This Just In – 27 pay dates for some employees in 2015!
Does DFAS handle your agency’s payroll? If so you will have 27 pay days in 2015. This might not be a big deal to many readers, but it will to some.
For highly compensated FERS employees who are planning on maximizing their TSP contributions in 2015, this is a big deal. In order to receive agency matching contributions in each pay period of the year, you must distribute your contributions over the entire year. If you reach the elective deferral limit before the last pay period, you will not receive any matching contribution for the pay period(s) in which you do not contribute. In other words, you are giving up free money.
For agencies where DFAS is their payroll processer, the first pay date is January 2, 2015 for the pay period that ends December 27, 2014. The last pay date is December 31, 2015 for the pay period that ends December 26, 2015 (the pay date would normally fall on January 1, 2016, but employees will be paid one day early). DFAS Benefits Bulletin 2014-7 transmitted this information to agencies that use their services. What is important in allocating your TSP contributions is the day you (and therefore the TSP) get paid, not when the pay period itself begins or ends.
The TSP elective deferral limit in 2015 is $18,000. If you are having an equal amount taken out each pay period, you would choose an amount of $667 per pay period if you have 27 pay days in the year. If the year contained only 26 pay days, the bi-weekly amount would be $693.
If your agency uses DFAS as the payroll processer and you want to max out your contributions this year, you will have to make a change in your per pay period contribution amount. To have this election effective for all 27 pay dates of the year, you must make a contribution election, through EBIS, by December 13, 2014.
What about “catch-up” contributions? As there is no match associated with them, you do not need to spread out your catch-up contributions over the entire year. However, many people choose to do so for budget reasons. To spread your catch-up contributions out over the entire year, choose $223 per pay period if you have 27 pay days and $231 per pay period if you have 26 pay days. Catch-up contributions do not carry over from year to year, so you will have to make a new allocation if you want to continue making them. The amount allowable for catch-up contributions has also increased in 2015. It will be $6,000.
Of course, there are other payroll providers that service other federal agencies. If you don’t know who provides payroll services for your agency, ask your Human Resources staff. Ask then how many pay days you will have in 2015 as well.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at shoplrp.com.