STARTING YOUR TSP CONTRIBUTIONS
The first step in planning participation in TSP is reviewing current pay, bonuses and deductions. This will allow you to determine what percentages of your basic pay, special and incentive pays, and bonuses are available for contribution elections. Remember, traditional and Roth contributions are based on your elections of percentages of pay and not on dollar amounts.
Traditional TSP contributions are taken before all other deductions. Roth TSP contributions come from pay available AFTER payroll taxes and deductions have been computed. We’ve developed a worksheet to help you determine the amounts of pay eligible for Roth TSP contributions.
WARNING: Electing a contribution percentage that does not allow for existing deductions will cancel the Roth TSP elections and funds will not be deposited in your Roth TSP account. Deductions include payroll taxes (Social Security and Medicare) as well as forfeitures, federal and state income tax withholding, Service Members’ Group Life Insurance (SGLI) and Family Service Members’ Group Life Insurance (FSGLI) premiums, debts, garnishments, bankruptcies, tax levies, alimony, child support and fines. Visit your finance office if you have any questions about deductions from your pay.
Once you have determined the percentages of each pay category to be contributed to your traditional and/or Roth TSP account, myPay is available to start, change or stop traditional and Roth TSP contributions.
If you do not have access to myPay, a completed and signed Thrift Savings Plan Election Form TSP-U-1 must be submitted to your finance office for processing. Forms are available at https://www.tsp.gov/forms/uniformedServicesForms.shtml
WANT TO CONTRIBUTE FROM A BONUS OR ONE-TIME PAYMENT?
If you will be receiving bonuses or one-time special or incentive payments, you may wish to contribute all or part of those payments to your TSP account. Like other TSP contributions, elections must be stated in percentages rather than dollar amounts.
Because Roth TSP is taken after all other deductions, you will need to calculate how much money is available to contribute to Roth TSP. Many regular payroll deductions may be found by reviewing your current LES; however, federal and state tax withholding of bonuses or other one-time payments will require a little math.
The federal supplemental rate for withholding is set at 22 percent. State supplemental rates vary state to state. Take a look at your state's current supplemental rates.
Multiply the amount of the gross bonus or one-time payment by the combined federal and state withholding percentages to get an estimate of your tax liability. Add this to your other deductions and subtract from the payment amount. If, for instance, all of your deductions equal 40 percent of your one-time payment, you cannot make an election of more than 60 percent for Roth TSP contributions.
CHANGING YOUR TSP ELECTIONS
Life, and your financial needs and goals change. Whether you need to reduce your contribution elections to balance your home budget or increase them to meet your future goals, you MUST enter contribution percentages in all pay categories when submitting changes either via myPay or a TSP-U-1. For example, if you are satisfied with most of your current elections, but wish to increase the percentage of basic pay, you must repeat your current elections in each pay category along with the increased percentage for basic pay.
Failure to submit the correct percentage in each pay category will cause your contribution elections for unmarked categories to be recorded as zero percent.
RESERVE AND GUARD ACTIVATION
Army and Air Force reservists and Guard members continue to be paid from the same system whether in a drill status or activated for active duty service. Your traditional and Roth elections will continue unaffected by the change in pay status.
For Navy reservists: Pay computation for members who serve on a period of active duty of more than 30 days is transferred to the pay system that supports active duty members. To continue traditional or Roth TSP, new elections must be submitted via myPay or a TSP-U-1 form. form. Following transfer back to the reserve pay system, your previous TSP elections may be restored. See your finance office to verify whether a new election is needed.
Beginning with the first pay period of 2021, the TSP switched to a “spillover” method for TSP Catch-Up contributions. This change eliminates the requirement to make a separate TSP Catch-Up election each year. The spillover method streamlines the catch-up contribution process for eligible participants by eliminating the requirement for participants to make an affirmative catch-up election each year. Participants turning 50 or older will no longer need to make a separate catch-up election. Once they reach the Elective Deferral Limit, their regular contributions will automatically start counting toward the IRC 414(v) catch-up contribution limit. More information can be found on the TSP Website.
Page updated October 30, 2020