Front-Loading Your TSP Contributions

Do your plans include retirement in 2017?  If so – good for you!  Many people choose to retire at the end of the year.  December 31, 2017 will be a popular day for FERS employees to retire, while January 3, 2018 will be a popular day for those covered under the old CSRS system.  Of course, once you are eligible to retire, you can pick any day you choose.

If you’re leaving at the end of the year and have been maxing out your TSP contributions for the last several years, just keep on doing what you’ve been doing and you’ll have maxed out again.  However, if you choose to retire in the middle of the year, you may want to consider “front-loading” your TSP.

In 2017 you can contribute $18,000 to the TSP, plus another $6,000 if you are 50 or over.

If you are retiring in the middle of the year (and if you can afford it), you can accelerate your TSP contributions so that you hit the maximum by the date that you leave.  Let’s say you are planning on retiring at the end of June in 2017, and let’s assume that you will leave at the end of the 13th pay period of the year.  If you contributed $1,385 per pay period, you would reach the full $18,000 at the end of the 13th pay period.  For the “catch-up” contributions of $6,000 per year, you would contribute $462 per pay period to max out at the end of the 13th pay period.

This adds up to a total of $1,847 per pay period, an amount that is out of the reach of many federal employees nearing retirement.  Nonetheless, you could accelerate your payments (say, by increasing your contributions from 10% to 15% of salary) and end up with a larger amount in your TSP when you leave.  It’s never too late to put more money in your Thrift Savings Plan