Throughout this fall, we’ve watched as President Trump and Congress have debated various adjustments to our tax code and the federal budget overall. While many propositions currently remain undecided, one change will definitely take place beginning in January. Contribution limits for certain tax-advantaged retirement plans have been raised.
The change affects 401(k), 403b, and yes, Thrift Savings Plans! Now you can stash an additional 500 dollars per year in your TSP, for a total contribution of $18,500 in 2018 (and every year beyond that, unless future changes take place).
If you’re age 50 or over, the catch-up contribution rule still applies. You can save another $6,000 in your TSP next year, for a total contribution of $24,500.
This is good news, for more than one reason. Saving more for your retirement is always a good idea. The increase of 500 dollars might not sound like a lot to you, but multiply that number by the number of years you will continue to work… and then consider the power of compounding interest. As you can see, that 500 dollars makes a major difference!
Also, your TSP is more than just a retirement vehicle. Since you fund the account with pre-tax dollars, you lower your overall taxable income for the year. That means you can save just a bit more on your income taxes next year.
Hopefully you’re feeling optimistic about the future of your Thrift Savings Plan, and you’re planning to increase your contributions next year. If you need help with that, or any other retirement planning issue, feel free to give us a call. We keep ourselves informed on issues related to federal employee retirement, and pass along that information to benefit you.