Contributing Too Much to the TSP Will Reduce Your Match

If you contribute too much to the TSP each pay period, it can actually cause you to lose money. The author provides a detailed explanation.

If you are a FERS employee and you are contributing a significant percentage of your pay to the TSP, this information could save you hundreds, possibly thousands of dollars, in free agency match contributions.

As you may know, in 2017 the annual limit on elective deferrals (how much you can contribute in a calendar year) into the TSP is $18,000. If you reach the maximum contribution limit prior to the end of calendar year your contributions will be suspended.

You may also be aware that FERS employees can receive as much 5% of pay in TSP agency contributions which is clearly an excellent benefit. Of the 5%, 1% is what’s referred to as Agency Automatic Contribution and the remaining 4% is referred to as Agency Matching Contribution.

As indicated in the name, the 1% Agency Automatic Contribution is automatically contributed to your TSP by the government whether you contribute to the TSP or not. Conversely, the Agency Matching Contributions are contingent on your contributions. To receive the maximum Agency Match of 4% you must contribute at least 5% of your pay per pay period.

Matching Schedule

The matching schedule is as follows:

  • First 3% – Dollar for Dollar
  • Next 2% – 50 cents on the Dollar

What This Means to You

Here is the significance of this information and how it may apply to you. Given the information above, you can see that if your TSP contributions are suspended due to hitting the $18,000 maximum prior to year end, the 4% Agency Match will also be suspended.


If you happen to be contributing more than $693 per pay period ($693 x 26 pay periods = $18,018), starting the first pay period you will be leaving free matching money on the table.

For example, using an $88,000 salary and TSP contributions of $900 per pay period this individual would hit the $18,000 limit in pay period 20. This individual would miss out on a 4% match for the remaining 6 pay periods which equals $812.30.

For higher salaries, the amount of free money that would be missed is even greater. An individual with a $150,000 salary and TSP contributions of $1,000 per pay period would hit the $18,000 limit in pay period 18. In this case, he or she would miss out on a 4% match for the remaining 8 pay periods which equals $1,846.15!

Clearly no one wants to leave free money on the table which is why we encourage FERS employees to make sure contributions are no more than $693 per pay period allowing for the maximum Agency Match Contributions to be received.

Ensure You Get the Full TSP Match

If by chance you find yourself currently contributing more than $693 per pay period, not to worry. Here is what you need to do to ensure you receive the full match.

First, determine how much you have contributed year to date (not including agency contributions). Subtract that figure from $18,000, then divide by the number of remaining pay periods. The resulting figure is the dollar amount you need to contribute per pay period through the end of the year. Finally, set a reminder to adjust your contribution prior the following year’s first pay period to $693, assuming the annual limit remains at $18,000.

What About Catch Up Contributions?

If you are wondering about catch up contributions for employees age 50 or older, they do not receive a match of any kind. Therefore, accelerating your catch up contributions to fully fund the $6,000 annual limit prior to year-end will have no negative financial implications.


About the Author

Neal Thompson is the founder of Federal Retirement Services and is recognized as one of the premier retirement planning advisors for federal employees. He has conducted countless retirement training workshops to help federal workers covered by CSRS or FERS get the most out of their retirement.