Thrift Savings Plan (TSP) Catch Up Contributions
What are TSP catch-up contributions?
"Catch-up contributions" are supplemental tax-deferred employee contributions
that employees age 50 or older can make to the TSP beyond the maximum amount
they can contribute through regular contributions. In 2009, you may contribute
up to $5,500 in catch-up contributions.
Who is eligible to make catch-up contributions?
To be eligible to make catch-up contributions, you must be:
- age 50 or older during the calendar year in which the catch-up
contributions are made (even if you become age 50 on December 31 of that year);
- currently employed and in pay status; and
- making regular contributions to a civilian or uniformed services TSP account
(or both), and/or an equivalent employer plan (such as a 401(k), 403(b), or 408
plan), that will equal the maximum allowed by the Internal Revenue Service
(IRS), which is $16,500 in 2008.
You are not eligible to make catch-up contributions (or regular
contributions) within 6 months of making a financial hardship withdrawal from
the TSP.
How much can I contribute?
If you are otherwise eligible, you can contribute up to the annual maximum
dollar amount allowed by the IRS elective deferral limit. Catch-up contributions
have an annual IRS limit of $5,500 for 2000. These limits are subject to annual
increases for inflation. Because catch-up contributions are supplemental, they
do not count against the IRS elective deferral limit ($16,500 for 2009).
However, the combination of regular and catch-up TSP contributions cannot
exceed the total IRS contribution limit for the year. For example, for 2009,
your contributions cannot exceed $22,000 (i.e., the $16,500 elective deferral
limit on regular TSP contributions, plus the $5,500 catch-up contribution
limit).
Catch-up contributions apply to the year during which you made them, even if
they are posted to your account in the following year (i.e., your contributions
for the last pay date in December may not be posted until January but will be
counted towards the limit in December).
Will I receive any matching contributions on my catch-up
contributions?
No. There are no matching contributions on catch-up contributions.
Can I make catch-up contributions from bonus pay?
No. Catch-up contributions can only be made from basic pay. Bonuses (or, if
you are a member of the uniformed services, special pay or incentive pay) cannot
be applied toward catch-up contributions. How do I make catch-up contributions?
You can make catch-up contributions only through payroll deductions. This is
because catch-up contributions are made before Federal and, in most cases, state
taxes are deducted.
To make catch-up contributions, you must submit a Catch-Up Contribution
Election (Form TSP-1-C) to your agency or service. You must indicate the dollar
amount you would like to contribute each pay period, and you must certify that
you expect to contribute the maximum amount of regular contributions for the
year. You can obtain Form TSP-1-C from the www.tsp.gov website or your agency. If your
agency or service uses an electronic version of the form (e.g., on Employee
Express, PostalEase, EBIS, or myPay), you may be required to submit your
election electronically. (Check with your agency for guidance.)
When can I make a catch-up contribution election?
You can make your election at any time. Your election will become effective
the first full pay period after your agency or service receives it. The election
will only be valid through the end of the calendar year in which it is made.
This means that you will have to submit a new Catch-Up Contribution Election
form each year.
Your contributions will continue until the end of the calendar year unless
you reach the annual catch-up contribution limit before that time or elect to
stop making catch-up contributions.
What happens to my catch-up contributions when the TSP receives
them?
When the TSP receives your catch-up contributions, it posts them to your
account according to your most current contribution allocation. You cannot make
a separate contribution allocation for catch-up contributions. (However, you may
change the allocation of contributions to your account at any time on the TSP
website, www.tsp.gov; over the telephone on the TSP ThriftLine; or by submitting
Form TSP-50, Investment Allocation, directly to the TSP.)
Once your catch-up contributions are posted to your TSP account, they become
part of your account balance and are subject to the same rules as any other
tax-deferred employee contributions:
- you are immediately vested in them;
- an interfund transfer has the same effect on them as on the rest of the
money in your account;
- they are available for loans and withdrawals; and
- spouses' rights apply.
Can I change or stop my catch-up contributions at any time?
Yes. To change or stop making catch-up contributions, you simply submit
another Catch-Up Contribution Election (Form TSP-l-C). Once you stop catch-up
contributions, they will not resume automatically. However, you can restart your
contributions at any time by completing another Catch- Up Contribution Election
form.
How are these contributions reported to the IRS?
Catch-up contributions are reported on your Form W-2, Wage and Tax Statement,
where they are combined with your regular TSP contributions.
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