Personal savings or Thrift Savings Plan (TSP) contributions could be an important part of the retirement picture for both FERS and CSRS employees. Most federal employees will not be able to meet all of their retirement income needs with their annuity alone. They may also need to draw substantially upon their savings.
2019 TSP Contribution Limits
In 2019, the TSP contribution limits for federal employees increased to $19,000, and employees age 50 or older can contribute an extra $6,000 for a total of $25,000. These amounts can change from year to year. Visit our website for any future updates. With TSP contribution limits on the rise, this allows federal employees to create a bigger federal retirement nest egg.
Traditional TSP vs Roth TSP
Typically, federal employees spend their working careers contributing to Thrift Savings Plan, which is a tax-advantaged 401(k)- type program offered by the federal government. Contributions made to a traditional TSP are not subject to income tax until they are withdrawn (“tax me later”), while Roth TSP contributions are taxed up front (“tax me now”), but generally no tax will be due upon withdrawal. Both CSRS and FERS employees are eligible to participate in the TSP, though different incentives apply. The TSP has the same contribution limits as other 401(k) plans.
If you have a Traditional and Roth account, any withdrawals that you make will come out pro-rata (i.e., proportionally) from each account balance when the TSP Modernization takes effect, you will have the option to choose whether your withdrawal comes from Traditional, Roth, or a mix of both.
Individual Retirement Account (IRA) to Roth IRA
The annual contribution limit for an IRA and Roth IRA increased to $6,000 for 2019. An additional catch-up contribution limit for federal employees age 50 or older remains at $1,000.
Income limits apply to IRA contributions: Married filing Joint cannot contribute to an IRA or Roth once Adjusted Gross Income (AGI) exceeds $203,000.
Federal employees may contribute to both the TSP and IRA (assuming AGI thresholds not exceeded).