As the year winds down, there's one bit of good cheer: You don't have to fret over the Thrift Savings Plan.
A number of Diary readers, based on recent e-mails and telephone calls, apparently feel they face some sort of year-end TSP decision. But the TSP "open season" requirements have been abolished by Congress, so the days of making deadline decisions are gone.
In 2006, TSP participants may contribute up to $15,000 to their retirement accounts, with taxes deferred. Participants who are 50 and older can make supplemental contributions up to $5,000 in 2006. Both contribution levels are up by $1,000 from this year.
Those dollar amounts are the only limits on contributions to the TSP because the plan's old percentage limits have been dropped.
If you choose not to adjust your regular TSP contribution amount, the payroll office will continue to make the payroll deductions -- which can be based on a biweekly dollar amount or on a percentage of salary -- that you previously requested. (But if you qualify for a supplemental, or "catch-up," contribution, you must submit a new form because those contributions do not carry over from year to year.)
Employees who want to increase their contributions to the TSP need to check with their payroll or personnel office, according to officials at the Federal Retirement Thrift Investment Board, which oversees the TSP.
The earliest date to change your contribution could be this week, but the date varies by payroll office, the officials said. You'll also need to ask in which pay period the TSP changes will take effect, and you'll also want to ask how many paydays have been planned by the agency for 2006.
A number of agencies -- but not all -- have set Jan. 18 as the first pay date in the new year. These agencies also plan to start the first full pay period of 2006 on Jan. 8 and end it Jan. 21, according to the Office of Personnel Management.
Knowing the number of pay dates during which the contributions will be made allows employees to use a calculator on the TSP Web site (www.tsp.gov) to determine the maximum dollar amount of regular contributions to make each pay period.
Once you have hit $15,000 in contributions, you may not make any more contributions for the rest of the year. For employees covered by the Federal Employees Retirement System, this also means that you will not receive any more agency matching contributions for the rest of the year, TSP officials said.
Employees covered by FERS need to make sure they don't hit the dollar limit before the end of the year and should consult the TSP fact sheet "Annual Limit on Elective Deferrals" for advice.
If FERS participants do not space out their contributions so that they contribute at least 5 percent of their basic pay every pay period, they will not receive the maximum amount of agency matching contributions that could have been made to their accounts, TSP officials said.
Unlike in past years, when investment amounts could be changed only during the open seasons, employees have considerable flexibility when it comes to TSP contributions. There is no limit on the number of contribution elections, as the TSP calls them, that a participant can make during a year. In other words, you can adjust your contribution level as the year goes on.
For people 50 and older, the earliest dates to make catch-up contributions also will vary by payroll office. Congress permits the tax-deferred, supplemental contributions for participants who are 50 or older during the calendar year and who have hit the dollar cap or who are on pace to hit it by the end of the year. You may spread the contribution over any number of pay periods or make a lump-sum contribution, if your net pay for the pay period, after taxes and other deductions are taken, is enough to cover the lump sum, officials said. In either case, the money must come from payroll withholding.
Forms to authorize regular and catch-up contributions may be obtained from the TSP Web site, but they must be submitted through your agency or payroll service. Agencies use different submission procedures, and some require employees to file through automated systems. If the procedures are not clear to you, check with your personnel or payroll offices for instructions.
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Diary associate Eric Yoder contributed to this column.