FRTIB Proposes Simplifying TSP Catch-Up Contribution Process

A proposed rule aims to simplify the catch-up contribution process for the TSP.

Update: According to the TSP, this rule has been implemented and will take effect January 1, 2021.

Are you eligible to make catch-up contributions to the Thrift Savings Plan? If so, you may soon find that the process for making these contributions will be easier.

The Federal Retirement Thrift Investment Board published a proposed rule in the Federal Register that aims to simplify the catch-up contribution process.

The Current Catch-Up Contribution Process

TSP participants eligible to make catch-up contributions currently are required to submit an election form called “TSP-1-C/TSP-U-1-C, Catch-up Contribution Election” (or electronic equivalent) to their employing agency. The catch-up contribution election form is separate, and in addition to, any other contribution election that a participant may already have on file.

Upon receipt of a catch-up contribution election form, the participant’s employing agency begins submitting catch-up contributions to the TSP on the participant’s behalf, using special payroll records designed specifically for catch-up contributions. The payroll records that employing agencies use for submitting catch-up contributions are separate, and in addition to, the payroll records that employing agencies use for submitting other types of contributions.

Proposed Change to the Catch-Up Contribution Process

The proposed change would eliminate the requirement that TSP participants submit the extra form for the catch-up contributions. Instead, the TSP will simply continue to accept contributions based on the participant’s contribution election that is already on file, until his/her contributions reach the combined limits on catch-up contributions and other types of contributions. Contributions in excess of the 402(g) limit or the 415(c) limit on behalf of a catch-up eligible participant, the TSP record keeping system would automatically treat the excess contributions as catch-up contributions.

The TSP record keeping system would also automatically determine a participant’s eligibility based on his or her birthdate (IRS regulations currently require that a person be 50 or older to make catch-up contributions).

Comments and Effective Date

The proposed rule is currently open to comments. Comments can be submitted online, by mail or even hand delivered. The proposed rule has details on where and how to submit comments. Comments must be received on or before February 24, 2020.

The most helpful comments explain the reason for any recommended change and include data, information, and the authority that supports the recommended change.

If finalized, the rule change would take effect January 1, 2021.

What are Catch-Up Contributions?

Catch-up contributions are contributions that exceed a statutory limit on the amount of contributions a participant can normally make to the TSP in each calendar year. Congress permitted these extra contributions to allow participants to “catch up” for years when they were not employed or were otherwise unable to contribute toward their retirement.

The Internal Revenue Service says in its regulations that individuals who are age 50 or over at the end of the calendar year can make annual catch-up contributions.

For 2020, the standard annual contribution limit for the TSP is $19,500, and the catch-up contribution limit is $6,500 for federal employees aged 50 and older. Federal employees who meet these eligibility requirements can save up to $26,000 per year into their TSP accounts under the 2020 limits.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.