TSP contribution cap to increase in 2012
Employees will be able to add up to $17,000 to their retirement plans next year.
Federal employees will be able to contribute more to their Thrift Savings Plan accounts in 2012, according to the latest figures from the Internal Revenue Service.
The cap on individual TSP contributions is increasing $500, from $16,500 to $17,000 next year as a result of the change in the cost-of-living index, the IRS announced this week. The increase also applies to those who participate in 401(k), 403(b) and most 457 retirement plans. The catch-up contribution limit for those 50 and older remains the same, at $5,500.
A federal employee's elective contribution does not include the agency automatic or matching contributions as those are not considered part of an employee's pay, according to a TSP fact sheet. The TSP cautions federal employees, particularly those at higher pay levels, to keep in mind the annual individual contribution limit throughout the year, as workers could lose some matching contributions from their agency if they reach the cap too quickly. Employees receive matching contributions only on the first 5 percent of their basic pay that they contribute each pay period. If employees reach the cap before the end of the year, their contributions and the agency matching contributions stop.