TSP introduces new ‘spillover’ method for catch-up contributions
- By Sherkiya Wedgeworth
- Jul 24, 2019
The Thrift Savings Plan, on July 24, announced its plans to change the “spillover” method for making catch-up contributions for certain active TSP participants.
The current catch-up contribution program requires participants to make an affirmative catch-up election each year, certify that they will meet the annual IRC 402(g) elective deferral limit (EDL), and spend considerable effort figuring out how to time their contributions.
Spillover will streamline that process. Beginning the first pay period in 2021, TSP participants ages 50 and older will use a simplified the process for making catch-up contributions.
For example, they will no longer need to make a separate catch-up election. Under the change, once they reach the elective deferral limit, their regular contributions will automatically spill over toward the catch-up contribution limit.
Spill over contributions for eligible members of the Federal Employees Retirement System and the Blended Retirement System will be matched up to 5 percent of basic pay to which participants are currently entitled.
In addition, payroll offices will no longer need to send catch-up contributions on separate payroll records.
Included in the bulletin is a QnA related to the changes.
View the bulletin here.