What Happens When Cap is Hit

If FERS investors hit the dollar cap before the last pay period of the year, their contributions will shut off until 2009 and so will government matching contributions (although the automatic 1 percent of salary government contribution for FERS employees would continue). Once lost, matching contributions can’t be recouped. To prevent that from happening, investors might need to make a new investment allocation, which can be done in paper form and in many cases through agency online benefits systems. Employees might wish to discuss the situation with their payroll offices, to determine how many pay dates will remain in the year by the time they make a change, in order to set up their deductions to their best benefit.