three years, you keep your own contributions, the agency match, and all their earnings, but you forfeit the automatic 1%. You have no pension right, though you can apply for a refund of the retirement deductions taken from your pay.

Between three and five years, the automatic 1% is now yours too. The pension is still out of reach, so the refund question is the same one.

At five years and beyond, all three clocks are finished. You can leave your deductions in place and claim a deferred annuity at 62, or take a refund instead. Taking a refund gives up credit for that service unless it is later repaid, which taking a FERS refund covers in full.

Two dates decide everything on this page, and neither is guaranteed to be right in your records. Checking them early is cheap, while discovering an error at separation isn’t.

The first is your TSP Service Computation Date, which drives the automatic 1% clock. Your agency reports it, and it appears in your TSP account. Prior federal service can move it in ways people don’t expect.

The second is your retirement service computation date, which drives creditable service toward the five-year pension vest. It isn’t always identical to the TSP date, and periods such as non-deduction service (time worked without retirement deductions taken from your pay) can complicate it.

If you have any prior federal service, temporary appointments, or a break in service, ask your agency HR office to confirm both. To see how the pieces fit into a longer plan, run your free readiness score.