Thread: Maximum Contribution Question - >$15k in 2006

Max contribution for 2006 is 15K. Whenever you hit this limit your payroll office will stop your contribution. If you have $590 per pay period, they would only contribute $250 (590 x 25 = 14750 ) on the last pay period of 2006. By law they can not contribute the extra $340.

Thanks ATCJeff! Sounds like I don't need to worry about going over, the payroll office does the work for me :-)

Originally Posted by CoastieRob

Sounds like I don't need to worry about going over, the payroll office does the work for me :-)

CoastieRob,

Check out this TSP Fact Sheet: http://www.tsp.gov/forms/oc91-13w.pdf

In 2003 and 2004, I borrowed twice (when it used to be allowed) from my TSP. Hated to do it, but it was to buy land to eventually put a house on. If I hadn't, I would've had to wait several more years before owning my first home....and I'm no spring chicken! The good news was that I was able to pay off the loans several years early.

My question is, if I were to do this again (although a much smaller amount), is ...would the loan repayment count against the cap on contribution? I am very close now to the maximum contribution and I plan on paying off the loan within a year. With the loan repayment and my contribution, I will be over the maximum. I can't see where this would be a problem...e.g. if someone took a loan out for say, $20K but paid it off in a couple of months I wouldn't think that would count toward the contribution limit.

Thanks!

No. It is nothing more than a loan against you account and if not paid back in the proper amount of time you will be declare a taxable distribution for the outstanding principal and interest balance.

I too have borrowed against my TSP and now wish that I did not. Here is something for you to consider.

We had this discussion many months ago when I was new to TSPTalk. At that time I thought "what a great deal borrow my money and pay me the interest". Problem is my TSP account made over 21% this year and the money I borrowed from myself only made 4.125%. That sucks big time and I learned my lesson. It is convenient, but any Credit Union or Bank will probably lend you the money if TSP will and you can set up an allotment right to the loan. Banks like when you do that.

marco59,

By the way congratulations on MAXING you contributions. That IS what we all need to do to insure we have a comfortable and early retirement. Well done!!!



P.S. Try a signature loan for a small amount. It is what I'm doing this morning to buy my wife a horse. She deserves it.

Does anyone know how many pay periods there will be in 2007? I know Pay periods 25 and 26 of 2006 will actually be paid in 2007, making it hard to figure out how much to have taken out of each check for the TSP.

Should be 27.

Originally Posted by 2025orbust

Does anyone know how many pay periods there will be in 2007? I know Pay periods 25 and 26 of 2006 will actually be paid in 2007, making it hard to figure out how much to have taken out of each check for the TSP.

Incorrect. PP's 25 and 26 were paid in 2006.

Originally Posted by Wheels

Incorrect. PP's 25 and 26 were paid in 2006.

Do the different agencies do their pay differently? For the VA, pay period
# 25 ended Dec 30. That means that check will be eft'd 1/5/07; which is the end date of payperiod #26, so that check will be received 1/12/07.

I know DHHS pay period 26 ended on 12/23/2006. 12/24/2006 is our first pay period for 2007.