How much can I contribute to the TSP?

The Internal Revenue Code places an annual limit on elective deferrals, e.g., tax-deferred employee contributions to the TSP.  The elective deferral limit is $15,500 for 2008.

Consequently, once you have contributed $15,500 in 2008, you may not make any more (regular) tax-deferred employee contributions for the rest of the year.  For FERS employees, this also means that you will not receive any more Agency Matching Contributions for the rest of the year.

If you have made -- or will make -- the maximum amount of regular employee contributions for the year ($15,500 in 2008), you may also make over-50 catch-up contributions to your TSP account. Catch-up contributions have their own annual limit, which is $5,000 for 2008.

Members of the Uniformed Services may not make catch-up contributions from pay that is tax-exempt; FERS employees do not receive Agency Matching Contributions on catch-up contributions.

I am a member of the uniformed services and am making contributions from pay that is tax-exempt. Does the elective deferral limit apply to these contributions?

No . However, there is another provision of the Internal Revenue Code, section 415(c) annual addition limit, which limits the total amount of contributions from all sources that can be made to your TSP account.  The limit for 2008 is $46,000.

In addition, catch-up contributions do not count towards the 415(c) annual addition limit.

The elective deferral limit applies to the total tax-deferred contributions you make during the year to both accounts. During the year, the TSP will apply the limit to each account separately and will not allow you to contribute an amount to either account that exceeds the $15,500 limit. In January, the TSP will check to see whether your combined contributions to both accounts exceed the $15,500 limit. To do so, the TSP will add the tax-deferred contributions made to both accounts and will return any tax-deferred contributions that exceed the $15,500 limit, along with attributable earnings on those contributions. The TSP will return the excess contributions and earnings from the contributions you made to your uniformed services TSP account. You must report the tax-deferred amount we return to you as income for the year in which you made the contributions; you must report the earnings we return to you as income in the year we pay the earnings to you.

The TSP will apply the same process to over-50 catch up contributions made to both accounts that exceed the limit.

When a uniformed service member contributes tax-exempt contributions he or she also becomes subject another limit: the 415(c) annual addition limit ($46,000 for 2008). The TSP applies the limit to the total contributions made to the uniformed services and civilian TSP account for the year. The total amount also includes agency automatic (1%) and matching contributions made during the year. However, it does not include over-50 catch-up contributions. The TSP will apply the same process to the 415(c) annual addition limit as it does to returning contributions that exceed the elective deferral limit (see above). The TSP will return the excess amount from the contributions you made to your uniformed services TSP account. The TSP will first return your tax-deferred contributions. If your tax-deferred contributions were less than the amount the TSP is required to return, the TSP will return the remainder of the excess amount from your tax-exempt contributions. The amount we return will include earnings attributable to these excess contributions. You must report the tax-deferred contributions we return to you as income for the year in which you made them; you must report the earnings we return to you as income for the year we pay the earnings to you. Tax-exempt contributions returned to you are not taxable as income. However, the earnings on these contributions are taxable in the year we return them to you.

For examples of how the 415(c) limit applies to participants who contribute or receive contributions in both a uniformed services and civilian TSP account, click on the information sheet here.

This varies throughout the Government. Even for those participants who are paid on a biweekly basis, the pay period beginning date and the pay dates for each pay period vary from agency to agency. Consequently, you must contact your personnel or payroll office to obtain this answer. Neither the Federal Retirement Thrift Investment Board nor its participant service representatives know the pay dates and pay policy of all Federal agencies. (The elective deferral calculator is under Calculators on this Web site.)

Although you may elect to contribute 100% of your gross basic pay to the TSP, your payroll office will take all the mandatory deductions from your pay before it will take your voluntary TSP deductions. Consequently, you will not be able to contribute all of the basic pay that you earn each pay period to your TSP account.

Mandatory retirement deductions for all civilian TSP participants total over 8% of basic pay and include, as applicable, deductions for the FERS basic benefit, the CSRS annuity, Social Security, and Medicare. TSP participants who have Federal health benefits and life insurance must also have the deductions for these benefits taken from their pay before voluntary TSP contributions can be made. Other required deductions include (but may not be limited to) Federal and state income tax withholding and court-ordered payments.

If later in 2008 I want to make a new contribution election to maximize my contributions for the year, how do I know how much I have contributed to my account to date in 2008?

No. TSP contributions may not be deducted from these payments. These payments do not meet the definition of basic pay as defined by law. Neither the Federal Retirement Thrift Investment Board nor your agency has the authority to waive this statutory restriction.

The elective deferral and the over-50 catch-up contribution limits apply to combined employee contributions to your TSP account and another qualified employer plan as described under sections 401(k), 403(b), 408(k), or 501(c)(18) of the Tax Code.

See the Fact Sheet "Annual Limit on Elective Deferrals" for more information on participating in the TSP and another tax-deferred retirement plan, including what happens if the elective deferral or catch-up contribution limits are exceeded by contributing to more than one employer plan.