The Internal Revenue Service (IRS) has announced the contribution limits for 2015:
|Limit Name||IRC||2015 Limit||2014 Limit|
|Elective Deferral Limit||§ 402(g)||$18,000||$17,500|
|Catch-up Contribution Limit||§ 414(v)||$6,000||$5,500|
|Annual Addition Limit||§ 415(c)||$53,000||$52,000|
These limits affect the amount of contributions participants can make to individual Thrift Savings Plan (TSP) accounts for the year.
TSP contributions are reported by pay date, which is established by the participant’s service and represents the date service members receive payment for a particular pay period. The pay date determines the year for which contributions are applied to the IRS contribution limits, and may be different than the date on which contributions are actually received and posted to the account.
Elective Deferral Limit (Internal Revenue Code (IRC) Section 402(g))
The IRC § 402(g) elective deferral limit for 2015 is $18,000. This limit applies to the traditional (tax-deferred) and Roth contributions made by a service member during the calendar year. The combined total of traditional (tax-deferred) and Roth contributions made during the calendar year cannot exceed the elective deferral limit. However, the effective deferral limit does not apply to traditional TSP contributions made from tax-exempt pay earned while deployed in a combat zone, catch-up contributions, contributions made by the participant’s employing service or agency, or amounts transferred or rolled over into the TSP.
The TSP is not allowed to accept a contribution that exceeds the elective deferral limit for the year. If you submit a contribution that exceeds the elective deferral limit, the TSP will reject the entire contribution, and will send a report to your payroll office showing the additional contributions allowed for the year. Once participants reach the elective deferral limit their contributions will be stopped for the rest of the year. You can refer service members to the Fact Sheet, Annual Limit on Elective Deferrals, and the elective deferral calculator, How Much Can I Contribute?, for help with their contribution elections. Both are available at tsp.gov.
Catch-Up Contributions Limit (IRC Section 414(v))
The IRC § 414(v) catch-up contribution limit for 2015 is $6,000. Participants who will make contributions to the TSP (or certain other employer sponsored plans) up to the elective deferral limit, and who will be age 50 or older by the end of 2015, may make a catch-up contribution election to contribute additional pay to their TSP accounts. These contributions may be traditional (tax-deferred) and/or Roth and do not count toward the elective deferral limit. Eligible participants elect a whole dollar amount from basic pay, and a new election must be made each year. Service members may elect to make catch-up contributions from taxable pay as either traditional (tax-deferred) and/or Roth. Members receiving tax-exempt pay may only elect Roth catch-up contributions. The combined total of traditional (tax-deferred) and Roth catch-up contributions made during the calendar year cannot exceed the catch-up contributions limit.
Age-eligible participants who contribute the maximum amount of contributions allowed under the elective deferral limit and make catch-up contributions have the opportunity to contribute up to $24,000 (combined total of traditional (tax-deferred) and Roth contri-butions) in 2015 to their TSP accounts.
Limits for Participants with both Civilian and Uniformed Services Accounts
For participants who contribute to both a civilian and a uniformed services TSP account during the year, the elective deferral and catch-up contribution limits apply to the combined amounts of traditional (tax-deferred) and Roth contributions in both accounts.
The TSP will apply the limits separately to each account during the year. In January of the following year, the TSP will determine whether either limit was exceeded in the aggregate of the two accounts. If this is the case, the TSP will deduct the excess contributions, along with any associated earnings, from the participant’s uniformed services TSP account, and will send the participant a refund. The participant must report the traditional (tax-deferred) portion of contributions refunded as income for the year in which the contributions were made. Payroll offices must not “correct” the deferral amounts in block 12 of IRS Form W-2 for participants who exceed the elective deferral or catch-up contributions limit by contributing to a civilian and a uniformed services TSP account. The TSP will do the required tax reporting by issuing an IRS Form 1099-R.
The earnings on refunded excess contributions must be reported as taxable income for the year in which they are returned by the TSP. The TSP will issue a separate IRS Form 1099-R for the earnings portion of the refund in January of the year following the year in which the excess contributions were returned.
Limits for Participants Who Contributed to a Similar Employer Plan and the TSP
The elective deferral and catch-up contribution limits apply to contributions participants make to the TSP and most other employer sponsored defined contribution plans (e.g., 401(k), 403(a), or 403(b) plans). Participants who exceed these limits by contributing to more than one employer plan may request a refund of excess deferrals from the TSP for the amount of contributions above these limits. In January 2015, the TSP will make available Form TSP-44, Request for Refund of Excess Contributions, and the Fact Sheet, Annual Limit on Elective Deferrals. The TSP must receive a participant’s request for a refund of 2014 excess elective deferrals no later than March 15, 2015. The TSP cannot process requests received after this date. Services should refer affected participants to the TSP website for more information.
The other employer plans affected by the elective deferral limit may also accept requests for excess deferral refunds. Participants may wish to consult information from all their plan providers before choosing a plan from which to request a refund.
Annual Addition Limit (IRC Section 415(c))
The IRC § 415(c) annual addition limit for 2015 is $53,000. This limit applies to the total amount of contributions made on behalf of a participant in a calendar year. It primarily affects participants who contribute to their uniformed services TSP account while deployed in a designated combat zone. When this occurs, the member makes contributions from tax-exempt pay. These contributions are not limited by the elective deferral limit, but instead count only toward the annual addition limit.
The following types of contributions count toward the annual addition limit:
- Traditional (tax-deferred) contributions;
- Roth contributions;
- Traditional contributions made from tax-exempt pay;
- Agency Automatic (1%) contributions;
- Agency Matching Contributions; and
- Catch-up contributions.
NOTE: Although traditional (tax-deferred) contributions and Roth contributions count toward the annual addition limit, they also may not exceed the elective deferral limit ($18,000 for 2015) for the year in which they are made.
For participants who have both civilian and uniformed services TSP accounts, the TSP will automatically refund contributions in excess of the annual addition limit. We will return the excess amount from the participant’s uniformed services TSP account, along with any associated earnings, from the participant’s tax-exempt balance. If we are required to return more than the amount in the tax-exempt balance, we will return the rest from the participant’s traditional (tax-deferred) and Roth balances, as appropriate. The participant must report the traditional (tax-deferred) amount returned as income for the year in which the contributions were made. As with the process described in section III above, services should not “correct” W-2s to reflect the refund. The TSP will do the required tax reporting by issuing IRS Forms 1099-R.
Participants who would like more information on how the limit applies to their civilian and uniformed services TSP accounts should refer to the Contribution Limits section under Plan Participation on the TSP website.