Q. I’ve heard that 2016 will have 27 pay periods. Is that true? If it is true, how will it affect my TSP contributions?
A. It may or may not be true, depending on who processes your agency payroll.
I’ve heard that some agencies that have their payroll processed by DFAS will have 27 pay dates in 2016. However, you should check with your Human Resources Office to be sure of the exact number of pay dates your agency will have in 2016. I’m using the wording “pay dates” as opposed to pay periods, as it is the date on which we are paid that will determine if there is any effect on our TSP contributions.
If you are covered under FERS and plan to max out your TSP contributions in 2016 (i.e., contribute the full $18,000 that you are allowed to), 27 pay dates might result in your losing the government matching contribution for the last pay date of the year.
Uncle Sam matches your contributions in pay periods where you are contributing to the TSP. If there were 26 pay dates, you would contribute $693 per pay period to reach $18,000 in the final pay period of the year. Of course, if there were 27 pay dates, you would have one pay period where you were not contributing to the TSP and you would, therefore, not receive the 4% contribution that represents the match; you would receive the agency automatic 1% contribution. If you know there will be 27 pay dates in 2016 and want to reach the $18,000 elective deferral limit in the final pay period, you would want to adjust your contribution to $667 a pay period.
Of course, if you are covered by CSRS, or are not able to contribute the full $18,000 in 2016, this means nothing to you. If you are 50 or over (this includes the year in which you turn 50) you are allowed to make “catch-up” contributions of up to $6,000 in 2016. Because these catch-up contributions do not have a match associated with them, the fact that there might be an extra period means nothing.
John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. Order your copy at shoplrp.com. Ask your human resources office to contact Federal Career Experts about pre-retirement training.