The Federal workforce will start the New Year off with a bonus. Section 402 of the Internal Revenue Code (IRC) has lifted the tax deferred limits for 2015. The deferral limit was $17,500 in 2014, the same as it was in 2013. The limit has increased for 2015 by $500 making the deferral limit $18,000. These limits impact how much employees may contribute to their Thrift Savings Plan, the Federal Government’s 401(k) equivalent.
The Internal Revenue Service (IRS) sets annual limits on elective salary deferrals for both the Traditional TSP and the Roth TSP. The Traditional TSP is before tax dollars and the Roth TSP is after tax dollars. Employees should take full advantage of the increased deferral limit to help make their retirement years easier. If you don’t participate in the TSP, it is simply like giving away free money.
The agency automatically contributes one percent to the fund even if the employee decides not to contribute to the TSP. Not participating in the TSP is at best a big mistake particularly for FERS employees because the TSP is arguably the largest component of their three-legged retirement system – a defined benefit, Social Security and the Thrift Savings Plan (TSP). In addition to the 1 percent, the agency also matches contributions bringing the total up to 5 percent of basic pay each pay period.
If you have questions or need to know more about maximizing your contributions in the TSP contact your agency TSP representative or tsp.gov. Participating in the TSP is your way of preparing for a secure and comfortable retirement future.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
