Safetyguy
11-22-2004, 11:40 AM
If one were to look at the following tsp.gov website (under Calculators)
http://www.tsp.gov/calc/contributions/index.html (http://www.tsp.gov/calc/contributions/index.html)
The following text is included:
"Highly paid FERS employees who elect the statutory percentage limit during the open season may reach the contribution limits and IRS limits (http://www.tsp.gov/features/def_contribution-limits.html) before the end of the year. Consequently, their contributions and their attributable Agency Matching Contributions must also stop for the remainder of the year. As a result, those FERS employees will lose some of their Agency Matching Contributions. For more detailed information, read the Fact Sheet Annual Limit on Elective Deferrals (http://www.tsp.gov/cgi-bin/byteserver.cgi/forms/ocfs91-13.pdf)."
My theoretical question is: If one is a highly paid FERS employee (an oxymoron), how does one calculate the maximum amount to put in if we aren't sure of the exact % raise next year, the first paycheck in 2005 is basically at the 2004 salary rate, how do you factor in step increases, etc.?
I did a quick calculation for a GS-13 Step 10 (RUS pay table) which is where I think the breakpoint is. Current salary for this type is$90,692. If there is a 3.2% raise next year (if and when that comes), the salary would be $93,594. The max TSP allocation is 15% which put this FERS employee at $14,039 which is $39 over the IRS limit of $14,000 per year. What should this person do?Given the questions in the paragraph above, should they just allocate $539 a month (but that doesn't take into account the lower amount that will go in from the firstJanuary paycheck which is $487).
Anyway, just throwingit out there for opinions before Open Season ends and hopefully it will trigger something in the minds of highly paid FERS employees to carefully rethink their allocation during this Open Season.
http://www.tsp.gov/calc/contributions/index.html (http://www.tsp.gov/calc/contributions/index.html)
The following text is included:
"Highly paid FERS employees who elect the statutory percentage limit during the open season may reach the contribution limits and IRS limits (http://www.tsp.gov/features/def_contribution-limits.html) before the end of the year. Consequently, their contributions and their attributable Agency Matching Contributions must also stop for the remainder of the year. As a result, those FERS employees will lose some of their Agency Matching Contributions. For more detailed information, read the Fact Sheet Annual Limit on Elective Deferrals (http://www.tsp.gov/cgi-bin/byteserver.cgi/forms/ocfs91-13.pdf)."
My theoretical question is: If one is a highly paid FERS employee (an oxymoron), how does one calculate the maximum amount to put in if we aren't sure of the exact % raise next year, the first paycheck in 2005 is basically at the 2004 salary rate, how do you factor in step increases, etc.?
I did a quick calculation for a GS-13 Step 10 (RUS pay table) which is where I think the breakpoint is. Current salary for this type is$90,692. If there is a 3.2% raise next year (if and when that comes), the salary would be $93,594. The max TSP allocation is 15% which put this FERS employee at $14,039 which is $39 over the IRS limit of $14,000 per year. What should this person do?Given the questions in the paragraph above, should they just allocate $539 a month (but that doesn't take into account the lower amount that will go in from the firstJanuary paycheck which is $487).
Anyway, just throwingit out there for opinions before Open Season ends and hopefully it will trigger something in the minds of highly paid FERS employees to carefully rethink their allocation during this Open Season.