Information on Thrift Savings Plan (TSP) Limits and Catch-up or “Spillover” Contributions for Military Members
During 2021, DFAS is applying a sequence of system changes impacting the way annual TSP contribution limits are handled for both those who are turning 50 or older this year, and those younger than 50.
For those 50 or older: System adjustments were made in direct response to the Federal Retirement Thrift Investment Board’s (FRTIB) change to the new “spillover” method for catch-up contributions, which began with the first pay period of 2021.This spillover method streamlines the catch-up contribution process for those 50 or older by eliminating the requirement to make an affirmative catch up election each year.
For those younger than 50: System changes are scheduled to be implemented during the 4th quarter of 2021. These changes will systematically prevent military members from contributing more than the Elective Deferral Limit each year. Currently, this is a manual process where DFAS refunds members who have over contributed to their TSP account, generally about 45 days after the first contribution that exceeds the elective deferral limit set by the FRTIB.
Below are a list of questions and answers on how these changes may impact you and your TSP contribution limits.
What is the TSP Spillover method?
- Prior to January 2021, service members turning age 50 or older had to elect if they wanted to contribute to catch-up contributions.
- Beginning with the first pay period of 2021, a new method for catch-up contributions, called “spillover”, was implemented for members TSP contributions. The spillover method streamlines the catch-up contribution process for eligible service members turning age 50 or older by eliminating the requirement for participants to make an affirmative catch-up election each year. Instead, contributions will continue until catch-up participants reach the combined elective deferral and catch-up limits for the year. For more information visit: https://www.tsp.gov/bulletins/20-1/
What is the 2021 Elective Deferral Limit and Catch-up “Spillover” Limit?
- The Elective Deferral Limit for individuals under the age of 50 can contribute up to $19,500 per year into the TSP.
- Those aged 50 and above can make catch-up or “spillover” contributions of an additional $6,500, for a total of $26,000 per year ($19,500 + $6,500).
I’m under the age of 50, how does this impact me?
- If a military member is under the age of 50 and their TSP contributions exceed the Elective Deferral Limit of $19,500, DFAS will make the necessary correction/adjustment to the member’s TSP record and refund the overage back to the member’s pay, typically within 30 days. DFAS will also suspend additional contributions from being sent to TSP this year.
- This process is currently manual; however, DFAS is working on system upgrades to automate this process that are targeted for implementation during the 4th quarter of 2021. After this system change is implemented, member’s contributions will automatically be stopped at the Elective Deferral Limit of $19,500, and will prevent any further contributions being ducted from the members pay, avoiding the need of a refund.
- Service members who are getting close to the Elective Deferral Limit and don’t want to go through DFAS’ manual process can adjust their contributions accordingly by visiting their MyPay account.
I’m turning 50 or older, how does this apply to me?
- Service members either turning 50 this year or are older than 50 will no longer need to make a separate catch-up election once they have exceeded the Elective Deferral Limit of $19,500. Their regular contributions will automatically start counting toward the catch-up (Spillover) contribution limit of $26,000.
- Service members turning 50 or older who do not wish to contribute toward the catch-up limit should adjust their contributions accordingly by visiting their MyPay account.
If you have questions about excess contribution, you can call the DFAS Customer Care Center at 1 -888-332-7411 or you can visit your local finance office.
For more information, please visit the following webpages:
Active Duty Military Member: https://www.dfas.mil/MilitaryMembers/tspformilitary/tspac/
Reserve/Guard Military Member: https://www.dfas.mil/MilitaryMembers/tspformilitary/tsprc/
Or visit the Thrift Savings Plan website
Page updated July 15, 2021