Today we’re talking about the Thrift Savings Plan’s switch to the spillover method for catchup contributions. We’ll talk about what means, who is affected, and how you designate your catchup contributions going forward. Then we’ll go back over pointers for all TSP participants to help you max out your contributions and how to make sure you get your full match. 

What is a catchup contribution? Everyone is eligible to contribute $19,500 to TSP for 2021. Once you reach age 50 you can make additional contributions if you want to, up to $6, 500 a year. So for participants 50 years old and up, the total amount you can put into TSP each year is $26,000. This even applies to you if you start off the year as a 49-year-old and turn 50 during the year. 

What’s changed? Beginning with the first pay period of 2021, if you’re eligible to make catchup contributions, you now only need to fill out one form and it will stay in effect year after year until you make a change. 

How do you max your contributions and get you full TSP matching contribution, if you’re eligible. Once you reach the annual limit, TSP will not process any more contributions for the rest of the year. Then, as long as you don’t make any changes, it will start up automatically again in January.  But you need to know what happens to your agency or service matching contributions once you reach the annual limit. For CSRS feds and non-BRS military you are not affected by this timing because you don’t receive any matching contributions. But if you’re a FERS employee or blended retirement system (BRS) servicemember, your agency matches your contribution each pay period, then stops matching once you reach the annual limit. The problem is that the matching contribution is based on the amount of your contributions you make each pay period up to 5% of your basic pay that period. So if you hit the annual limit before the last pay period of the year, there’s no match in any pay period for the rest of the year. Make sure you spread out your contributions throughout the whole year so you contribute at least 5% of your basic pay every single pay period. That’s every month for military and every 2 weeks for Feds. 

To figure out the minimum you need to contribute to get your match, check your LES. See what your base pay is for the pay period and multiply it by .05. This is the minimum amount you need to contribute to get your full match each pay period. Depending on your circumstances, you should definitely consider contributing more than 5% a pay period for retirement. 
Once you’ve decided how much to contribute, make sure to spread it out through the year. You don’t want to hit a limit before your last pay period. You’ll take your annual base pay and divide that by the number of pay periods. For military that’s 12, and for civilians that’s 26. Take that number and round up to the nearest dollar. And that’s what you put on your TSP form. By rounding up to the nearest dollar that you’ll max out every penny of match. 

If you are partially into a year and need to make a change, maybe because of a pay raise or change in circumstances, or just hate math, you can use the How Much Can I Contribute calculator on the TSP website at  https://www.tsp.gov/calculators/how-much-can-i-contribute/#top I’ll put the link in the show notes. 

Check out TSP’s website at https://www.tsp.gov/ for info on all things TSP. If you’d like to talk about your situation or would like you’re your question answered on a future podcast, send it my way to through my website https://www.moneypilotadvisor.com/ or you can email me directly at [email protected] Talk to you next week.