Author Topic: TSP: over contribution with % of salary?  (Read 4064 times)

Villanelle

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TSP: over contribution with % of salary?
« on: March 28, 2016, 09:37:44 PM »
We've never maxed our TSP (I know!) so this has never been an issue.  But we are finally doing some financial housekeeping and are getting this done.  (This is for active duty military, if that makes a difference.) 

Since, as far as I can tell, the only way to select contribution amount now is via % of salary rather than a dollar amount, the numbers won't come out exactly right.  If we select a % of his base pay that is approximately $18,000/yr (the 2016 limit) and it ends up being slightly over, am I correct that for the December draw they would just take a smaller number automatically, meaning we'd get exactly $18,000 for the year and no more?  It seems like they've made it impossible to go over, but I want to make sure.  Do I understand correctly?

Lkxe

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Re: TSP: over contribution with % of salary?
« Reply #1 on: March 28, 2016, 10:32:21 PM »
Yes at least that has always worked for us In May will see if it works when you max at the 60% max allowable percentage



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Cycling Stache

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Re: TSP: over contribution with % of salary?
« Reply #2 on: March 29, 2016, 08:57:56 AM »
Yes at least that has always worked for us In May will see if it works when you max at the 60% max allowable percentage

Make sure doing so doesn't doesn't reduce any match you may get!  At least for us, you have to take throughout the entire year to get the complete match (because you only get a certain percentage match for each paycheck).

Drifterrider

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Re: TSP: over contribution with % of salary?
« Reply #3 on: March 29, 2016, 09:24:43 AM »
We've never maxed our TSP (I know!) so this has never been an issue.  But we are finally doing some financial housekeeping and are getting this done.  (This is for active duty military, if that makes a difference.) 

Since, as far as I can tell, the only way to select contribution amount now is via % of salary rather than a dollar amount, the numbers won't come out exactly right.  If we select a % of his base pay that is approximately $18,000/yr (the 2016 limit) and it ends up being slightly over, am I correct that for the December draw they would just take a smaller number automatically, meaning we'd get exactly $18,000 for the year and no more?  It seems like they've made it impossible to go over, but I want to make sure. Do I understand correctly?

Yes.  They stop taking when you hit the max allowable. 

primozaj

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Re: TSP: over contribution with % of salary?
« Reply #4 on: March 29, 2016, 09:37:10 AM »
You should be able to select $ value or % for either Roth TSP or Traditional TSP.  I currently use $693 and let the last paycheck of the year "auto" adjust.

Lkxe

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Re: TSP: over contribution with % of salary?
« Reply #5 on: March 29, 2016, 10:44:11 AM »
Yes at least that has always worked for us In May will see if it works when you max at the 60% max allowable percentage

Make sure doing so doesn't doesn't reduce any match you may get!  At least for us, you have to take throughout the entire year to get the complete match (because you only get a certain percentage match for each paycheck).

This is good advice for when active duty gets a match in 2018 but we are done this may


frugalecon

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Re: TSP: over contribution with % of salary?
« Reply #6 on: March 29, 2016, 10:46:58 AM »
We've never maxed our TSP (I know!) so this has never been an issue.  But we are finally doing some financial housekeeping and are getting this done.  (This is for active duty military, if that makes a difference.) 

Since, as far as I can tell, the only way to select contribution amount now is via % of salary rather than a dollar amount, the numbers won't come out exactly right.  If we select a % of his base pay that is approximately $18,000/yr (the 2016 limit) and it ends up being slightly over, am I correct that for the December draw they would just take a smaller number automatically, meaning we'd get exactly $18,000 for the year and no more?  It seems like they've made it impossible to go over, but I want to make sure.  Do I understand correctly?

Yes, this is exactly how it works, though as someone else noted, you should be able to select $693/PP. And make sure to get the whole match!

Villanelle

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Re: TSP: over contribution with % of salary?
« Reply #7 on: March 29, 2016, 12:54:09 PM »
Thanks all.  No match for military (for now, and forever for us), so that's not an issue.  I guess I need to have DH look closer and find a dollar amount entry!

I do have another question.  Frugalecon mentioned $693/pp.  We are limited to $18k/yr for DH only, yes?  Not for both of us? 

primozaj

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Re: TSP: over contribution with % of salary?
« Reply #8 on: March 29, 2016, 01:04:30 PM »
We are limited to $18k/yr for DH only, yes?  Not for both of us?

I believe its only for those eligible for TSP; Civil servants and Uniformed Services.  So if both of you are eligible then you can put $18k in each account separately.  But if he's the only one in the Service then it should be only $18k.

MishMash

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Re: TSP: over contribution with % of salary?
« Reply #9 on: March 29, 2016, 01:05:40 PM »
Thanks all.  No match for military (for now, and forever for us), so that's not an issue.  I guess I need to have DH look closer and find a dollar amount entry!

I do have another question.  Frugalecon mentioned $693/pp.  We are limited to $18k/yr for DH only, yes?  Not for both of us?

I think he's referring to your employers 401k plan.  Under military just DH can use TSP.

In regards to dollar amount, if he goes to finance they can do the paperwork for traditional TSP for a dollar amount however it's not worth the potential screw ups we've had in the past so we just do the percentage now (dollar amount option is only in the Roth option last we checked in MyPay).  In December (or whenever you hit max) it just caps it out at the 18k and dumps the extra into your paycheck.

Vagabond76

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Re: TSP: over contribution with % of salary?
« Reply #10 on: March 29, 2016, 03:32:26 PM »
I've had experience with this.  But first a couple of notes for all the commenters:

1)  There is no match for service members.  There will be in a couple of years when they reduce the pension in favor of a match.  For me, I will take the full pension.

2)  Service members can only select a percentage of net pay.  We used to be able to select a dollar amount for Roth TSP, but even that went away this year.

Now to OP's question:  Because we can only select a percentage, we err on the side of going over the IRS contribution limit.  Once year we hit the limit in October, and DFAS shut off contributions for the rest of the calendar year.  Last year, we would have gone over in Dec.  In fact we went over, and DFAS applied the overpayment to our 2016 contributions.  It took six weeks before everything got straightened out.  In the meantime, it appeared that our entire Dec contribution, regardless if it was applied to 2015 or 2016, was lost.  I didn't sweat it because (1) it is only a fake human invention called "money" and (2) we've done this a few times with no long term problems.

Villanelle

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Re: TSP: over contribution with % of salary?
« Reply #11 on: March 29, 2016, 03:48:00 PM »
 
I appreciate all the clarification.  I thought it was only a % that was available, because we used to have a dollar amount and were forced to switch when something changed.  Thank you!

(Also, DH will be taking the full pension as well.  He'll be at 19 years in 2018, so it would be crazy not to.  But the TSP money will be nice icing on the cake)

Travis

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Re: TSP: over contribution with % of salary?
« Reply #12 on: March 29, 2016, 04:49:35 PM »
I went over on TSP contributions last year, and my second December paycheck was much higher than usual because they turned my contribution off mid month and gave me the balance after I hit the max.

frugalecon

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Re: TSP: over contribution with % of salary?
« Reply #13 on: March 29, 2016, 06:33:55 PM »
Thanks all.  No match for military (for now, and forever for us), so that's not an issue.  I guess I need to have DH look closer and find a dollar amount entry!

I do have another question.  Frugalecon mentioned $693/pp.  We are limited to $18k/yr for DH only, yes?  Not for both of us?

Oh, sorry! I meant /pp to mean "per pay period"!