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Paycheck Chronicles

30 September 2016 Military Pay

Since 1 October 2016 falls on a weekend, the next regular, active duty military payday is Friday, 30 September 2016.  That means that your 30...

Thrift Savings Plan Contribution Limits

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2015 Update:

Roth TSP is changing from a dollar amount election to a percentage of pay election. Traditional TSP will remain a percentage of pay election. In January 2015, members who want to continue their Roth TSP election must submit a new election on MyPay or submit a TSP election form TSP-U-1 to their finance office. If you do not submit a new election your Roth TSP contributions will be stopped at the end of January 2015.

TSP Contribution Limits for 2015:

Elective Deferral Limit:  $18,000 
Applies to combined total of traditional and Roth contributions.

Annual Addition Limit $53,000
An additional limit for tax-exempt pay earned in a combat zone.

Catch-up Contribution Limit $6,000 
The maximum catch-up contributions that can be contributed in a given year by participants age 50 and older.

The Internal Revenue Code (IRC or Tax Code) places a number of specific limits on the dollar amount of contributions you can make to the TSP. These limits can change annually and are generally refered to as the “IRS limits” because the Internal Revenue Service (IRS) is responsible for calculating them each year. When the annual limits become available, the TSP announces them on the TSP website and the ThriftLine as well as through its various publications.

The IRC elective deferral limit is the limit that the Tax Code (section 402(g)) places on regular employee contributions. The elective deferral limit applies only to regular employee contributions that are made in before-tax (i.e., tax-deferred) dollars. 

For members of the uniformed services, the elective deferral limit includes all taxdeferred contributions from taxable basic pay, incentive pay, special pay, and bonus pay.

However, the elective deferral limit does not apply to contributions made from the tax-exempt pay a member of the uniformed services may receive. If you are a member of the Ready Reserve who is contributing to both a uniformed services and a civilian TSP account as a FERS employee, the elective deferral limit applies to the total amount of taxdeferred employee contributions you make in a calendar year.

If you are a member of the uniformed services and have two TSP accounts, or if you are participating in other eligible plans, you need to pay particular attention to the section 402(g) limit.

The IRC section 415(c) limit is an additional limit that the Tax Code imposes on the total amount of all contributions made on behalf of an employee to an eligible retirement plan in a calendar year.

“All contributions” include employee contributions (both tax-deferred and taxexempt), Agency Automatic (1%) Contributions, and Agency Matching Contributions. For 2011, the section 415(c) limit is $49,000.

Members of the uniformed services should pay particular attention to this section 415(c) limit if they contribute from pay that is subject to the combat zone tax exclusion because section 415(c) allows their contributions to exceed the elective deferral limit.

The IRC catch-up contribution limit is the maximum amount of catch-up contributions that can be contributed in a given year by participants ages 50 and older. It is separate from both the elective deferral limit imposed on regular employee contributions and the IRC section 415(c) limit imposed on employee contributions (both tax-deferred and tax-exempt), Agency Automatic (1%) Contributions, and Agency Matching Contributions.

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