TSP Contribution Limits Going Up in 2022

Numbered wood blocks turning over to read "2022"
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The IRS has announced that the maximum amount of money you can contribute to retirement savings plans like the Thrift Savings Plan (TSP) will go up in 2022.

The popular retirement savings plans offer tax-free or tax-deferred income later in life when you choose to stop working. The maximum contribution rates in 2022 will be:

  • $20,500 for regular TSP or 401(k) contributions (up from $19,500 in 2021
  • $6,500 for catch-up contributions for those 50 and over
  • $61,000 annual limit for tax-free combat zone pay (up from $58,000 for 2021)

Individual Retirement Account (IRA) holders will also have the same maximum contribution amounts in 2022 as they did in 2021: $6,000 for regular contributions and $1,000 for catch-up contributions.

To contribute the maximum amount to your TSP you should contribute $1,708.33 monthly, or $854.17 each payday.

Of course, you can withhold nothing and put the entire $20,500 in at a later date. But if you do that, you lose the Defense Department's 5% match if you are under the Blended Retirement System. You should be contributing at least 5% of your base pay each payday to get the matching funds from the DoD. If you don't, you are basically throwing away free money.

You also shouldn't pay the $20,500 ahead of time, you may also lose the matching government contributions if you do.

You can also change the withholding percentage through the myPay website at any time. That means you can keep it at 5% and then increase it if you deploy or get a bonus.

If you want your withholding percentages to be effective for the first payday of 2021, you must make the change in myPay before mid-December. The Defense Finance and Accounting Service and myPay usually require about three weeks to make any changes to your TSP withholding.

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