Special Considerations Apply in FERS

Employees under the FERS system especially might need to doublecheck that their 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 $17,500 limit 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. That is not a consideration for CSRS employees, who get no government contributions. In theory, at least, they could invest all of their salary, after 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. CSRS employees who are eligible to make catch-up contributions—virtually all of them, since CSRS applies only to those first hired before 1984–could immediately put in the maximum catch-up amount. There are no matching contributions on catch-up investments under either system.