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2010 TSP Elective Deferral Limit

This message serves as a reminder that Section 402 of the Internal Revenue Service (IRS) Tax Code limits the amount of income that you may elect to defer under all cash or deferred arrangements during a tax year. In accordance with IRS tax code and effective January 1, 2010, the total amount of employee contributions to the Thrift Savings Plan (TSP) cannot exceed the elective deferral limit of $16,500.

When the annual elective deferral limit is reached, employee contributions will be suspended by TSP for the remainder of the year. 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. Therefore, determining how much you will contribute to your TSP account each pay period is very important.

If you are age 50 or older, you may be eligible to make “catch-up” contributions in addition to regular employee contributions. Your contributions cannot exceed the sum of the IRS code elective deferral limit plus the "catch-up" contribution limit for that year. This means that for 2010, your total contributions cannot exceed $22,000 ($16,500 in regular contributions, and $5,500 in catch-up contributions.) If you want to make “catch-up” contributions, you will need to make a separate election to request them. To start, stop, or change your election to make ‘‘catch-up’’ contributions to your TSP account, use Form TSP-1-C, which can be found at http://www.tsp.gov/forms.

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 reaching the maximum elective deferral limit. If you have any questions, please contact your servicing human resources office.