Are You Contributing to Your TSP Correctly? by Jennifer Vernon
Are you in danger of over-investing too quickly?
As per Jennifer Vernon, Every year, there is an annual limit as to how much you can contribute to your Thrift Savings Plan, which is called the elective deferral limit. For this year, the limit is $19,500.
Jennifer Vernon said Federal workers under FERS should be considerate of the limit while they are electing the contribution amount for each pay period. It is possible to lose a government matching if you reach the yearly limit too fast before the year’s end. That is because the matching contributions are for the first 5 percent of your basic salary that you contribute for every paycheck.
If you contribute the limit way ahead of the last pay period, you will miss out on the matching contributions from the agency. That’s why it is very important to ensure that you spread out your contributions correctly throughout the year. At the minimum, make sure to invest the 5 percent of your base pay for each pay period so that you can receive the contribution match. Those that wish to reach the max limit need to calculate how much you will need to contribute each pay period until the last one of the year.
Jennifer Vernon Ask payroll in your agency about how many pay periods there are as they can be anywhere from 25 to 27, and many dates and policies may also differ from agency to agency. So be sure to get as much information as possible.
