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The IRS has announced there will be few changes to the maximum annual contribution limit for Thrift Savings Plans (TSP) in 2021.
Here are the limits for next year:
- The annual contribution limit will remain $19,500.
-The contributions to an Individual Retirement Account (IRA) stays at $6,000.
-The catch-up contribution limit for those aged 50 and over remains at $6,500. What is changing for participants is that starting next year, employees will no longer need to make separate catch-up elections to their TSP account each year. Employees turning 50 or older who exceed the IRS elective deferral (or annual addition) limit will have their contributions automatically start counting toward the IRS catch-up limit. Employee elections will carry over each year unless they submit a new one, but contributions may be stopped, started or changed at any time.
TSP reminds participants who are eligible for matching to be careful not to exceed the contribution limits before Dec. 31. For those who exceed the limits early, TSP won’t be able to process any more of the employee’s contributions for the remainder of the year, which means they will miss out on matching contributions.
For more information, visit TSP.gov