Does your agency offer any form of matching funds for the contributions you make to your Thrift Savings Plan? If so, you know that you could be (and hopefully are) taking advantage of what is essentially free money for retirement.
You would be in good company, as 77.6 percent of FERS employees contributed at least 5 percent of their income to their TSPs during the first three quarters of the year, and 77.4 percent did the same during the final quarter.
Wait…. Did you notice something in those statistics? A small number of people appeared to have stopped contributing to their TSPs, or lowered their contributions, in the final quarter of the year. Why would they do this? More importantly, why would they turn down free money for retirement, during the last few months of the year?
For most, the answer is relatively simple: They already met their contribution limits for 2017, and so had to stop making contributions or lower contributions for the rest of the year.
Yes, maxing out your contributions each year is a good idea. But because agencies only match a certain percentage of those contributions each pay period, you want to spread out those contributions evenly throughout the year. If you’re already maxed out by September, for example, then you’re missing out on matching funds for the last three months of the year.
The solution to this problem is fairly simple: We can help you calculate the exact contribution that you need to make each pay period, in order to reach your maximum contribution by the end of December. At the same time, we can help you reap more of those matching funds each period, by helping to ensure that your contributions are made evenly throughout the year. In most cases, only a small adjustment to your contributions schedule will be necessary…. But you’ll be gaining a bit more of that “free money” for retirement!
Just give us a call if you think you might be making this small (but potentially costly) mistake. We’ll help you analyze and adjust your TSP contributions to take full advantage of matching funds.
