New TSP limits set for 2009

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RANDOLPH AIR FORCE BASE, Texas --  The Federal Retirement Thrift Investment Board announced an increase in the 2009 elective deferral limit for regular Thrift Savings Plan contributions: $16,500, up from $15,500 for 2008.

In addition, contributions for the TSP catch-up plan will increase to $5,500, up from the $5,000 limit set for the last three years.

"TSP is a long-term retirement savings plan, which everyone should consider," said Fran Campbell, a human resources specialist at the Air Force Personnel Center. "It's a great supplement to military and civilian retirement plans."

The plan gives investors the opportunity to lower their taxes each year they contribute. The taxes are deferred until the employee withdraws from the account after retirement.

"Investment money is deposited directly from each paycheck, so you never have to think about it. That makes it easy to 'pay yourself first' while only investing what you deem appropriate," Ms. Campbell said.

She also said that investing in TSP is not limited to just stocks.

"People can choose safer government securities or invest in the lifecycle funds," added Ms. Campbell.

Catch-up contributions are additional tax-deferred contributions and are separate from regular TSP contributions. For those who are eligible, catch-up contributions provide a way for individuals to secure their retirement if they began investing later in their careers.

To be eligible for catch-up contributions, civilian and military employees must be age 50 or older in the year in which the first deduction from pay occurs. They must also be in a pay status and be able to certify they will make, or have made, the maximum "regular" employee contributions of $16,500 to a TSP or other eligible account by the end of 2009. Other eligible accounts include uniformed services TSP accounts or other eligible employer plans, such as 401Ks. To be eligible, employees cannot be in the six-month, non-contribution period following a financial hardship in-service withdrawal.

Catch-up contributions automatically stop with the last pay date in the calendar year or when the maximum catch-up dollar limit for the year is reached, whichever comes first. Eligible employees must submit a new election for each year they wish to participate.

Regular TSP contributions stop when an employee's contributions reach the annual maximum limit and then automatically resume the next calendar year.

TSP for military members

- Military members can contribute any whole percentage of basic pay, as long as the annual total of the tax-deferred investment doesn't exceed $16,500 for 2009. As long as they contribute from basic pay, Airmen can also invest all or part of their bonuses, special pay or incentive pay. Members may enroll in December; however, requested actions will not update until Jan. 1.

- Military members who are currently enrolled and want to adjust their contribution for 2008 must contact their local finance office so adjustments can be completed by Dec. 20.

- Those serving in tax-free combat zones are allowed up to $49,000 in annual contributions for 2009. The $49,000 total includes tax-exempt combat zone contributions and regular deferred contributions.

- Military members can enroll or change their regular TSP contribution amount through the Defense Finance and Accounting Service Web site or by filling out a TSP-U-1 Election Form at local military personnel flights and finance offices.

- Catch-up contributions can also be made at those offices by filling out a Form TSP-U-1-C, TSP Catch-Up Contribution Election.

- Contribution allocations (how an employee chooses to invest money among the investment funds) can be made by calling the TSP automated ThriftLine at 877-968-3778 for employees in the U.S., Virgin Islands, Puerto Rico, Guam, American Samoa and Canada. Others can call 404-233-4400 or log onto their TSP account at http://www.tsp.gov.

- For general TSP questions, call the Air Force Contact Center at 800-616-3775 (press 1, press 1, press 1, and follow the prompts).

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. This amount is subject to the $16,500 annual maximum for 2009.

- Air Force-serviced civilians may submit regular TSP enrollment elections or changes at any time. Contributions will automatically continue into 2009 for those already in TSP, so it is not necessary for employees to submit an election unless they wish to change the amount of their bi-weekly contributions. The contribution on pay date Jan. 9, 2009, will apply toward the 2009 annual maximum.

- Employees who are covered by the Federal Employees Retirement System and who are eligible for agency matching contributions must contribute at least 5 percent of their basic pay every pay period in order to receive maximum matching contributions throughout the entire year. Once the maximum contribution limit of $16,500 is reached, employee contributions and agency matching contributions will be suspended for the remainder of the year.

- Regular TSP enrollments, changes or catch-up contribution enrollments submitted between Dec. 7-20 will be effective Dec. 21 and reflect on pay date Jan. 9, 2009. Elections submitted between Dec. 21 and Jan. 3 will be effective Jan. 4 and reflect on the Jan. 23 pay date.

- When submitting catch-up contribution elections, employees need to designate a whole-dollar amount to contribute each payday rather than the annual maximum of $5,500. Do not designate an amount that exceeds net pay or payroll will not withhold any TSP contributions. To spread catch-up contributions evenly over the year, divide the total contribution (up to $5,500) by the number of pay dates remaining in the year. There are 26 pay dates in 2009 for employees who submit their catch-up contribution election between Dec. 7-20.

- Air Force-serviced civilians enroll or submit regular TSP contribution elections, as well as catch-up contribution elections if eligible, by using the Employee Benefits Information System Web application or the Benefits and Entitlements Service Team's phone system. EBIS can be found on the Air Force Portal and on AFPC's "Ask" Web site by entering "Employee Benefits Information System" in the search function.

- Employees can reach the BEST phone system by dialing 800-616-3775. For more details, visit AFPC's "Ask" Web site and enter "Thrift Savings Plan" in the search function.
Additional information about TSP, both regular and catch-up, is available on the TSP Web site. See "Summary of the Thrift Savings Plan" located under civilian or uniformed services TSP Forms and Publications.