Questions and Answers as of November 12, 2008

 Q1:     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 $16,500 for 2009.

Consequently, once you have contributed $16,500 in 2009, 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.

See the Fact Sheet: Annual Limit on Elective Deferrals for more information on this limit, including what happens to Agency Matching Contributions when the annual limit has been reached.

Q2:    If I am at least age 50 (or if I will become 50 in 2009), may I make catch-up contributions? 

If you have made — or will make — the maximum amount of regular employee contributions for the year ($16,500 in 2009), you may also make catch-up contributions to your TSP account. Catch-up contributions have their own annual limit, which is $5,500 for 2009.

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.

For more information about catch-up contributions, see the Fact Sheet: Catch-Up Contributions.

Q3:    I am a deployed 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 (I.R.C. Section 415(c)) which limits the total amount of contributions that can be made to your TSP account from all sources.  The limit for 2009 is $49,000. Catch-up contributions do not count toward the 415(c) limit.

Q4:    How does the TSP apply the limits if I contribute to both a civilian and a uniformed services TSP account? 

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 limit ($15,500 for 2008; $16,500 for 2009).  In January, the TSP will check to see whether your combined contributions to both accounts exceeded that limit.  To do so, the TSP will add up the tax-deferred contributions made to both accounts.  It will then return any tax-deferred contributions that exceeded the 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 catch up contributions made to both accounts that exceed the separate catch-up contribution limit.

When a uniformed service member contributes tax-exempt contributions, he or she also becomes subject another limit: the 415(c) annual addition limit ($49,000 for 2009).  The TSP applies that limit to the total contributions made to the uniformed services and civilian TSP accounts for the year.  “Total contributions” also include Agency Automatic (1%) and Matching Contributions made during the year.  However, they do not include catch-up contributions. The TSP will apply the same process to the 415(c) limit that it uses to calculate and return contributions that exceed the elective deferral limit (see above).  The TSP will return any 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 the 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 to both a uniformed services and a civilian TSP account, click on the information sheet here.

Q5:    I am using the elective deferral calculator on the TSP Web site to determine a specific dollar amount to be deducted each pay period that would allow me to maximize my (regular) contributions to the TSP. How many pay dates are there in 2009? 

This varies throughout the Government. Even for those participants who are paid on a biweekly basis, the beginning pay period date and the pay dates for each subsequent 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 policies of all Federal agencies.

Q6:    May I elect to contribute 100% of my basic pay to the TSP?  

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) court-ordered payments.

If you have additional questions about the deductions that your payroll office must take from your pay, contact your personnel or payroll office.  Neither the Federal Retirement Thrift Investment Board nor its participant service representatives have access to the records that your payroll office uses to determine your pay each pay period. 

Q7:    If later in 2009 I want to make a new contribution election to maximize my contributions for the year, how do I know how much I have already contributed to my account in 2009? 

Generally, the leave and earnings statement that your payroll office provides contains year-to-date information and will reflect your year-to-date TSP employee contributions.  However, these statements also vary from agency to agency, and, if your leave and earnings statement does not contain this information, you must contact your personnel or payroll office.  Your quarterly TSP participant statements also reflect the contributions you have made to your TSP account.   These statements are available online or through the mail by request. 
   
Q8:    I am a civilian employee who will be retiring shortly and will be receiving a lump sum payment for my annual leave and a voluntary separation incentive payment (buyout). Can I have TSP contributions deducted from these payments? 

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.

Q9:    What if I contribute to the TSP and another employer tax-deferred retirement plan during the year? 

The elective deferral and 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 you exceed the elective deferral or catch-up contribution limits by contributing to more than one employer plan.

Q10:   If I transfer my former employer plan (e.g., a 401(k), 403(b), or 457(b) plan) into the TSP, does the amount transferred count toward the elective deferral limit? 

No.  transfers and rollovers into the TSP do not count toward annual contribution limits.  Money transferred or rolled over was applied to the limits in the years the contributions were made.  If you contributed to another employer plan in the same year that you transferred money into the TSP, see Question 9 above for information on contributing to one or more plan in the same year.

Note:  Please do not transfer other eligible employer plan contributions to the TSP until you have established a TSP account.  You cannot establish a TSP account by transferring money into it.

Q11:    Where can I find more information about contributing to the TSP? 

Other resources include the Features section of the TSP Web site, as well as the Summary of the Thrift Savings Plan and other related materials available through the Forms and Publications section of this Web site.