I currently have a 3.5x multiplier for my career field and zone and want to contribute my SRB into TSP. The SRB would be roughly 44k pre tax paid 75% up front.
I am currently contributing 20% and with the 65% max contribution through LES, I believe the SRB would push me over the annual contribution limit for TSP.
What would you all recommend to maximize this influx in money?
Thanks!
Posted by yesthisisnonner
2 Comments
Is it possible to be deployed in a tax free zone for your reenlistment?
If yes, in addition to the bonus being tax free, you have the ability to contribute up to the IRS Annual Additional Limit. Roth TSP contributions would still be limited to the Elective Deferral Limit of $24k (for 2024) so the excess would need to be contributed in Traditional and would be designated as tax free contributions to Traditional.
If no, I would recommend adjusting your contribution percentage to allow you to max the Elective Deferral Limit of $24k by December so you don’t miss out on any matching funds if in BRS. If not BRS, ignore any matching fund considerations.
The excess can be held in a High Yield Savings Account and used as needed for income in order to maintain the higher TSP contributions into next year.
Are you in the BRS? If you max early you’ll miss out on the 5% match for the remaining months of the year.
44k pre-tax is $34,320 with 22% bonus tax withholding. 75% up front is $25,740. 65% to the TSP is $16,731. What month are are receiving the bonus?