Thrift investment board sets 2008 TSP contribution limits

The Federal Retirement Thrift Investment Board has announced that 2008’s elective deferral limit for regular Thrift Savings Plan contributions is $15,500, which was the same for 2007.

In addition, contributions for the catch-up plan will remain at the same $5,000 limit set in 2006 and 2007.

“TSP is a long-term retirement savings plan, which everyone should consider,” said Janet Thomas, a human resources specialist at the Air Force Personnel Center. “It’s a great supplement to military and civilian retirement plans.”

TSP gives investors the opportunity to lower their taxes each year they contribute; the taxes are deferred until the employee withdraws from the account after retirement.

“Investment money is deposited directly from each paycheck, so you never have to think about it. That makes it easy to ‘pay yourself first’ while only investing what you deem appropriate,” Ms. Thomas said.

TSP catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions. For those who are eligible, catch-up contributions provide a way for individuals to secure their retirement if they began investing later in their careers.

To be eligible for catch-up contributions, civilian and military employees must be age 50 or older in the year in which the first deduction from pay occurs. They must also be in a pay status and be able to certify they will make (or have made) the maximum “regular” employee contributions of $15,500 to a TSP or other eligible account by the end of 2008. “Other” eligible accounts include uniformed services TSP accounts or other eligible employer plans, such as 401(k)s. To be eligible, employees cannot be in the six-month noncontribution period following a financial hardship in-service withdrawal.

Catch-up contributions automatically stop with the last pay date in the calendar year or when the maximum catch-up dollar limit for the year is reached, whichever comes first. Eligible employees must submit a new election for each year they wish to participate.

Regular TSP contributions stop when an employee’s contributions reach the annual maximum limit and then automatically resume the next calendar year.
Investing in TSP is not limited to just stocks. People can choose safer government securities or invest in the Lifecycle Funds.

For general TSP questions and more information, call the Air Force Personnel Center at (800) 616-3775 (press 1, press 1, press 1, and follow the prompts).

(Article courtesy of Air Force Personnel Center News Service.)

TSP for military members
•Airmen can contribute any whole percentage of basic pay, as long as the annual total of the tax-deferred investment doesn’t exceed $15,500 for 2008. As long as they contribute from basic pay, Airmen can also invest all or part of their bonuses, special pay or incentive pay. Members may enroll in December; however, requested actions will not update until Jan. 1.

•Those serving in tax-free combat zones are allowed up to $46,000 in annual contributions for 2008. The $46,000 total includes tax-exempt combat zone contributions and regular deferred contributions.

•Military members can enroll or change their regular TSP contribution amount through the Defense Finance and Accounting Service Web site at or by filling out a TSP-U-1 Election Form at local military personnel flights and finance offices.

TSP for civilians
•Civilians can contribute any whole percentage of their basic pay or a whole dollar amount each pay period to a regular TSP account; this amount is subject to the $15,500 annual maximum for 2008.

•Air Force-serviced civilians may submit regular TSP enrollment elections or changes at any time. Contributions will automatically continue into 2008 for those already in TSP, so it is not necessary for people to submit an election unless they wish to change the amount of their bi-weekly contributions. The contribution on pay date Jan. 11, will apply towards the 2008 annual maximum.

•Regular TSP enrollments, changes, or catch-up contribution enrollments submitted between Dec. 9 and 22 will be effective Dec. 23 and reflect on pay date Jan. 11. Elections submitted between Dec. 23 and Jan. 5 will be effective Jan. 6 and reflect on the Jan. 25 pay date.