TSP Changes and Limit Updates for 2023
Here Is What You Need to Know About the TSP Updates for 2023!
A new year means updated TSP rates. What exactly is TSP? TSP stands for the Thrift Savings Plan. The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services, including the Ready Reserve. The TSP was established by Congress in the Federal Employees’ Retirement System Act of 1986 and offers the same type of savings and tax benefits that many private corporations provide their employees under their 401 K plans.
The retirement income from your TSP will depend on how much you can put into your account during your working years as well as earnings over time. This will be a supplement to your retired military pay. Each year will have a different limit to how much you can put in.
2023 Regular TSP Rates
For 2023, the IRS annual limit for regular TSP contributions is $22,500. In 2022, it was $20,500. This limit is important because if you are covered by FERS, FERS-RAE, or FERS-FRAE, you will lose Agency Matching TSP contributions after you hit that limit.
What would this really look like? To make equal contributions over the whole year, you should be making $866 per pay period and can enter that into myPay. If you did enter your election after December 31, 2022, you will need to adjust the election amount. You can do this using the Elective Deferral Calculator.
If you can contribute at least 5% of your bi-weekly gross pay each pay period, you will then receive 4% Agency Matching contributions each pay period. You will also receive the Agency Automatic 1% contribution each pay period.
If you are deployed, you can exceed the $22,500 limit. Any contributions above $22,500 will automatically go into a traditional TSP. The Annual Addition Limit is $66,000 if you are under 50 years of age. This is the total you can contribute in 2023 across all retirement funds.
TSP Catch-up
You can also make TSP Catch-up contributions. You would need to be 50 years of age or older, or turning 50 in 2023. The 2023 IRS annual limit for Catch-up contributions is $7,500. In 2022 it was $6,500. This amount is in addition to the regular TSP limit.
As of January 2021, FRTIB implemented a new method for Catch-up contributions. This is called the “spillover” method. This simplifies the TSP Catch-up process and does not impact the Agency Matching contributions. Basically, you would enter the amount for your regular TSP and TSP Catch-up at the same time.
What Else to Know About the TSP
The Retirement and Employee Benefits Branch can’t stop or even change the election that you enter into myPay. Make sure the amount is correct before you submit it. After you do enter the election, it will become effective at the beginning of the next pay period. However, it won’t be visible in myPay and on your LES for 1-2 pay periods.
If you have any other questions about the TSP, you can visit the Frequently Asked Questions section on the TSP.gov website.
RELATED:
- Thrift Savings Plan (TSP): Everything You Need to Know
- Maximize Your TSP Retirement Fund
- Service Members Now Have More Options to Invest in TSP
- Blended Retirement System (BRS): An Overview
About the author
Julie Provost is a freelance writer, and blogger. She lives in Tennessee with her National Guard husband and three boys.
