TSP Annual additions limit

[Royal]

Looks like we're safe until at least March, thanks to Uncle Joe Manchin

[QAZqaz]

On 12/17/2021 at 7:00 AM, likearock1515 said:

https://the-military-guide.com/maximizing-your-thrift-savings-plan-contributions-in-a-combat-zone/
 

I don’t believe everything I read on the internet, but this article seems to be written by someone who has done their research.  There’s a TON of fluff in it, and it is from a few years ago, so may not be 100% accurate, but I’m wary of what some folks have suggested up til this point regarding maxing your Roth ASAP.

Once you hit the elective deferral limit in your Roth, you may basically get locked out of any additional limit contributions, Roth or traditional.  (You certainly won’t be able to contribute anything over 20,500 into your Roth) Also, any additional limit contributions have to be made while you are in the combat zone, so an “early” deployment won’t do you much good.  The best way to work it, according to this article, would be to put $20,499 or less into your Roth, deploy long enough to dump 40,500 into the traditional side of your account, then put $1 into your Roth at the end of deployment or once you’re home.  If you are in the BRS then you obviously need to plan/spread the contributions out to where you don’t hose yourself out of a government match towards the end of the year.

Bottom line, my interpretation of a third party article is that if you hit your elective deferral limit by contributing 20,500 into your Roth, you may get locked out of additional limit contributions, unless the TSP coding has been fixed from when this article was written.  Hopefully it has been fixed, but it’s probably such a rare situation that I doubt finance or TSP folks could give you a 100% clear answer. Even if my interpretation of this article is wrong, you only potentially miss out on a small dollar amount in your Roth, which you can probably make up by the end of the calendar year.

Happy to hear any reattacks or real world experiences since I’ll be trying this myself this upcoming year.  Good luck!

 

Yeah I read that one before. So my biggest concern is accidentally going over $20.5k and then it locking the additional annual limit ($40.5k traditional) out so I’ll just have to watch it on every paycheck and figure out what month I need to drop the percentage, then on the following month start dropping into the traditional. 

[QAZqaz]

On 12/16/2021 at 9:53 PM, ViperMan said:

Yeah, max the Roth TSP, then if you can dump more money into the traditional if you want. I think we're on the same page.

I interpret this to mean that you're not allowed to exceed $19,500 in the Roth TSP under any circumstance: "The Elective deferral limit applies to the combined total of traditional and Roth contributions. For members of the uniformed services, it includes all traditional and Roth contributions from taxable basic pay, incentive pay, special pay and bonus pay but does not apply to traditional contributions made from tax-exempt pay earned in a combat zone."

Key phrase "traditional contributions." TRADITIONAL contributions...

Are you saying you can add more than the 19.5 to the roth TSP? Because if so, I haven't seen a source that backs that up.

Nope you cannot add more than $20.5k (for cy2022) into a Roth TSP (unless a back door Roth TSP exists as mentioned elsewhere in this thread). My plan is to get to like $20.49k into the Roth at the beginning of the year, and then start dumping into traditional because I will be in a CZTE for almost all of 2022. My question was basically how do I do that through MYPAY and will the MYPAY system realize I’m in a czte etc. 

my wife has been doing the back door Roth (kinda sounds dirty) for years now but I never considered it could be something I could do via TSP. Imagine trying to get information on how to do that from anybody lol I mean I can barely get a voucher processed correctly let alone find someone that knows what a back door Roth is. 

[QAZqaz]

On 12/16/2021 at 11:45 PM, jazzdude said:

 

This should work, and it's the way to max perform your tsp.


From what I understand it's all one big bucket. Basically the your limited to 20.5k for the sum of your Roth and traditional contributions. Once you hit that limit, you can only continue to contribute to your traditional tsp if you're in a combat zone that month, up to the 61k limit. That might just be a DFAS limitation, since TSP keeps tax free traditional contributions separate, so the should know that money can exceed the 20.5k limit.

The other caveat is that if you're on the BRS, the gov contributions count towards that 60.5k limit as well.

The problem is if I get tax free the month of Sept, it’s already too late to change my MYPAY contributions to dump in traditional tsp contributions past the 20.5k limit, because when you change your contributions in MYPAY it takes effect the following month (oct). So I would get tax free for sept, but then try to add to my traditional tsp past the 20.5k limit in Oct, which isn’t the month I received tax free. So I don’t know if MYPAY/DFAS or the algorithm is smart enough to realize that and not just kick the money back.