What is really the max

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pyriel

pyriel

Active member
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TSP gang,

Please smart ones, give me some guidance. My wife is a FERS employee contributing 14% (15% next year) and receiving matching contribution of 5%. Max contribution according to TSP is 13K (14K next year). However, when I compute 14K to my wife's pay, I am coming up wiht 32%? What gives? We want to follow the l14K route but do not want to lose the 5% matching. Additionally, we want to lower our taxes as well. Can someone please explain which one is correct and show us how? Is anybody doing this?

As for me, I'm an active duty military contributing 9% (10% next year). I would like to do the same and max out to 14K next year. Which one can I follow? I've always thought I am limited only to 9% this year and 10% (next year). Hmmm.... Confusing...

:*Heads spinning and seeing stars....
 
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TSP contribution limit for FERS employees for 2005: 15% (up to the IRS limit)

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TSP contribution limit for CSRS employees for 2005:10% (up to the IRS limit)

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TSP contribution limit for members of the uniformed services for 2005: 10% (up to the IRS limit)The key is the percentage and that percentage of your annual earnings cannot exceed the IRS limit..normally only effects very highly paid Federal Employees.:^
 
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Just to elaborate on what Dogdaddy wrote, you are limited by BOTH the 10 % cap and the $14K cap. But, unless you make more than $140K per year, you are effectively limited by the 10% cap and not the $14K cap.

In your wife's case, if $14K is 32% of her salary, then she makes around $44K per year. Since she is limited by the 15% cap next year, and gets the 5% agency match, the most she can put into her TSP is $8,800 ($44K X 20%). This is well below the $14K cap imposed by the IRS. So you can see that the $14K limit only is relevant for those making the big bucks.

Hope this helps.

Dave
 
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Just to elaborate on Dogdaddy's response, you are limited by BOTH the percent cap and the $15K cap (imposed by the IRS). However, for most people it is the percent cap that kicks in first.

For example, in your wife's case she apparently makes around $44K per year (given that $14,000 is 32% of her salary). She cannot contribute the whole $14,000 because it exceeds the percent cap. With the max percentage contribution rising to 15% next year, and with the 5% agencymatch, the most she can contribute is $8,800 (20% of $44K), farless than the $14,000 limit.

Now, if you made $200K per year, then you would be faced with the IRS' total dollar limit firstsince only 7.5% of your salary would equal $15K.

So for all but the most highly paid feds, it is the percent contirbution that we need to think about. Make sense?

Dave
 
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Next year you can only contribute 15% of your wifes salary. The 15,000 refers to the IRS limit thay anyone (not just Feds) can contribute into a 401K. It only effects Federal employees if their salary is higher than 100,000. (If a federal employee makes more than 100,000, then 15% of their pay would equal more than 15,000 and would be capped by the IRS, not their agency).

Does that help?

Dave



Oops. Neirbod beat me to it...with a better explanation too.
 
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OKI, OKI, OKI...

For 2006, TSP is supposed to be unlimited for military personnel. Does this mean that I can then put 15K into my TSP?

Second, does the unlimited TSP contribution for 2006 applies to FERS employee as well? If so, my wife should be able to put in 15K as well.If this is true,will she still be able to get the 5% max contribution?

Doggy, Ihaven't read the stuff you pasted in your post. I promise to read them butfor some clarification, especially, for other clueless like me, I'd like toget all your response on this.

Thank you all...
 
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pyriel wrote:
OKI, OKI, OKI...

For 2006, TSP is supposed to be unlimited for military personnel. Does this mean that I can then put 15K into my TSP?

Second, does the unlimited TSP contribution for 2006 applies to FERS employee as well? If so, my wife should be able to put in 15K as well.If this is true,will she still be able to get the 5% max contribution?

Doggy, Ihaven't read the stuff you pasted in your post. I promise to read them butfor some clarification, especially, for other clueless like me, I'd like toget all your response on this.

Thank you all...
Click to expand...
pyriel:

According to the information on the TSP Website, you're right - there is no percentage limit on your contibution (or your wife's contribution) for 2006. You (and she) can contributewhatever the percentage is that will bring you up to the IRS Limit of $15,000.

Being a FERS employee, she will get the matching 5% contribution, as well. The Secretary of your service branch can also authorize a matching contribution for some critical specialties, but none of the uniformed services have approved matching contributions to date. Your service will notify you when and if you are elgible for matching contributions.

When you reach age 50, you can also make an additional "catch-up" contribution to your TSP, but I suspect you're a little young for that. That contribution is $4000 for 2005, $5000 for 2006, and is adjusted for inflation thereafter.

Hope that clears it up !

Dogdaddy
 
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tsptalk wrote:
Welcome Dogdaddy!!
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Thanks for the welcome Tom:

I've been "lurking in the shadows" as a guest the last couple of months watching a lot of the negative crap going on between two of your most active posters. Now that you have apparently put a stop to that, I've decided to become an active participant........ Hopefully it will be a synergistic experience. I've learned a lot from your board so far, and at my age (recently retired) can probably contibute some ideas from my own fairlyextensive financial and business background. My Wife still works for the Feds, so I certainly have a vested interest in helping to make her TSP grow as rapidly as possible as she also approaches retirement..........Certainly look forward to that possibility.

Nick :^
 
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My Wife still works for the Feds, so I certainly have a vested interest in helping to make her TSP grow as rapidly as possible as she also approaches retirement..........Certainly look forward to that possibility.

Nick :^
Click to expand...
And I welcome you also, Dogdaddy !!And I am certainly interested in getting a glimpse of how you work your wife's account, and perhaps gleaning some wisdom from those moves.! This is a good group of good :cool:people!!

pat
 
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Dogdaddy wrote:

...According to the information on the TSP Website, you're right - there is no percentage limit on your contibution (or your wife's contribution) for 2006. You (and she) can contributewhatever the percentage is that will bring you up to the IRS Limit of $15,000.

Being a FERS employee, she will get the matching 5% contribution, as well. ...
Click to expand...

Dogdaddy - Quick query...

I wasn't able to find on the TSP website information if thetotal deferral amount combined for a married couple - say one was FERS and another was uniformed - was still capped out by the IRS at the 14k level for 2005. Do you know if the IRS treats each spousal member as separate (even if they file taxes jointly?). Or would they be able to independently claim for the max cap for a grand total (not including any allowable catch-up contributions) of 28k? Sure would seem unfair to penalize based on that... (though it wouldn't be the first unfair thing to be set forth!). Thanks... Have a GREAT holiday.

Jim
 
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teknobucks wrote:
this guy has done a wonderful job explaining tsp limits:

http://atpayplan.natca.net/tsp.htm
Click to expand...
This is neat! thanx for making me aware of this site! I do need to ask if different departments of the gov have different pay periods?:? The schedule he shows on his calculator is two payperiods ahead of where I work. The period starting Nov 28 is pp#24 for me, so that puts two paydays into January. That shouldn't make a difference tho, cuz things are totaled Jan 31, right? AL requests are based on the payperiods, but the wording for caps is for a specific year. (?)
 
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