RANDOLPH AIR FORCE BASE, Texas -- The Federal Retirement Thrift Investment Board has announced the 2010 elective deferral limit for regular Thrift Savings Plan contributions will remain at $16,500, unchanged from 2009. Contributions for the TSP catch-up plan also remains at the $5,500 limit set in 2009.
"TSP is a long-term retirement savings plan which everyone should consider contributing to," said Kathryn Iapichino, a human resources specialist at the Air Force Personnel Center at Randolph Air Force Base, Texas. "It's a great supplement to military and civilian retirement plans."
The plan gives investors the opportunity to lower their taxes each year they contribute. The taxes are deferred until the employee withdraws funds from the account after retirement.
"Investment money is deposited directly from each paycheck; so, you never have to think about it. That makes it easy to 'pay yourself first' while only investing what you deem appropriate," Iapichino said.
"TSP is not limited to just stocks; employees can choose safer government securities or invest in the lifecycle funds," she added.
Regular TSP contributions stop when an employee's contributions reach the annual maximum limit and then automatically resume the next calendar year.
Catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions. For those who are eligible, catch-up contributions provide a way for individuals to secure their retirement, especially for those that begin investing later in their careers.
To be eligible for catch-up contributions, civilian and military employees must be age 50 or older in the year in which the first deduction from pay occurs. They must also be in a pay status and be able to certify they will make, or have made, the maximum "regular" employee contributions of $16,500 to a TSP or other eligible account by the end of 2010.
Other eligible accounts include uniformed services TSP accounts or other eligible employer plans, such as 401Ks. Employees who have taken a TSP financial hardship in-service withdrawal are not eligible to invest during the six-month, noncontribution period.
Catch-up contributions automatically stop with the last pay date in the calendar year or when the maximum catch-up dollar limit for the year is reached, whichever comes first. Eligible employees must submit a new election for each year they wish to participate.
TSP for military members
Military members can contribute any whole percentage up to 92 percent of basic pay, as long as the annual total of the tax-deferred investment doesn't exceed $16,500 for 2010. If contributing from basic pay, Airmen may also invest all or part of their bonuses, special pay or incentive pay.
Members may enroll and adjust contribution amounts through their Defense Finance and Accounting Service myPay account. TSP elections made after Dec. 6, 2009, were effective Jan. 1, 2010.
Those serving in tax-free combat zones may contribute up to $49,000 in annual contributions for 2010. The $49,000 total includes tax-exempt combat zone contributions and regular deferred contributions. There are limitations regarding the amount military members may contribute per month, please contact TSP for additional information at (877) 968-3778.
Military members who wish to make catch-up contributions must complete and forward a TSP-U-1-C, TSP Catch-Up Contribution Election form, to their local finance office.
Contribution allocations (how an employee chooses to invest money among the investment funds) can be made by accessing your TSP account, using your personal identification pin and password at http://www.tsp.gov. Contribution allocations can also be made via the Thrift Line at (877) 968-3778.
TSP for civilians
Civilians can contribute any whole percentage of their basic pay or a whole dollar amount each pay period to a regular TSP account. This amount is subject to the $16,500 annual maximum for 2010.
Air Force-serviced civilians may submit regular TSP enrollment elections or changes at any time. Contributions will automatically continue into 2010 for those already in TSP; so, it is not necessary for employees to submit an election unless they wish to change the amount of their bi-weekly contributions. The contribution on pay date Jan. 8, 2010, will apply toward the 2010 annual maximum.
Employees who are covered by the Federal Employees' Retirement System must contribute at least 5 percent of their basic pay every pay period in order to receive maximum agency matching contributions throughout the entire year. Once the maximum contribution limit of $16,500 is reached, employee contributions and agency matching contributions will be suspended for the remainder of the year.
Regular TSP enrollments, changes or catch-up contributions submitted through Dec. 19 were
effective Dec. 20, 2009, and will reflect on the Leave and Earnings Statement for the pay period ending Jan. 2, 2010. Elections submitted between Dec. 20 and Jan. 2 were effective Jan. 3 and will reflect on the leave and earnings statement for the pay period ending Jan. 16.
When submitting catch-up contribution elections, employees need to designate a whole-dollar amount to contribute each payday rather than the annual maximum of $5,500. Do not designate an amount that exceeds net pay or payroll will not withhold any TSP contributions. To spread catch-up contributions evenly over the year, divide the total contribution (up to $5,500) by the number of pay dates remaining in the year.
Air Force-serviced civilians enroll or submit regular TSP contribution elections, as well as catch-up contribution elections if eligible, by using the Employee Benefits Information System Web application or through the automated phone system. EBIS can be found on the Air Force Portal and on AFPC's "Ask" Web site by entering "Employee Benefits Information System" in the search function.
Additional information about TSP, both regular and catch-up, is available on the TSP Web site at http://www.tsp.gov. See "Summary of the Thrift Savings Plan" located under civilian or uniformed services TSP Forms and Publications.
Airmen, including civilians, can visit AFPC's "Ask" Web site and enter "Thrift Savings Plan" in the search function. They can also call the 24-hour Air Force Total Force Service Center at (800) 525-0102.
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