If it looks like you will not be able to reach the maximum contribution for 2023, you can still up your contributions for the last several pay periods of the year. Image: 3rdtimeluckystudio/Shutterstock.com
By: John GrobeWe’ve entered the first quarter of fiscal year 2024, though we are still in calendar year 2023. In fact, we have just entered the fourth quarter of the calendar year and there’s still time to take financial/retirement related actions for 2023.
If you’re still working and contributing to your Thrift Savings Plan account, make sure you max out your contributions, or, at least, get more money into the TSP. While your contributions to FERS and to Social Security are mandatory, those that you make to your Thrift Savings Plan are completely voluntary. If you want more set aside in your TSP, it’s completely up to you to set it aside. No one else can do it for you.
If you’re on track to hit the maximum contribution ($22,500, plus an additional $7,500 if you are 50 or over this year), then you can pat yourself on the back and plan to stay the course for 2024.
If it looks like you will not be able to reach the maximum contribution for 2023, you can still up your contributions for the last several pay periods of the year. Remember – more is always better than less when it comes to setting money aside for your retirement.
Don’t forget Individual Retirement Arrangements (IRAs). I am surprised at the number of people who think that the fact that they fund their TSP account precludes them from participating in an IRA. Nothing could be further from the truth – IRAs and the TSP are mutually exclusive. For 2023, you can contribute $6,500 to an IRA and another $1,000 if you are 50 or older this year. Plus, you do not have to contribute that money by December 31, 2023; you have through April 18, 2024, to fully fund your 2023 IRA.
What if you’re retired, what do you need to be aware of as the end of the year approaches? You need to take a required minimum distribution (RMD) if you are 73 and older. When it comes to the Thrift Savings Plan, if you haven’t taken your RMD by mid-December, you will be sent the requisite amount by the TSP before the end of the year. That’s not necessarily so with IRAs, so check with your IRA custodian to see if you’ve taken enough money to satisfy your RMD. If you’re charitably inclined, you could choose to make a qualified charitable distribution (QCD) rather than taking your RMD.
As long as you’re thinking about your TSP and IRAs, you may want to take the time to check and see if your beneficiary forms reflect your current wishes. Why stop with just the TSP and IRAs, look at your beneficiary forms for other federal benefits and for outside insurance policies.
Finish 2023 on a high note and you can carry your success on into 2024.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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