Federal employees will be able to contribute up to $10,500 to their Thrift Savings Plan accounts next year under an increase in pension plan limitations, the Internal Revenue Service announced last week.
The TSP contribution limit this year is $10,000. The IRS sets each year's annual contribution limit, known as the elective deferral limit, to account for cost-of-living increases.
Most federal employees are not affected by the limit because contributions are also limited to 10 percent of basic pay each pay period for Federal Employees Retirement System (FERS) employees. Civil Service Retirement System (CSRS) employees can contribute up to five percent of basic pay each period. The new $10,500 limit will only affect FERS employees who make more than $105,000 a year.
Rep. Connie Morella, R-Md., has sponsored a bill for several years that would allow all employees to contribute up to the elective deferral limit. The bill (H.R. 483), which Morella says would encourage federal employees to save up for retirement, is considered too expensive by opponents. Contributions to the TSP are tax-deferred; allowing people to contribute more to the TSP would decrease federal revenues.
For a daily index of the performance of the C Fund, see the "TSP Ticker" on the front page of GovExec.com. For more TSP information, see the Thrift Savings Plan guide.
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