2014 TSP Limits

[Frixxxx]

Most TSPer's see no increase in amount elligible to save.
$17,500 Annual Limit
$5,500 Catch-up Limit
No change to Spreadsheet estimations.

25941

For other limits:
https://www.tsp.gov/planparticipation/eligibility/contributionLimits.shtml

[Scorpion1]

Hello, This is my first post to TSPTalk. I was wondering if their has ever been a grass-roots political movement to eliminate the annual limit on retirement accounts? I'm at the point in my life that I would not mind renting a room within a boarding house and invest every dollar left. That would allow me to retire in 5 years at the age of 52 with nearly 1 million in cash.....not on paper. Please reply with any information anyone may have about getting the IRS limit changed to unlimited!! Thank You, Scorpion1

[Frixxxx]

Hello, This is my first post to TSPTalk. I was wondering if their has ever been a grass-roots political movement to eliminate the annual limit on retirement accounts? I'm at the point in my life that I would not mind renting a room within a boarding house and invest every dollar left. That would allow me to retire in 5 years at the age of 52 with nearly 1 million in cash.....not on paper. Please reply with any information anyone may have about getting the IRS limit changed to unlimited!! Thank You, Scorpion1

The government wants it's tax dollar. There are many ways to defer paying taxes, but sooner or later the taxman wants his share. There are many avenues to low taxes or deferred taxes, but my suggestion is this:
Set your goals based on your circumstances.
Live to those goals based on the budget you set.
52 is very soon to retire, your budget and goals will dictate what you could save and duration.
Work with a tax counselor/accountant to understand the code in your area.
Unfortunately, like death, taxes are inevitable. You've paid them, and you will pay them. If you are willing to live like that, I recommend real estate as an investment tool. Gather rental properties. But remember, every investment has risk.

Good luck, and if you find the best avenue to reduce your footprint on the tax burden, we are all ears.

[PessOptimist]

A couple of thoughts on making the annual limits, if you are fortunate enough to be in a situation to do so.

If you want to make catch up contributions you must restart them every year. TSP requires this. To max out the catch up contribution the magic number is $212 per pay period. $212x26=$5512 which is over the $5500 limit. It has been my experience the last many years that on the last pay period the amount is adjusted to make it exactly $5500 so no worries about trouble with IRS.

To make catch up contributions you must max out your regular contribution for the year.

PO

[PessOptimist]

To follow up on the catch up contribution. I finally got around to changing mine for CY14 today and find it will be effective 23 Jan 14 which is the second pay period falling in CY 14. So the magic number was $220 (220x25=5500). Not sure when the cut off is for any agency but just a heads up if you want to max out your CUC.

Happy New year all

PO

[SkyPilot]

A summary of your computations based on the data you entered is shown below.

From TSP.GOV Calculator
https://www.tsp.gov/planningtools/electivecontributions/electiveContributions.shtml
Maximizing Agency Contributions
To receive the maximum Agency Matching Contributions, you must contribute 5% of your basic pay each pay period.


Warning: Accuracy of Results
This calculator can provide you with a reasonable estimate. However, calculations may vary from actual contribution amounts because of a variety of factors influencing your pay (including pay increases) and the accuracy of the input.






Contribution year

2014



IRS Elective Deferral Limit for 2014

$17,500.00



Amount contributed for 2014 as of effective date of new election

$0.00



Amount that may be contributed before reaching the elective deferral limit for 2014

$17,500.00



Number of salary payments remaining in 2014

26



Dollar amount of contribution per pay date (rounded up to the nearest whole dollar)

This is the amount you may elect to contribute each pay period to maximize employee contributions for 2014. You may contribute less.

$674.00




https://www.tsp.gov/planparticipation/eligibility/contributionLimits.shtml




Catch-up Contribution Limit
$5,500
IRC §414(v)
The maximum amount of catch-up contributions (https://www.tsp.gov/sitehelp/glossary/glossary.shtml?term=CatchUpContributions) that can be contributed in a given year by participants age 50 and older. It is separate from the elective deferral and annual addition limit imposed on regular employee contributions.

[alevin]

To follow up on the catch up contribution. I finally got around to changing mine for CY14 today and find it will be effective 23 Jan 14 which is the second pay period falling in CY 14. So the magic number was $220 (220x25=5500). Not sure when the cut off is for any agency but just a heads up if you want to max out your CUC.

Happy New year all

PO

New year's TSP contribs (and flex savings for that matter) start with the first official first paydate that hits in January. If that happens to be pp 25, then that's the one to target for change/add tsp cotribs. which was true for this year in my agency. Always base contribs on 26 paydates per calendar year if want to spread evenly through the year, just make sure the contribs set to start with the payroll that has the first official paydate in January, be it Jan 1 or Jan 14. You can check the payroll paydate calendar in your timesheet program to verify which payperiod that happens to be, could be pp 24, 25, 26 or even pp 27, depends on the year. took me a couple years to completely figure that part out once I started attempting to max out.

[offroad]

Dang it. Just seeing that you have to elect to do the catch-up every year in the first pay period. And of course no one told me this, and was too foolish to check. Now playing catch up to the catch up.

[Cactus]

Well, there aren't that many people who can afford the catch-up contribution so its rules aren't that well known. I will warn you that you actually have to reelect your catch-up contribution every year before the first pay period of the new year because there is a pay period lag between election and implementaion. You should actually be able to go in around Nov - Dec and change your election specifically for the new year seperate from the current year.

[offroad]

Cactus - so I can't do this now because the first pay period is over?

[Cactus]

You can change your catch-up contribution allocation at any time. If you change it today it will go into effect in the pay period starting Feb 9. That means you won't see it reflected in your next pay check but the one after that. This is only important if you are trying to max out your catch-up contribution. The critical thing is to max out your regular contribution ($17,500 for 2014) before the end of the year. If you don't, everything you contributed to your catch-up contribution will be returned to you in your last pay check. So the threat goes anyways. I don't know why they seperate it out that way. IRAs aren't treated that way. Maybe it has something to do with the matching.

Anyways, around December there is an additional option to elect catch-up contributions for the following year in addition to making any changes to the current year. That is probably the easiest way to continue it.

[offroad]

I do max out the regular contribution but it is over the year with the final contribution on the last pay period. Are you saying I need to make my max by the third or second to last pay period. So that my catch up will still be counted towards that year?

[offroad]

Like max out my regular contribution in November. And the catch up in December maybe?

[Cactus]

You don't want to end your regular contribution in November because your agency matching is based on that, not on the catch-up. You want to make sure you are contributing at least 5% every pay period to max agency matching. The numbers given earlier in the thread were for the same amount every pay period. Regular contribution = $17,500 / 26 = $674. Catch-up = $5500 / 26 = $212. If you missed the Catch-up for the first pay period it is now Catch-up = $5500 / 25 = $220 and so on. You are contributing both every pay period.Another gotcha to be aware of is that your contribution counts for the year you are payed in, not the year the pay period started in. This means that your first contributions for 2014 came from the last pay periods of 2013. That can get confusing so it's probably easier to think in term of pay dates instead of pay periods.