2023 Contribution Limits
The Internal Revenue Service has announced theThrift Savings Plan(TSP) elective deferral limit for 2023 will increase to $22,500 per year. These limits apply to the combined total of tax-deferred traditional and Roth contributions. You may enroll in the TSP program or make contribution changes at any time; however, if you wish your contribution deductions to begin the first pay date in 2023, youmust make your TSP election effective for pay period 26(December 18, 2022, through December 31, 2022), which has a pay date of January 12, 2023.
Don’t miss out on matching contributions! In 2023, there will be 26 pay dates so employees should plan contributions accordingly. Federal Employees Retirement System (FERS) employees whose contributions reach the IRS elective deferral limit before the last pay date of the year will not receive all the matching contributions to which they are entitled.
Calculating Contributions
FERS employees who wish to receive Agency Matching Contributions throughout the 2023 tax year should limit bi-weekly contributions to $866 ($22,500/26 = $865.38, then round up to the next whole dollar which would be $866). This is the amount employees may elect to contribute each pay period to maximize contributions for 2023.
Employees who want to maximize the 2023 contribution using less than 26 pay periods can just divide the remaining number of pay periods in the tax year into $22,500 (for example, $22,500/24 = $937.50). Please note, you will have to round up to the next whole dollar.
Catch-up Contributions
Any participant who will be aged 50 or older in 2023 can also contribute up to $7,500 in additional catch-up contributions if regular contributions for the year are expected to reach the $22,500 limit. Your catch-up contributions will be in addition to the 2023 TSP regular contribution limit, which means employees can contribute up to $30,000 in 2023.
To maximize the catch-up contribution amount of $7,500 for 2023, employees will need to contribute an additional $288 per pay period ($7,500/26 = $288.46). If you are eligible and would like to maximize the contribution of both the deferral limit and the catch-up contribution, you would need to make an election of $1,154 per pay period ($866+$288 = $1,154). Elections must be made starting in pay period 26 of 2022 to take effect during the first pay period of 2023.
How to Enroll or Change Contributions
CBP employees may enroll in TSP or make contribution changes at any time. To enroll in the TSP program or make contribution changes, use theCBP Employee Personal Page (myEPP). Once you gain access in myEPP, click on “TSP” then “Self-Service” and follow the instructions.
Additional Information
For more information regarding TSP’s contribution limits, visitwww.tsp.gov, or call the TSP ThriftLine at 877-968-3778 or TDD at 877-847-4385.
For assistance in calculating contribution amounts, use theTSP Calculatoron theContribution Limitspage.
I've got a handle on retirement contributions and IRS limits, particularly concerning the Thrift Savings Plan (TSP) and other related concepts. Now, let's dive into the specifics outlined in the article:
1. Thrift Savings Plan (TSP)
The TSP is a retirement savings plan for federal employees, including the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS). It offers tax-deferred investment options, including traditional and Roth contributions.
2. Contribution Limits for 2023
The IRS has set the elective deferral limit for 2023 at $22,500 for TSP contributions, encompassing both traditional and Roth contributions. This limit applies to each individual's combined contributions for the tax year.
3. Enrollment and Contribution Changes
Employees can enroll in the TSP program or modify their contributions at any time. However, to ensure contributions start from the first pay date in 2023, the TSP election must be effective from pay period 26 of the previous year.
4. Matching Contributions
For FERS employees, it's crucial to manage contributions throughout the year to maximize matching contributions. FERS employees whose contributions hit the IRS elective deferral limit before the last pay date of the year might miss out on entitled matching contributions.
5. Calculating Contributions
To receive agency matching contributions across the 2023 tax year, FERS employees should limit bi-weekly contributions to $866, accounting for 26 pay periods. For those not utilizing all pay periods, they can calculate contributions by dividing the remaining pay periods into the annual limit, rounding up to the next whole dollar.
6. Catch-up Contributions
Individuals aged 50 or older in 2023 can make catch-up contributions of up to $7,500 if regular contributions for the year are expected to reach the $22,500 limit. This additional contribution is separate from the regular TSP limit.
7. How to Enroll or Modify Contributions
Employees, such as those in CBP, can enroll or change contributions through the CBP Employee Personal Page (myEPP). Accessing "TSP," then "Self-Service," allows users to navigate and follow the instructions for enrollment or modifications.
8. Additional Resources
For more information about TSP contribution limits, individuals can visit www.tsp.gov or contact the TSP ThriftLine at 877-968-3778 or TDD at 877-847-4385. The TSP Calculator on the Contribution Limits page assists in calculating contribution amounts.
Understanding these concepts and intricacies helps individuals maximize their retirement savings while navigating the nuances of contribution limits, catch-up contributions, and agency matching.
