Over Allowable Contribution for the Year - What to do?

[skobydog]

I made an error with contributions this year. I thought I could contribute $24,000 (TSP plus Catchup) AND $6,500 (Roth plus Catchup) to my TSP Roth.


Long story short I maxed out for my TSP contributions this year because I also opened a Vanguard Roth IRA and didn't realize I had exceeded the limits.




Now I am maxed out with TSP PLUS I have a Vanguard Roth IRA with $5,000 in it. My question is what should I do about the excess funds I have in my Roth? I have read that as long as I remove the money before tax year ends (from the Vanguard account) I will be ok.


Does anyone know the process? Can I just close out the Vanguard IRA and remove the funds or do I have to notify Vanguard? Thank

 

[alevin]

You can have the roth outside account maxed out, plus add total of 24000 in your tsp this year too. You are fine there. what you can't do is put 24000+6500 all in the tsp. the annual allowable total for contributions is 24000 max. That includes 6000 tsp catchup. doesn't matter whether the catchup was done as roth-tp or regular tsp.

so you overdid it on the catchup in tsp by 500, as well as contributed too much to the regular tsp (6000 too much).

Here's an article you may want to read. Even if you aren't military. It spells things out pretty clearly even for us civilians.

 

[skobydog]

So the TSP "Roth" is separate from a self-directed IRA like Vanguard Roth? I think this is where I'm confused.


I've listed my LES numbers below.

My "TSP SAVINGS" stopped last pay period. When I called TSP they said I was at the maximum allowable for the year.

My "TSP CUC" is still being deducted at $231 per month and I'm "assuming" TSP will stop it when I reach my max. ($6,000). Is this correct?

Also, with my self-directed IRA Vanguard account the total I can contribute is $6,500 this year? (I'm over 50 y/o)


These are figures from my LES

TSP Savings $15,600.00
Roth DED $2,400.00
-----------------------
$18,000.00


TSP CUC $5,082.00
Roth CUC $500.00
-----------------------
$5,582.00

 

[alevin]

If they have told you they will cut you off on the regular contributions when you hit 18500, and cut you off on the catchup when you hit those limits, you are ok there. If you hit the 18500 limit before end of the contribution year, you will miss out on matching contributions from .gov for the pp where you aren't allowed to contribute any further, that would be the only downside there.

otherwise, you should be ok after all, so long as they cut you off in tsp when you max out.

And yes, I've been maxing out tsp for some time, and putting max into Roth outside account when I can in the same year these days. I am well over 50, but wasn't able to do the catchups for a few years after 50, other demands on the cash flow for a while after I hit that mark.

Here's the link I forgot to add last post.

https://www.saveandinvest.org/milit...ings-plan/thrift-savings-plan-tsp-roth-option

 

[skobydog]

If they have told you they will cut you off on the regular contributions when you hit 18500, and cut you off on the catchup when you hit those limits, you are ok there. If you hit the 18500 limit before end of the contribution year, you will miss out on matching contributions from .gov for the pp where you aren't allowed to contribute any further, that would be the only downside there.

otherwise, you should be ok after all, so long as they cut you off in tsp when you max out.

And yes, I've been maxing out tsp for some time, and putting max into Roth outside account when I can in the same year these days. I am well over 50, but wasn't able to do the catchups for a few years after 50, other demands on the cash flow for a while after I hit that mark.

Here's the link I forgot to add last post.

https://www.saveandinvest.org/milit...ings-plan/thrift-savings-plan-tsp-roth-option

The link does verify what I was confused with. It states "Roth TSP contributions do not count toward the limits on Roth IRA contributions". I wasn't able to find this anywhere else online.


I did miss out on a few matching contributions this year but it's an error on my part so I accept that. Thanks for the help. :smile:

 

[evilanne]

For the outside Roth, just make sure you are below the income thresholds (Single filer is $118K) 2017 Roth IRA Limits Announced | RothIRA.com If you are above the threshold, the amount you can contribute may be lower. If this is the case google "Backdoor Roth" and you probably need to talk to someone at Vanguard to make sure you get everything done appropriately

 

[James48843]

Damn:

I screwed up.

I just got my leave and earnings statement for this pay period (#26), and I have hit the Elective Deferral Limit of $18,000 in this particular paycheck.

1. that means I will NOT get matching contributions next paycheck (papyperiod 27).

2. AND it means that my ROTH contributions ALSO get cut off next pay period.


Bummer. I thought I was fine- but it turns out this year we have 27 pay periods and I didn't count that. .

 

[Frixxxx]

Bummer. I thought I was fine- but it turns out this year we have 27 pay periods and I didn't count that. .

Oops -at: