House votes to lift TSP contribution cap
Federal employees with six-figure salaries would be able to contribute more money to their Thrift Savings Plan accounts under a bill passed by the House last week.
The bill, H.R. 1102, lifts the IRS cap on 401K contributions and Individual Retirement Accounts from $10,500 to $15,000 over five years, meaning some federal employees could contribute up to $15,000 to their Thrift Savings Plan accounts.
According to Tom Trabucco, director of external affairs for the Federal Retirement Thrift Investment Board, only employees participating in the Federal Employees Retirement System (FERS) making more than $105,000 a year would benefit from the bill as it stands. FERS employees may only contribute up to 10 percent of their annual income-up to the IRS limit-to their TSP accounts.
Employees in the Civil Service Retirement System can contribute 5 percent.
Carol Bonosaro, president of the Senior Executives Association, said raising the limit could have a limited effect on senior executives. For example, she said many SESers have children in college, and may not have any money left over for contributions after paying tuition.
A separate bill sponsored by Rep. Connie Morella, R-Md., would eliminate percentage restrictions on federal employees' TSP contributions altogether. Morella's bill would allow all employees-regardless of income or retirement plan-to make TSP contributions up to the IRS limit.