2017 is right around the corner and a new contribution year will begin for the Thrift Savings Plan. In fact, some of you will soon be entering the first pay period that has a pay day that occurs in calendar year 2017. As different agencies have different payroll service providers, you might want to check with your HR office to find out which pay period is the first one to have a pay day in 2017.
A couple of months ago the Thrift Board announced that the elective deferral amount ($18,000) and the catch-up contribution amount ($6,000) were not changing for 2017, so, if you’re maxing out your TSP, you need make no changes in the amount of your contributions. If, however, you were contributing less than the full $18,000 per year, you may want to consider increasing your contribution. If you can, contribute $693 per pay day to the TSP and you’ll end up reaching the elective deferral cap on the 26th pay day of the year. You want to ensure that you’re contributing to the TSP every pay period if you are covered by the FERS retirement system, that way you will receive the matching contribution every single pay period. Those who “max out” before the end of the year will lose the agency match for the pay periods in which they don’t contribute.
What if, like many federal employees, you find that you cannot contribute the full $18,000? Take this opportunity to increase the amount you are contributing. If you’re contributing 8% of your salary, kick it up to 9%; you might find that it doesn’t affect your budget as much as you thought it would. If that’s the case, move it up to 10% and see how that works. More is always better than less. If you’re FERS, you should strive for five; that is, be sure that you contribute at least 5% of your salary in order to ensure that you receive the full government match.
What if you’re turning age 50 sometime in 2017? If you can afford it, begin “catch-up” contributions. You don’t have to wait until the day you reach age 50; you can begin these contributions on January 1 of the year in which you reach 50, even if your birthday isn’t until December 31.
Remember, the TSP doesn’t have “open seasons” for changing your contributions; you can change them at any time. So, if you get a promotion or a step increase, consider directing it to the Thrift Savings Plan. You’ll be glad you did.