These plans are defined contribution plans and offer the same types of benefits that 401(k) plans offer employees, such as tax and savings advantages. Let’s learn more about TSPs and their maximum contribution limits for 2022.
Maximum TSP Contributions for 2022
Thrift savings plans were started as a result of the Federal Employees’ Retirement System Act of 1986 to provide service members and federal workers with retirement savings benefits. How much you can contribute to a thrift savings plan varies depending on a number of factors. The IRS elective deferral limit for 2022 is $20,500 and that limit doesn’t include matching contributions received from your federal agency. The IRS announces contributions limits to tax-deferred savings plans like TSPs each year. Sometimes it makes changes in tandem with inflation, and sometimes it does not. To make saving for retirement through a TSP easier, you may want to make contributions in smaller amounts instead of a lump sum. For example, you could have contributions automatically deducted from your paycheck each pay period. You can use the TSP online calculator to help you figure out the exact amount you need to have deducted each pay period to max your contributions and collect any agency or service matching contributions you are entitled to.
Catch-Up Contribution Limits
If you are over the age of 50, you can contribute more than $20,500 if you qualify for catch-up contributions, which help you save faster for retirement. You can make up to $6,500 in additional catch-up contributions to TSPs for 2022 for a total of $27,000.
Annual TSP Addition Limits
The annual addition is the total amount that can be contributed each year from all sources. Its limit for 2022 is $61,000 and catch-up contributions are not included. Source of total TSP contributions include:
Employee contributions (tax-deferred, after-tax, and tax-exempt) Agency and/or service automatic (1%) contributions Agency and/or service matching contributions
The annual addition limit mainly affects members of the uniformed services who exceed the annual elective deferral limit. This annual addition limit caps the total amount of contributions someone can make in a year and accounts for all sources of contributions, such as: Any excess contributions go into the traditional portion of their account alongside tax-exempt pay earned in a combat zone. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
