TSP begins catch-up contributions enrollment for 2005

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RANDOLPH AIR FORCE BASE, Texas (AFPN) --  Air Force Personnel Center's benefits and entitlements service team automated systems will be available for 2005 Thrift Savings Plan catch-up contribution enrollments beginning Dec. 12.

"TSP catch-up contributions are additional tax-deferred contributions, separate from (regular) contributions," said Janet Thomas, a human resources specialist at the center here.

To be eligible for catch-up contributions, employees must be age 50 or older in the year in which the first deduction occurs, be in a “pay” status, and be making regular contributions at either the maximum TSP percentage or an amount that will reach the Internal Revenue Service limit by the end of the year, she said.

"They also must not be in the six-month noncontribution period following a financial hardship in-service withdrawal," Ms. Thomas said.

Employees contributing to other eligible tax-deferred retirement programs, such as a 401k, need to be aware that the IRS limit applies to the total contributed to all eligible tax-deferred retirement savings plans.

-- Catch-up contributions have their own IRS annual limit that is separate from the annual limit for regular contributions. The maximum catch-up contribution for 2005 is $4,000, while the IRS limit for regular contributions will be $14,000.

-- There is no "open season" applicable to TSP catch-up contributions. Eligible employees may start, change, stop or restart catch-up contributions at any time. The BEST automated Web and phone system will accept catch-up contribution enrollments beginning Dec. 12 for contributions to be deducted in 2005.

-- Enrollments submitted between Dec.12 and 25 will be effective Dec. 26, with the first contribution deducted from the Jan. 14 pay. Subsequent enrollments will be effective at the beginning of the next pay period.

-- When making contribution elections, employees need to designate a whole-dollar amount they wish to contribute each pay day rather than the annual maximum of $4,000. Employees cannot designate an amount that exceeds their net pay; if they do, payroll officials will not withhold any TSP contributions. Employees who want to spread their contributions evenly over the year will divide the total they wish to contribute by the number of pay dates remaining in the year. There are 26 pay dates in 2005 for employees who submit their election before Dec. 25.

-- Catch-Up contributions will automatically stop with the last pay date in the year or upon reaching the maximum catch-up dollar limit for the year, whichever comes first. Because the IRS limit for catch-up contributions changes each year, participants must submit a new election each year.

-- Eligible Air Force-serviced civilian employees may enroll for catch-up contributions online at www.afpc.randolph.af.mil/dpc/BEST_GRB/EBIS.htm or through the BEST phone system. The online system is also available through the Air Force portal at www.my.af.mil.

-- Employees may reach the BEST phone system by dialing toll-free (800) 616-3775 (press 2 for Air Force-serviced civilian employee, then 2 again for BEST benefits and entitlements, and follow the prompts). Overseas employees need to dial a direct access number for the country they are located in, then 800-997-2378.

Additional information is available online at www.afpc.randolph.af.mil/dpc/best/menu.htm under "Thrift Savings Plan," and the TSP Web site at www.tsp.gov. (Courtesy of AFPC News Service)