Fedweek

Employees under the FERS system might need to doublecheck that their TSP investment rates are structured to their best benefit. In order to capture the maximum government contributions, FERS employees need to pace their investments so that they are able to invest at least 5 percent of salary each pay period throughout the year. If they hit the annual limit (remaining $18,000 this year) before that, their regular investments will shut off, and so will agency matching contributions (although the automatic 1 percent of salary contribution would continue). Once lost, matching contributions can’t be recouped. In particular, FERS employees need to check the number of pay distribution dates–not the ending dates of biweekly pay periods—for them in the year. Typically it is 26, but there are situations where it can be one more or one fewer. (The actual investment in the TSP often is made later than the individual’s pay distribution date but that is not an issue for these purposes.) There is no such consideration for CSRS employees, who get no government contributions. In theory, at least, they could invest all of their salary, after other mandatory withholdings, in the TSP until they reach their limit, in order to get the money into their accounts early and start the tax-deferred growth as soon as possible.