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Front-Loading Your Thrift Savings Plan

Retiring during 2012? You may want to consider “front-loading” your TSP.

Retiring during 2012? You may want to consider “front-loading” your TSP. In 2012 you can contribute $17,000 to the TSP, plus another $5,500 if you are 50 or over. When you work an entire year, it is likely that you will spread your TSP contributions out over the entire year. This is especially important if you are a FERS employee, as it ensures you receive the full government matching contributions. 

If you are retiring in the middle of the year, you can accelerate your TSP contributions so that you hit the maximum by the date that you leave. Let’s say you are planning on retiring at the end of June in 2012, and let’s assume that you will leave at the end of the 13th pay period of the year. If you contributed $1,308 per pay period, you would reach the full $17,000 at the end of the 13th pay period. For the “catch-up” contributions of $5,500 per year, you would contribute $424 per pay period to max out at the end of the 13th pay period.

Of course, $1732 per pay period is out of the reach of most federal employees nearing retirement. Nonetheless, you could accelerate your payments (say, by increasing your contributions from 10% to 15% of salary) and end up with a larger amount in your TSP when you leave.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.