2010 Thrift Savings Plan contributions remain at 2009 limits

American Forces Press Service

RANDOLPH AIR FORCE BASE, Texas — The Federal Retirement Thrift Investment Board here announced Dec. 11 the 2010 elective deferral limit for regular Thrift Savings Plan contributions will remain at $16,500, unchanged from 2009.

Contributions for the TSP catch-up plan also remains at the $5,500 limit set in 2009.

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

The plan gives investors the opportunity to lower their taxes each year they contribute. The taxes are deferred until the employee withdraws funds 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,” Iapichino said.

“TSP is not limited to just stocks. Employees can choose safer government securities or invest in the lifecycle funds,” Iapichino added.

Regular TSP contributions stop when an employee’s contributions reach the annual maximum limit and then automatically resume the next calendar year.

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, especially for those that begin 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 $16,500 to a TSP or other eligible account by the end of 2010.

Other eligible accounts include uniformed services TSP accounts or other eligible employer plans, such as 401Ks. Employees who have taken a TSP financial hardship in-service withdrawal are not eligible to invest during the six-month, noncontribution period.

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.