for Agency and Service TSP Representatives
2021 TSP Contribution Limits
The Internal Revenue Service (IRS) has announced the contribution limits for 2021:
|Limit Name||IRC||2021 Limit||2020 Limit|
|Elective Deferral Limit||§ 402(g)||$19,500||$19,500|
|Catch-up Contribution Limit||§ 414(v)||$6,500||$6,500|
|Annual Additions Limit||§ 415(c)||$58,000||$57,000|
These limits define the contributions that can be made to individual Thrift Savings Plan (TSP) accounts for the calendar year.
TSP contributions are reported by pay date, which is established by the participant’s employing agency and represents the date employees 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 from the date on which contributions are actually received and posted to the account.
To see contribution limits from previous years, see the Historical information section of tsp.gov.
Elective Deferral Limit (Internal Revenue Code (IRC) Section 402(g))
The IRC § 402(g) elective deferral limit for 2021 is $19,500. This limit applies to the traditional (tax-deferred) and Roth contributions made by an employee 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. The elective deferral limit does not apply to Agency/Service Automatic (1%) Contributions, Agency/Service Matching Contributions, catch-up contributions, traditional contributions made from tax-exempt pay, or amounts transferred or rolled over into the TSP.
The TSP is not allowed to accept employee contributions that exceed the elective deferral limit for the year. Beginning in January 2021, if a payroll office submits a contribution that exceeds the elective deferral limit for an employee who is not eligible to make catch-up contributions, the TSP will reject only the amount of the employee contribution that exceeds the elective deferral limit. (Before January 2021, the TSP rejected the entire contribution. Agencies and services will have a year to submit any negative adjustments on excess matching) Once the employee reaches the elective deferral limit, his or her contributions will be stopped for the rest of the year. This means that FERS and BRS participants who reach the limit before the final pay date of the year will also miss out on matching contributions for the rest of the year.
Agencies and services should make FERS and BRS participants aware of what happens when they reach the elective deferral limit. You can refer FERS and BRS participants to the fact sheet Annual Limit on Elective Deferrals, which is available on tsp.gov.
Catch-Up Contributions Limit (IRC Section 414(v))
The IRC § 414(v) catch-up contribution limit for 2021 is $ 6,500. Important note: Starting in 2021, participants will no longer need to make separate catch-up contribution elections. Amounts beyond the elective deferral or annual additions limit will automatically spill over toward the catch-up limit for those who are 50 or older and for those turning 50 in the calendar year starting in January 2021.
As a result of this new “spillover” method, age-eligible participants who contribute the maximum amount of contributions allowed under the elective deferral limit and make catch-up contributions can contribute up to $26,000 (combined total of traditional (tax-deferred) and Roth contributions) in 2021 to their TSP accounts. For those contributing tax-exempt pay, the maximum amount allowed under the annual additions and catch-up limits is $64,500; see final section. As appropriate, agencies are encouraged to alert participants that reauthorizations for previous catch-up elections are not necessary. (Participants should add their 2021 catch-up amounts in the same place as their other TSP contributions.). For more information on catch-up contributions and the spillover method please see TSP Bulletin 20-1 Spillover Method for Catch-Up Contributions to the Thrift Savings Plan-UPDATE.
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 made to both accounts.
The TSP will apply the limits to both the civilian and uniformed services accounts concurrently during the calendar year. Once the IRS contribution limits have been met, any subsequent contributions will be rejected with an error message that will be sent to the participant’s agency/service payroll office. In January of the following year, the TSP will deduct the excess contributions and any associated earnings from the participant’s TSP account with the excess contributions 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 contribution 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 all 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 2021, the TSP will make available Form TSP-44, Request for Refund of Excess Employee Contributions, and the fact sheet Annual Limit on Elective Deferrals. The TSP must receive a participant’s request for a refund of 2020 excess elective deferrals no later than March 15, 2021. The TSP cannot process requests received after this date. Agencies should refer affected participants to tsp.gov 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 review information from all of their plan providers before choosing a plan from which to request a refund.
Annual Additions Limit (IRC Section 415(c))
The IRC § 415(c) annual additions limit for 2021 is $58,000. This limit applies to the total amount of contributions made on behalf of a participant in a calendar year. Although the annual additions limit does apply to civilian TSP accounts, civilian participants are rarely affected by it.
Participants who would like more information on how the limits apply to their civilian and/or uniformed services TSP accounts should refer to Contribution limits in the Making contributions section on tsp.gov.