Percentage Limits Still Would Apply

The bill would raise the tax code dollar cap on retirement saving programs to $15,000 effective in 2004. The current limit of $12,000 is set to rise to $13,000 in 2004, $14,000 in 2005 and $15,000 in 2006. However, the measure would not change the TSP percentage of salary limits, which for most TSP investors effectively set a lower limit. This year the limit is 13 percent for FERS employees and 8 percent for CSRS employees, with those limits rising by one percentage point a year until they hit 15 and 10 percent in 2005; they will be abolished in 2006, after which all investors would be limited only by the dollar cap. Catch-up contributions allowed for investors turning age 50 and older this year-the 2003 maximum is $2,000-are over and above any percentage or dollar limits that apply to an investor.