Catch-Ups Could Primarily Benefit CSRS Employees

The TSP catch-up program likely will be of interest primarily to employees in the CSRS retirement system for two reasons. First, most older federal employees are under CSRS, since the FERS system mostly applies to those hired since 1983. Second, CSRS employees are subject to lower percentage of salary investment limits-for most of the TSP’s existence, 5 percent of salary biweekly, although the limit now has risen to 8 percent and will be phased out in two more years. The reasoning behind allowing catch-up contributions is that many older workers may have spent much if not most of their working years without being eligible for the TSP, a 401(k) or similar plan and that they have relatively little time left to build up those accounts before retiring. Sponsors say that catch-up investing also could be especially valuable to those who took breaks in their careers for child-raising or other purposes and who were unable to make retirement investments during those years.