TSP/401k Contributions: Which tax year?

[jimbohoward69]

Hey y'all I started working for the Air Force (as a civilian) back in January and have been contributing to the TSP since that time. Pay periods are every two weeks (Begin on Sunday, end on Saturday), with "pay day" being the following Thursday after the end of the payperiod.

My question is this: Does the annual 401k contribution limit go off of when the income was actually deferred or when it is contributed to your TSP/401k account? I'm trying to figure it out so that I don't go over the max at the end of the year.

Scenario: The last two pay periods of the calendar year are 1-14 (Pay Period #1) and 15-28 (Pay Period #2) December. The date when Pay Period #1's deferred funds are deposited into my TSP account is 19 December but the deposit date of Pay Period #2 is not until 2 January 2014.

Do I want to calculate my contributions from now until the end of the year to "hit" $17,500 on the 19th of December (since it's the final contribution date of the year) or is including the last pay period of the year OK in my calculation (although it won't go into my TSP until the 2nd of January)?

I hope my questions made sense. Any feedback would be greatly appreciated!

 

[Amethyst]

I'm a DoD civilian, and our payroll department ensures our TSP contributions do not go over the max. Every December before the contribution year, we tell Payroll how much we want to contribute in the coming year. Payroll tells us how much will come out of each biweekly pay. It's generally a bit less in the last pay period.

Hope that helps. Ask your Payroll folks...

Amethyst

 

[timo2]

Yes, the 401K limit is a calendar (tax) year thing, not a pay-year thing. My agency also put out a document as to what to put in per pay period to reach the limit. But you can adjust your contributions as the pay period year end comes close also, to ensure that you 1) don't go over the cap 2) still get the matching contribution for the last couple pay periods.

Here is the TSP page for that https://www.tsp.gov/planparticipation/eligibility/contributionLimits.shtml

 

[jimbohoward69]

Yes, the 401K limit is a calendar (tax) year thing, not a pay-year thing. My agency also put out a document as to what to put in per pay period to reach the limit. But you can adjust your contributions as the pay period year end comes close also, to ensure that you 1) don't go over the cap 2) still get the matching contribution for the last couple pay periods.

Here is the TSP page for that https://www.tsp.gov/planparticipation/eligibility/contributionLimits.shtml

Thank you for the link! However, after looking at the literature, it states that BOTH Traditional (tax-deferred) and Roth TSP (after tax) contributions count towards the $17,500 "elective deferral limit"? That doesn't make sense to me...why would Roth TSP contributions count towards the IRS amount of $17,500 amount when they're considered "after tax" contributions?

So basically, for each dollar I contribute to the Roth TSP, I need to lessen my Traditional TSP contributions by the same amount in order not to exceed the "elective deferral" maximum? I thought the whole idea of the $17,500 "ceiling" was to limit the amount that can be "tax deferred", which doesn't pertain to Roth TSP contributions. Or am I wrong?

Now I'm more confused...

 

[timo2]

Yes, for each dollar you contribute to the Roth TSP, you need to lessen my Traditional TSP contributions by the same amount in order not to exceed the "elective deferral" maximum? Additionally, the federal contribution only goes into the Traditional TSP account, even if you put all of your $17,500 into the Roth.

I believe all this is according to law as passed by Congress that dictates how any retirement fund would behave, not just the TSP.

 

[Redbugdave]

I think this is what you are asking about...

The 2013 tax year for TSP and TSP CUCs will begin December 16, 2012 (pay period 26) and will end December 14, 2013 (pay period 24). This is a total of 26 pay periods.

You may need to total up what you have put in so far...and figure up the difference you need to contribute...and divide equally by the remaining pay periods in the 2013 pay period year to fully contribute. Same goes for your over 50 contributions, (if you are 50 years old or older).

I do my own Roth separately each year, (with Vanguard), and don't mess with the TSP Roth option. I max out the TSP, the over 50 addition, as well as the $6500 limit Roth IRA for me as well as my wife.

For both traditional IRAs and Roths, the maximum you can contribute rises from $5,000 to $5,500 (the catch-up contribution is still $1,000 for people age 50 or older, bringing their total to $6,500 in 2013). The income limit for contributing to a Roth also rises slightly -- from $183,000 to $188,000 for married couples filing jointly, and from $125,000 to $127,000 for singles and people filing as head of household. The amount you can contribute starts to phase out if your adjusted gross income is $178,000 or more for joint filers, and $112,000 for singles and heads of household.

I hope I am making sense...

 

[jimbohoward69]

Thank you all for the replies!