### Author Topic: Maximizing TSP Matching Contributions  (Read 1444 times)

#### FIREandMONEY

• Posts: 46
• Age: 32
• Location: North Richland Hills, TX (Fort Worth)
##### Maximizing TSP Matching Contributions
« on: December 07, 2015, 09:53:12 AM »
Warning: This is more of a theoretical problem than an actual problem that anybody worries about. Only the nerdy and over-analytical need respond!  :P

I got this sent to me in my work email today: https://www.abc.army.mil/TSP/TSP2016Chart(OA&FA).pdf

It shows how much you need to contribute/PP to max out the \$18K TSP limit.

It says \$693 per pay period, which multiplied 26 PP comes out to \$18,018. I was always under the impression that any amount you pay over the contribution limit, you are giving up a portion of your matching contribution.

Assuming a 25% tax rate, would it actually be more efficient to contribute \$692 (17,992=692*26), get the full amount of matching and then contribute the difference (\$8) to a brokerage account?

My matching contribution is \$142.20. \$142.2/692=0.205 That means for every dollar I contribute, I get a match of ~20.5 cents. If I contribute \$693, I gain an extra ~\$1.64 in annual matching, but then \$18 will get removed from the final matching amount right? So my final TSP matching in my earnings statement would be \$142.20-\$18=\$124.2 Basically that would be like giving someone \$26 and them giving you back \$9.64 in return right?

I know the difference dollar wise is negligible in the big picture, that's why I said this is more of a math problem, but what do the rest of you guys say?

Better to contribute \$8 UNDER the \$18,000 max or \$18 OVER?

I think the answer is under, but I just wanted to see if I was forgetting anything.

#### fattest_foot

• Pencil Stache
• Posts: 592
##### Re: Maximizing TSP Matching Contributions
« Reply #1 on: December 07, 2015, 09:59:54 AM »
I'm in for an answer to this as well, just because I'm not sure how it works.

I changed my contribution to \$693 about a month ago.

#### FIREandMONEY

• Posts: 46
• Age: 32
• Location: North Richland Hills, TX (Fort Worth)
##### Re: Maximizing TSP Matching Contributions
« Reply #2 on: December 08, 2015, 07:19:02 AM »
I found it!

Second footnote on page 3 describes the agency adjustment to the last paycheck so you don't exceed the limit.

https://www.tsp.gov/PDF/formspubs/oc91-13.pdf

Looks like \$693/PP is the amount to contribute to max the TSP for 2016.