Maximize TSP contributions for Jan.3 retirement

[LunaticFringe]

I'm retiring Jan. 3rd, 2008. I'll only have the one pay period to make my entire 2008 TSP contribution. I'd like some guidance in structuring this so as to make as large a TSP contibution as possible. If they'd let me, I'd contribute the whole thing. But...I don't think you can do that. A few helpful details: I'm 55 (eligible for the "catch-up") and CSRS; Base Salary = $166,457; and if it's significant, since my RDOs are Fri-Sat, retiring on Thursday, Jan.3rd means I'll have worked my "normal" 80 hours. Any guidance in getting this done right would be appreciated.

[pyriel]

You may contribute all your pay to TSP by changing your contribution setting to 100% for that particular pay period. I assume that Based on your annual salary of $166,457, your base pay for your Jan 3 pay period should be $6402.00. Contrary to popular belief, TSP members can actually set their contribution for 100% however, once you reach your maximum allowable contribution ceiling, TSP will stop all allotments and refund the rest to you. I'm not very familiar with the catch up since i've got a long way prior to becoming eligible for it but IF it is allowed for you to write a check for it, you should do it as well.
Pyriel

[BlueMax]

The "catch up" for 2007 is still $5,000. You will be able to contribute $20,500 max for the year.

[BlueMax]

I did forget to mention one thing, if you contributed to the Voluntary CSRS, you can transfer ALL of that amount to your TSP, after Jan. 4.

[BlueMax]

If you are so inclined, you have another strategy that you can use;
You are allowed to contribute 10% of your lifetime base pay into the Voluntary contributions. You can make that by any means, electronic transfer, check, etc.

You are then allowed to transfer the entire amount of your voluntary contributions to your TSP one day after your retirement is effective.
This amount is NOT affected by the IRS limit.

[wv-girl]

Thanks for the info BlueMax. Can you post a link where I can find more information on the Voluntary contributions?

Thanks

[BlueMax]

http://www.opm.gov/forms/pdf_fill/sf2804.pdf

[LunaticFringe]

Hey, thanks a lot! I really appreciate the heads-up(ups?).

[Ed]

I did forget to mention one thing, if you contributed to the Voluntary CSRS, you can transfer ALL of that amount to your TSP, after Jan. 4.
Does the transfer from Voluntary Contribution Plan to TSP include both principal and interest? Do you have the reference publication?

Many thanks,

Ed

[BlueMax]

Ed,

Yes it does include principle and interest, on the voluntary portion only.

I will find the reference and post it, but right now I am really tasked for time. I will try to post it before the end of the day.

[Ed]

Thank you. Ed

[Warrenlm]

Contributions to the CSRS VCP are after tax dollars. After tax dollars cannot be transferred into the TSP. As to transferring untaxed accumulated interest, I think that is possible. But in the OP's case, it would not be enough in amount, if he/she just opens the account and starts now. The beauty of the CSRS VCP is that one can deposit 10% of their lifetime earnings just before retirement and transfer the full amount as part of retirement into a Traditional IRA (assuming the $200 minimum is met).

As to the question as to how to maximize the TSP taken out of the one and only paycheck in 2008, I'm not familiar with the percentage method, but if setting a specific amount, one must ensure that it is low enough to allow all maximum withholdings for that biweekly pay period to be met. The paycheck is applied to mandatories first and if the amount left over is insufficient to make the TSP deposit, it doesn't get made.