# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MountainTown on February 21, 2019, 11:58:58 PM

Title: Maxing out TSP...do I have this right?
Post by: MountainTown on February 21, 2019, 11:58:58 PM
Ok....I understand that you can't totally front load the TSP because you would miss out on the match. However, I am wondering is it possible to sort of half-ass front load?

For example, I make about 84k/year now. I figure my 5% will be no more than 4200 at this point. So if I were to ....front load a little bit....like up to 10k this winter...wouldn't I be at minimal risk of losing my match?

My math is roughly:
10,000 contributed by April, YTD
Allows for another total 5% throughout the year of 4200
=14,200 total contributions

Which is still below the max.....am I getting something wrong here? It seems to me that if I wanted to I could even go bigger and max out until I hit about \$14,000 or something. I probably won't just to play it safe(in case I were to get a raise/bonus) but generally do I have this right?
Title: Re: Maxing out TSP...do I have this right?
Post by: six-car-habit on February 22, 2019, 01:52:39 AM
To get the maximum match you need to put in 6% of your own money each paycheck.  As long as you can figure the math so that you will be putting in 6% [ or more]  bi-weekly throughout the year, you will get the maximum match.  I haven't run your math examples, but yes you've got the jist of it.

Should you hit \$18500 in Your Own contributions [ I think \$18.5K is the limit this year] before the 26th pay period you would lose matching funds in the final paychecks before the calendar year hit Dec 31st.

It's only your own contributions that can "out-accelerate" the match. What they put in does not get counted against the \$18.5K

They match 1% for each 1% you put in for the first 4%.   Than they match 1/2% for each further 1%  you put away. So 6% of your contributions equals the 5 % total maximum they will match.   And you get the agency automatic 1% contribution that you see as a line item on your LES regardless.
Title: Re: Maxing out TSP...do I have this right?
Post by: sparkytheop on February 22, 2019, 02:55:42 AM
That should be fine.

A bonus would not change your base pay, which is what TSP matching is based on (overtime does not change tsp contribution/match either).  When would you get your pay raise?  Or are you thinking mid-year promotion type of pay raise?

As for the match, yes, 5% contribution gets the 5% match (auto 1% whether you contribute or not, then 1% match for you first 3% of contribution, and 1/2% for your next each 1% contribution.)

Our raises are supposed to happen in June, but we've had years where we didn't know what our raise would be until well into the next year, and then we get a bunch of retro pay.  I'm at the point now where I don't want that raise to finally show up in November, push me over the limit with the retro pay, and end up losing any match at the end of the year, so I just contribute a dollar amount each paycheck instead of a percentage.  The dollar amount I contribute is still well over 5%, so I know I would not lose any matching, and it isn't some weird mystery involving retro pay and multiple corrections to fix it when the raise is late.
Title: Re: Maxing out TSP...do I have this right?
Post by: the_fixer on February 22, 2019, 02:59:21 AM
Pretty sure the max this year is 19k

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Title: Re: Maxing out TSP...do I have this right?
Post by: Kierun on February 22, 2019, 10:14:26 AM
The premise of your thinking is fine, though with there being 3 pay periods from now until April, where will the boosted contributions come from?  Assuming you've also already missed the window to change contributions for this pay period there would only be 2 pay periods before April in which you could up your contributions.  Unless you've already been contributing significantly more than the 5% since the start of the year, then the above is moot.  But you'll be fine and won't miss out on matching by year end at 5%.
Title: Re: Maxing out TSP...do I have this right?
Post by: Boofinator on February 22, 2019, 10:57:23 AM
Have you considered the financial benefit associated with frontloading? To me, it has never seemed worth the hassle (for a 401k or TSP; I frontload my IRA). Consider that the money you would use for frontloading, instead went to a taxable account of equities. Basically, you'd be delaying the purchase of taxable equities by roughly six months (on average) for the \$10k if you frontload. So on average, that \$10k might spit out \$200 of dividends, which results in \$30 of extra taxes. Additionally, it might be expected to rise by 5% in that six months (and remain elevated by 5% in perpetuity relative to a later purchase), so that dividends are increased by an extra 5% per year; this results in an extra \$1.50 in taxes the first year. So overall, if my math is right, you are saving roughly \$31.50 the first year and a little bit in subsequent years (on average). Nothing to sneeze at, but I find it to be a pain in the ass to dial in my contributions correctly due to associated lags in the system, and therefore prefer a steady contribution for the cost of an extra hour of work.