John M. Mason, CFP® & Tommy Blackburn, CFP®, CPA, PFS
New Savings Limits
The IRS recently announced increased contribution limits for retirement plans such as Thrift Savings Plan, 401(k)s, and 403(b)s for 2020. The contribution limits have increased from $19,000 to $19,500 for those under age 50, and for those over age 50, the catch-up contribution limit has increased from $6,000 to $6,500. Effectively, those who are 50 or older can contribute up to $26,000 into their TSP, 401(k), or 403(b)!
For those in TSP, you can change TSP contribution elections at any time. To take full advantage of the increased limits, and assuming 26 pay periods, you would contribute $750 per pay period, which comes out to $19,500 annually. If you’re eligible for catch-up contributions, and assuming 26 pay periods, you would contribute $250 per pay period to take full advantage of the 2020 limit of $6,500.
Check with your payroll department to see when you should make the new elections to have them effective for all of 2020. Please also note that TSP catch-up contributions have to be elected each year (they do not carry from year to year).
Department of Navy Personnel
TSP changes executed during the pay period of December 8 – December 21 will be effective December 22 and withheld from your first paycheck in tax year 2020.
This is likely true for the majority of Civil Service personnel but should be confirmed by each human resource department.
TSP Matching
For FERS employees, please remember that you have to contribute to your TSP each pay period in order to receive agency matching contributions (4%)!