Help Me Understand Maximum TSP Contributions

If you’ve been hanging out around The Paycheck Chronicles for a while, you’ll have noticed that I have a small group of military personal finance writers with whom I chat regularly.  We discuss new trends, surprising problems, and mysteries of military pay and allowances.  And this week, we have a new question to ponder.

If you’ve ever looked closely at your myPay Thrift Savings Plan (TSP) contribution election page, you’ll see that to the side of both the traditional and Roth TSP options, there is a number

MyPay TSP Page

What’s mysterious to us is that number is different for every single person that we’ve checked with, and we can’t figure out the method to how that number is calculated.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • 4M

    For my numbers it seems as though the %’s will get me right to the 18000 cap, but it’s silly that I can’t go higher (isn’t the limit in the 90’s). What if I wanted to front load my TSP, didn’t have much in bonuses, special, or incentive pay?

    Is this forces dollar cost averaging?

    Do the %’s change w/W4 changes (might be trying to allow for taxes).

  • 4M

    My base values are

    Makes sense for ROTH, need to account for taxes out of base pay

    And I think 92 is the actual limit for trad.

    So it seems like your limited based on TRAD of 92% of base pay, but DFAS put in a buffer on the ROTH to account for State + Federal income tax (still 92% of base which is 100% ish after FICA).

    I’m not sure special/incentive/and bonuses have FICA, so that accounts for the higher trad limit, and there’s some sort of weighting going on to establish ROTH limits.

    If I put 50% of the ROTH’s limit (30%), then trad gives me a limit of 46% which is 50% of its limit.

    It certainly is interesting that DFAS thinks military members will be paying an effective 35% tax rate, but I guess it could happen in a dual income high earner couple that paid state tax.

  • 4M

    10% in ROTH is roughly 15% in trad and vice versa.

    So the numbers are different because everyone is contributing different %’s into either the ROTH or the TRAD.

    Upping the ROTH drops what you can put into the trad by 1.5x, and upping the TRAD drops what you can put into the ROTH by .75x.

    But special pays don’t affect base and vice versa, so there’s no computing for the 18,000 cap.