As a federal employee your Thrift Savings Plan (TSP) is one of your most valuable benefits. This retirement account allows you to accumulate savings on a pre-tax or after-tax basis and, if you are a FERS employee, you can also receive matching contributions on up to 5% of what you put into TSP each pay period. When you retire your TSP may well be one of your most valuable assets, and it is important to stay informed when changes occur to the plan. So let’s look at what is new for this year.
- Contribution limits have increased. The amount that you can contribute each year is capped by the IRS but it has increased $500 to a total of $19,500. If you are over 50, you are also eligible to make “catch up” contributions each year and that limit also increased $500 to a total of $6500. That equates to a limit of $26,000 for employees age 50 or older. Remember that the matching contributions are on a pay-period basis, so don’t max out your TSP too early in the year and forgo the matching dollars!
- I fund index is changing. The I fund or “International” index in the TSP is moving to the Morgan Stanley Capital International All Country World Ex-U.S. Investable Market Index (MSCI ACWI Ex-US IMI), which covers 22 developed and 26 emerging markets. The Federal Retirement Thrift Investment Board feels that this move will bring the TSP more in line with 401(k) plans as the traditional I fund did not have emerging market exposure. This move, however, has not been without controversy with some United States Senators opposing the change, so be sure to continue to monitor this story.
3. Lifecycle funds will move to 5 year increments. The L funds use professionally determined mixes of the G, F, C, S, and I Funds for a particular target retirement date. The goal of the L Funds is to give investors a diversified portfolio within each fund that balances risk and return. These Lifecycle funds are offered in 10 year periods (L2020, L2030, L2040) but will be moving to five year funds sometime in the third quarter of 2020.
United Benefits has assisted thousands of federal employees with retirement, and we want to help you too. Are you interested in learning more about how to not only grow but also protect your TSP? Do you want to know what your pension amount will be when you retire? Life insurance or Social Security questions?
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