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Thrift Savings Plan (TSP) Elective Deferral Limit

Section 402 of the Internal Revenue Service’s (IRS) Tax Code limits the amount of income that you may elect to defer under all cash or deferred arrangements during a tax year. For 2008, the total amount of employee contributions to the TSP cannot exceed the elective deferral limit of $15,500.

When the elective deferral limit is reached, your employee contributions must be suspended for the remainder of the year since the TSP will not accept any contributions that exceed this limit. The only exception is if you are over age 50, in which case your contributions cannot exceed the sum of the IRS Tax Code elective deferral limit plus the "catch-up" contribution limit for that year. For 2008, the Catch-Up contribution limit is $5,000.

For those employees covered under the Federal Employees Retirement System (FERS), your agency matching contributions are also suspended when the elective deferral limit has been reached. As a result, you will not get the full amount of agency matching contributions that you could have received if your own contributions had been slightly less each pay period. Although the automatic 1 percent agency contribution will continue, once lost, matching contributions cannot be recouped.

FERS employees are encouraged to use the TSP on-line calculator at http://www.tsp.gov/calc/contributions/index.html to ensure that they receive the agency matching contributions throughout the year without hitting the elective deferral limit. If you have any questions, please contact your servicing human resources office.