Contributing to Your TSP - United Benefits

Contributing to Your TSP


Matt: A lot of questions we get is, how much can you contribute to your TSP?

A lot of times you hear percentages, but actually it’s determined by the IRS, and in 2018 you can contribute up to $18,500. If you’re older than 50, there’s a catch up-provision where you can do another 6,000, so that puts you up to $24,500 if you’re older than 50 into the TSP. That’s your contributions, that’s not the matching.

Jeremy: What would be the benefit of actually doing, we’re talking about percentages on the slide before and the matching, 1 to 5%. Now I see a hard dollar figure. If I’m a federal employee, do I focus on a hard dollar figure or do I look at maybe just setting a percentage?

Matt: That’s a great question. A lot of federal employees that we talk to and we meet with and we sit down, have been there for 20 years. They calculated their 5% 15 years ago, but don’t always remember to go back as you get COLAs or step increases and raises and promotions, that it’s not gonna go with you automatically if you do a dollar amount. So if you’re just trying to get the matching, we always recommend to do the 5%, because when you get a pay increase, it’s gonna go with your pay increase.

Now, if you want to do beyond 5%, typically that’s when you’re gonna get into higher amounts and then you do a dollar amount. But you do have to be careful because if you put in too much early in the year and you get to your limits, you lose the ability to get matching later in the year if you’ve put in too much-

Jeremy: Oh.

Matt: Once you hit your limit.

Jeremy: Okay.

Matt: So we’ve seen people that put in the $24,500 by October or November, they’re not allowed to contribute anymore, therefore they’re gonna lose the matching piece.

Jeremy: Again, the catch up provision there is something that it’s available for those that may not have been educated enough on the Thrift Savings Program early in their career and have some catching up to do, which– hence the name, “Catch Up Provision.” So it allows them to put in more funds to try to increase their retirement benefit, correct?

Matt: That’s correct.

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