Not affiliated with The United States Office of Personnel Management or any government agency

Not affiliated with The United States Office of Personnel Management or any government agency

Why it’s Wise to Front-Load Your TSP Before Leaving A Job by Don Fletcher

Why it’s Wise to Front-Load Your TSP Before Leaving A Job

By Don Fletcher

Don Fletcher helps Federal Employees protect their retirement money by assisting them in putting together their Personal Retirement Plan. Wealth preservation and financial security, when looking at retirement planning, is key for Don and his clients.

With agency downsizes and buyouts possible, federal employees close to retirement, or thinking about a change, may be wondering what to do with their TSP. If you plan to leave before the year’s end, you may want to consider front-loading your Thrift Savings Plan (TSP).

For 2017, employees can contribute up to $18,000 to their TSP. If an employee is 50 years of age or older, they can contribute another $6,000. If you are retiring mid-year, you can speed up the TSP contributions to hit the maximum before you decide to leave.

For example, if you plan on leaving around the 20th pay-period, you will have contributed nearly $14,000 to the TSP.  This is $693 per pay period, which is how much you need to max out by the last pay-period (26th).

Say you decide to leave two months before your actual date of leaving (which is four pay periods before your date). If you boosted the bi-weekly contribution, you would hit $18,000 for the 20th pay-period. In order to attain $6,000 per year in catch-up contributions, you would need to put in $576 per pay period to attain the max out by that time.

This is a total of $1,611 for each pay period, which is impossible for federal employees who want to leave the government. However, you could boost your payments to 15 percent of your salary and have a bigger TSP amount upon leaving (or retiring).

It’s wise to add money to your Thrift Savings Plan, and you should avoid spending it whenever possible to ensure it’s still there when you retire. If you leave, you can either leave it there, or you can roll the money into another employer’s defined contribution plan or an IRA.

If you have any questions on your TSP or need some advice, please be sure to consult a financial professional.

Contact Denise Spindler

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