I don't understand either-
last year I was contributing 2100/per pay period to the Roth TSP (basically 100% of my base pay) until I hit the max. In January everyone had to reallocate, and the max % you are able to contribute within MyPay is 65% to the Roth TSP, I could contribute up to 92% of Base Pay IF it was to a traditional TSP. I don't understand this change- and it has me wondering which I should contribute to-
Basically, if the goal is to get as much as possible, I will be able to hit the limit a little faster if I contribute to the traditional (since I will be able to go over 18k while on deployment.) However since I am so limited in the amount I can actually contribute I won't be able to get much over the 18k limit anyway, I am wondering if it is worth the hassle.
My financial situation is probably a little different than most E-4's since I got in a little later in life- but I find this limitation on the amount I can contribute problematic... I would prefer to contribute 100% base pay to my TSP and max it out as quickly as possible, but not an option now...
Thanks for your PM. I consulted a couple other military bloggers & CFPs, and here's some thoughts.
I know that the 92% in the traditional TSP contribution limit is based on having 7.45% left for FICA (Medicare & Social Security). We used to do this limit with my spouse's Reserve drill pay, and as a result she'd get a pay deposit of tiny amounts like $1.21.
Because of that limit, we're wondering whether the Roth TSP limit is based on tax withholding. For example, if DFAS' default withholding ratio for taxes is 25% then the Roth TSP contribution limit becomes 100% - 7.45% - 25% = ~65%. But I don't know how DFAS came up with 65%.
It's even possible that your contributions are limited by your individual income tax withholding, and it'd be interesting to see whether you could contribute more to the Roth TSP by simply claiming more W-4 exemptions. The Roth TSP's 65% might not kick in until after deductions and allotments, so anything taken out of your pay before the TSP contribution might reduce the remaining amount that's subject to the 65% limit. If you could eliminate all other deductions/allotments from your pay (other than the 7.45% FICA) then you might be able to max out your Roth TSP contributions. I wouldn't even take out an allotment to the Combined Federal Campaign.
The other thoughts of our group were that you'd contribute to your spouse's 401(k) up to the employer match, then do as much as you can in the Roth TSP, then maximize your Roth IRA contributions, then maximize the rest of your TSP contributions via the traditional TSP, then maximize the rest of your spouse's tax-deferred contributions, and then (finally) save more in taxable accounts. But it looks like you're already doing that.
And you're right, when you're deployed to the combat zone then you want to shovel as much of your pay as possible into the TSP. You're still stuck with an $18K limit in the Roth, but you could put up to another $35K in the traditional TSP (if you had the earned income!).
I'm most familiar with Navy re-enlistment programs, and I realize that you're AF, but if you're planning to STAR for E-5 (and perhaps a re-enlistment bonus) then doing it from the combat zone would be an excellent way to stuff more money into your TSP. But that's assuming you'd be interested in a longer service obligation in the first place.