The IRS said in a recent statement that the 2018 maximum annual contribution limit to the Thrift Savings Plan is not affected by the new tax law.
The IRS announced last fall the 2018 annual contribution limits for the TSP and other retirement savings plans such as 401(k)s and IRAs. Federal employees can contribute $18,500 this year to the TSP, a $500 increase over last year.
After the Tax Cut and Jobs Act of 2017 was signed into law, it raised the possibility that these limits could change. The IRS stressed that they will not:
As the recently enacted tax legislation made no changes to the section of the tax law limiting benefits and contributions for retirement plans, the qualified retirement plan limitations for tax year 2018 previously announced in the news release and detailed in guidance remain unchanged.
The tax law also specifies that contribution limits for IRAs, as well as the income thresholds related to IRAs and the saver’s credit, are to be adjusted for changes in the cost of living using procedures that are used to make cost-of-living adjustments that apply to many of the basic income tax parameters.
Although the new law made changes to how these cost of living adjustments are made, after taking the applicable rounding rules into account, the amounts for 2018 in the news release and the guidance remain unchanged.
Also unchanged by the new tax law is the 2018 annual contribution limit to an IRA which is $5,500, the same as it was in 2017. The additional catch-up contribution limit for individuals aged 50 and over is $1,000.
