Federal Employees News Digest

Employees Should Review 2019 TSP Contribution Amounts

The Internal Revenue Code (IRC) places limits on the dollar amount of contributions a federal employee can make to the Thrift Savings Plan (TSP). This limit is called the IRS’ “elective deferral limit”. For 2018, the elective deferral limit was $18,500. For 2019, the elective deferral limit has been increased to $19,000.

Those employees who are covered by the Federal Employees Retirement System (FERS) receive from their agencies an automatic one percent of their (SF-50) gross salary contribution to their TSP accounts, plus a matching contribution of up to four percent. To receive the maximum four percent matching contribution during the calendar year, a FERS-covered employee must contribute from his or her salary at least five percent of the salary each pay date during the calendar year. Note that it makes no difference which TSP account contributes to; namely, the traditional TSP or the Roth TSP in achieving the minimum five percent of salary contribution rate each pay date.  If a FERS-covered employee contributes the entire $19,000 during 2019 before his or her last pay date in December 2019, then the employee will lose the four percent matching contributions between the date the employee reaches the $19,000 limit and Dec. 31, 2019.

The TSP on its Web site has a calculator entitled “How much can I contribute?”. The calculator, which may be found at www.tsp.gov/PlanningTools/Calculators/electiveContributions.html, will ensure that the employee does not reach the IRS’ elective deferral limit before the last pay date of the calendar year, thereby avoiding “leaving money on the table”.

The following table summarizes the TSP contribution limits for 2019:

TSP Contribution Limits for 2019

Elective Deferral Limit

 

 

$19,000

Applies to combined total of traditional and Roth TSP contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay. It does not apply to traditional contributions made from tax-exempt pay earned in a combat zone.

Annual Additional Limit

 

 

$56,000

An additional limit imposed on the total amount of all contributions made on behalf of an employee during a calendar year. This limit is per employer and includes employee contributions (before-taxed, after-taxed, and tax-exempt), agency automatic one percent of gross salary contribution and agency matching contributions. Working for multiple Federal agencies or services in the same year is considered having one employer.

“Catch-up” contribution limit

 

$6,000

The maximum amount of “catch-up” contributions that can be made in a given year by retirement plan participants who are over age 49 as of Dec. 31, 2019. It is separate from the elective deferral limit and annual addition limit imposed on regular employee contributions.

Members of the uniformed services should be aware that Roth TSP contributions are subject to the $19,000 elective deferral limit during 2019, even if the contributions come from tax-exempt pay earned in a combat zone. If a uniformed service member wants to contribute tax-exempt pay towards the annual additional limit, then the uniformed service member will have to contribute to the traditional TSP for any amounts exceeding the $19,000 elective deferral limit and not exceeding $56,000 (less any matching contributions made on behalf of Blended Retirement System Uniformed Service members).

In addition, uniformed service members who are over age 49 and eligible to make “catch-up” contributions and who are deployed in a designated combat zone will not be able to make any traditional TSP contributions from tax-exempt pay. But Roth TSP “catch-up” contributions from tax-exempt pay are allowed.

The elective deferral and “catch-up” contribution limits for members of the Ready Reserve who are contributing to both a uniformed services TSP account and a civilian agency TSP account (as a FERS employee) apply to the total amount of employee/Ready Reserve member contribution made during 2019 to both types of TSP accounts.

Those employees who plan to retire or leave Federal service anytime during 2019 are still eligible for the full amount to their TSP accounts ($19,000 elective deferral limit plus $6,000 “catch-up” contributions). If these retired or departed employees decide to work for another employer offering a qualified retirement plan, such as a 401(k) plan, in which they can contribute to the plan via payroll deduction, then the retired or departed employee’s total contribution to the TSP and other plans cannot exceed the $19,000 and $6,000 limits for 2019.

 

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant and IRS Enrolled Agent in Silver Spring, MD.  Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. 

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Contributors

Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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