TSP contribution limits set for 2011

American Forces Press Service

RANDOLPH AIR FORCE BASE, Texas — Federal Retirement Thrift Investment Board members announced the 2011 elective deferral limit for regular Thrift Savings Plan contributions will remain $16,500, and TSP catch-up plan contribution limits will remain at $5,500.

TSP is a long-term retirement savings plan that gives investors an opportunity to lower their taxes each year they contribute, because taxes are deferred until the employee withdraws from the account after retirement.

“It’s a great supplement to military and civilian retirement plans,” said Kathryn Iapichino, a human resources specialist at the Air Force Personnel Center. “Funds come directly from each paycheck, so you never have to think about it. That makes it easier to pay yourself first,” she said.

TSP options include stocks, government securities or lifecycle funds.

Regular TSP contributions stop when contributions reach the annual maximum limit and automatically resume the next calendar year.

Catch-up contributions are additional tax-deferred contributions, separate from regular TSP contributions. To be eligible for catch-up contributions, investors must be age 50 or older the year the first deduction from pay occurs. Contributors must also be in a pay status and able to certify they will make, or have made, the maximum regular contributions by the end of the year.

Catch-up contributions automatically stop with the last pay date in the calendar year or when the maximum catch-up dollar limit is reached. Eligible employees must submit a new election each year.

TSP for military members: Service members can contribute any whole percentage up to 92 percent of basic pay, as long as the annual total of the tax-deferred investment does not exceed $16,500. Airmen may also invest all or part of their bonuses, special pay or incentive pay.

Members may enroll and adjust contribution amounts through their Defense Finance and Accounting Service myPay account, and elections made in the current month will be reflected on the leave and earnings statement for the next month.

Those serving in tax-free combat zones may contribute up to $49,000 in annual contributions for 2011. The $49,000 total includes tax-exempt combat zone contributions and regular deferred contributions.

Service members’ monthly contribution amounts are limited.

For more information, contact a TSP representative at 877-968-3778. Military members must complete and forward TSP-U-1-C, TSP Catch-Up Contribution Election Form, to their local finance office to make catch-up contributions.

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. Air Force-serviced civilians may submit regular TSP enrollment elections or changes at any time, and contributions automatically continue into the new calendar year for those already in TSP.

Employees covered by the Federal Employees’ Retirement System must contribute at least 5 percent of their basic pay every pay period in order to receive maximum agency matching contributions throughout the year. Employees must designate a whole-dollar amount per payday for catch-up contribution elections.

Air Force-serviced civilians submit contribution elections through the Employee Benefits Information System web application, accessible through the Air Force Portal and AFPC personnel website (enter “Employee Benefits Information System” in the search function). Civilians can also submit elections through the automated phone system.

From duty locations outside the United States, dial the country-direct access number, then 800-525-0102, and follow the voice system prompts. Direct-access numbers can be found at http://www.usa.att.com/traveler/index.jsp. Hearing impaired employees may reach a benefits counselor by dialing toll free TDD 800-382-0893 or 210-565-2276 if calling within the San Antonio area.

For more information about TSP, go to www.tsp.gov, visit the Air Force personnel services website or call the Total Force Service Center at 800-525-0102.