2023 TSP Contribution Tables

[patto]

With the September CPI data the BLS released yesterday, all the information need to calculate the TSP contribution limit for next year is available. Below are the updated TSP contribution tables.

https://imgur.com/a/eMtYJvv

Due to base pay going up by 4.6% and the contribution limit going up by about 9.6%, most servicemembers will have to contribute a greater percentage of their pay to max it out next year. As a reminder, these tables assume constant base pay and contribution percentage throughout the year and you do not contribute from special, incentive, or bonus pay. If you expect your pay to change due to advancement, time in service raise, or some other reason, the TSP contribution calculator blow might be more useful.

https://docs.google.com/spreadsheets/d/15OigNS8TEP_hsAXYbYS62vMMp3b7xxQi_yZJ8D859E8

It accounts for changes in base pay and can be used for changing contributions during the year but still assumes no contributions from special, incentive, or bonus pay.

Edit: It turns out I made a mistake in the spreadsheet and applied the 4.6% raise to the 2021 numbers instead of the numbers for this year. This caused the spreadsheet to calculate erroneously high contribution percentages. The link is updated with the corrected tables.

Edit 21 October 2022: The IRS confirmed the contribution limits and other cost of living adjusemts for 2023. You can find more details in their press release here.

 

[marina777]

@patto Wow, an O2 with less than two years can max out their tsp with less of a percentage than I can. I chose poorly.

 

[christiancentipede]

@marina777 Yea I regret going enlisted everyday

 

[katan]

@patto Your gray boxes are only true if don't change allocation percentage throughout the year, correct? Basically, if you can afford to contribute the full amount, you could structure it so that you contribute at least 5% in December, but the flat % given in the table won't do it and you need to finagle it a little bit.

Really interesting table. I've had to brute force the math before (it isn't hard) but this is really nice for people that just need a quick answer.

 

[patto]

@katan That is correct. People with the gray boxes would have to change their contribution percentage sometime during the year to both max it out and get the full match in December. For those people, the calculator would probably be useful so they could try different scenarios and find one that works.

 

[napua]

@patto Maybe I’m all effed up here but I’m not seeing how he table works. I did a (before I knew about this) excel chart. For example at O4 pay at 15 years of service, if I contribute 21% ($898.54) for the entire year I would contribute $23,362.04. Am I wrong here or miscalculating somewhere?

I can contribute 21% for 5 paychecks then 20% for the rest of the year to get me to $22,463.

Any help is appreciated!!!! Thanks for your work!

 

[patto]

@napua Here is the math behind it for your situation. O4 with 14 years is $8,557.50 this year. The NDAA that is making its way through Congress right now has a pay increase of 4.6%. That means the expected pay next year is $8,951.10 per month or $107,413.20 total. Now take $22,500/$107,413.20 and you get 0.2095. That means you need to contribute 21% to max it out. That will make your monthly contribution $1,879.73. Doing that for 12 months would put you slightly over the limit at $22,556.77 so your December contribution would be slightly smaller at $1,822.96.

 

[napua]

@patto Ah ok. That makes so much more sense! I appreciate the help.

Side note, since you’re well read on the topic. Someone told me (probably barracks lawyer shiz) that if you go over with a contribution that it gets refunded (that months contribution). Does that mean I should calculate and ensure my last contribution equals the amount you quoted above?

Seriously, many thanks. If there were only more of you out there to help educate!

 

[patto]

@napua We can only contribute by percentage of pay. We are not able to specify a dollar amount. DFAS should be able to figure out when we hit the limit and reduce the last contribution. Right now there is a bug in the system and they send too much to the TSP. The TSP is able to catch it and send the extra back to DFAS so they can include it in our next paycheck. You can find more details here.

Over the last couple years I discovered a passion for personal finance, investing, and financial education. After I retire I hope to find a job where I can help people with their finances and/or teach them how to better handle their money.

 

[loveyourself123]

@patto This is actually wrong. If you go over in December, that money doesn’t go in at all. It’s held and then returned. So you lose your December match and have to wait for DFAS to pay it back.

 

[resolve413]

@loveyourself123 I went over and it actually adjusted automatically for December.

 

[annam23]

@patto Has the 22.5k limit been officially announced?

 

[katan]

@annam23 It's been thrown around in a couple news articles, but I think with the new CPI numbers you can do the math that will eventually be announced as the 22.5k limit.

So... yes but actually no.

 

[patto]

@katan

I think with the new CPI numbers you can do the math that will eventually be announced as the 22.5k limit

That is correct. The cost of living adjustment is based on the average CPI of the third quarter of the calendar year. For several months it has been likely that the limit will be $22,500 unless something unexpected happened with inflation. The September CPI number was the last piece of information needed to do the calculation for the actual limit. In past years, the IRS has typically made the official announcement for the cost of living adjustments sometime in November.

 

[sammist]

@patto Out of curiosity, what percentage of service members are actually maxing out their TSPs? Even Junior officers would have to commit over a third of their pay which is substantial.

 

[patto]

@sammist I'm not sure but I am maxing it out. Being single and living a simple lifestyle helps a lot.

 

[makubexx]

@sammist A third of their base pay. Officers typically automatically qualify for BAH and BAS so it’s a much lesser percent of their actual take home pay.

 

[sourav]

@sammist I've been in for 8 years and the entire time I've been maxing it out into the life cycle fund. It's not that hard. Especially starting out in the barracks and you don't need to spend money on anything.

 

[snappercat]

@sammist The numbers are probably pretty different across the branches.

Speaking from the Marine Corps, the amount of people who do not adequately fund their retirement is concerning. I actually have several NCOs who allocate 0% into their TSP account, even when I sat them down individually and explained that you're basically throwing away free money - even if you do plan to get out.

 

[angel4sin23]

@sammist One of my coworkers said at lunch that she had her TSP maxed out and I expressed surprise that she was able to do that. It turns out that to her, "maxed out" means contributing "10 or 12 percent."*

It would be interesting to know the true number, but only DFAS knows for sure. And I highly doubt that they know that they know, if you know what I mean.

*Edit: As a 7 year E-6.