Some changes are set to take effect as from 2019, and one of them is an increase in the Thrift Savings Plan from $18500 to $19000 for all federal employees. Also, on Thursday, the internal revenue service put forward that there would be a rise in some retirement savings plans such as the 401(k)s.
There is a different category, however, and that includes “catch up contributions” which is strictly for people aged 50 years and above. For them, theirs will remain at $6000, and there won’t be any adjustments whatsoever.
Nowadays every federal employee has opted to open a TSP account. In most cases, these workers have no choice because once you are enrolled in the Federal Employees Retirement System, an account is established immediately whether you want to or not. It is almost like a requirement for people hired as from 1983.
Approximately 2.6 million, U.S postal service workers inclusive, are under the retirement program. Among them, 7% which equals about 180,000 have reached the investment maximum of $18000 in 2017 thanks to some data collected from TSP records. The exciting part is that of the 180,000, 122,000 were either 50 years old or more. Still, among those, 79,000 had their plan that included investing in the additional maximum of $6,000.
As of August FERS-covered employee average account stood at $145,000 an amount that is expected to keep on rising gradually over time. One of the standout factors here is the fact that the government plays a significant role and sees through a contribution of 1% of the participant’s salary annually whether or not one opts to invest. For employees under FERS and happen to invest personally, qualify to sum up a total of an extra 4% of salary. However, it’s worth noting that these government contributions do not affect the investment maximums that have already been set.
Most FERS employees are into personal investment plans with exceptions being about 10% of them. Their average investment rate is approximately 8%, an amount that’s big enough comprise of the maximum government match.
Previously there was a Civil Service Retirement System, and some federal workers are still under it although they are about 5% now. For them, they get to invest up to the same maximums as the others although they don’t get employer contributions. According to TSP records, their average account balances stood at $150,000 in August an amount slightly lower than for the federal workers using the latest retirement program.
TSP does not have so many limits and now embraces military personnel as well. The same limits as with the other category apply as well. For federal and military personnel, there is a provision that allows them to keep accounts open even after retirement. However, they cannot make new investments. On overall, there are many people with TSP accounts that number presumably at 5.3 million now.