HRPAY 20-12, Spillover Method for Catch-Up Contributions to the Thrift Savings Plan (TSP)

Published: December 16, 2020
Effective: Pay Period 26, 2020

Summary

The Federal Retirement Thrift Investment Board (FRTIB), the Agency that administers the Thrift Savings Plan (TSP), will switch to the spillover method for catch-up contributions beginning with the first pay period of tax year 2021. For the National Finance Center’s (NFC) purposes, this will be effective Pay Period 26, 2020. Catch-up contributions apply to all participants age 50 or older.

The spillover method will streamline the catch-up contribution process for eligible participants. Currently, the TSP catch-up contribution program requires participants to submit Form TSP-1-C, Contribution Catch-Up Election, each year and certify that they will meet the annual Internal Revenue Code (IRC) 402(g) elective deferral limit (EDL). With this change, participants turning 50 or older in the current year will no longer need to make a separate catch-up election. Once participants reach the EDL, their regular contributions will automatically start counting toward the catch-up contribution limit. Contributions spilling over toward the catch-up limit will be matched, but only up to the 5% of salary to which participants are already entitled. TSP will discontinue Form TSP-1-C. Contributions toward the EDL and the catch-up limit will be submitted using Form TSP-1, Election Form.

Note: This will not cause any changes for tax reporting, as all TSP contributions are combined on the participant’s IRS Form W-2, Wage and Tax Statement.

Affected Systems

System

System Impact

EmpowHR

Removed the TSP Catch-Up/TSP Roth Catch-Up Election page.

Web-based Entry, Processing, Inquiry, and Correction System (EPIC Web)

Removed the 126 Thrift Saving Plan Catchup document.

Personnel Input and Edit System (PINE)

Added a new edit message 059, Invalid Document Type, to Document Type 126, TSP Over 50 Catchup.

Implementation

There will be two TSP limits for each calendar year: a base limit and a catch-up limit.

EmpowHR

The TSP Catch-Up/TSP Roth Catch-Up Election page will be removed from the Payroll Documents menu group. Employees wishing to maximize their catch-up contributions should complete a TSP-1 and submit it to their personnel office. The Agency personnel office should process the TSP-1 via the TSP/TSP Roth Payroll Document.

All 126 documents in Ready, Not Applied, or Future status will be placed in status D (Hold) in PP26, 2020, and will not be processed. These documents will also not be visible on the Worklist page.

The TSP Catchup Not Applied selection will be removed from the Work Item Filters drop-down list on the Worklist page.

EPIC Web

The 126 TSP Catchup document will be removed from the Payroll Actions/Federal Benefits Documents folder. Employees wishing to maximize their catch-up contributions should complete a TSP-1 and submit it to their personnel office. The Agency personnel office should process the TSP-1 on the Thrift Savings Plan/Roth Election page.

All 126 TSP Catchup documents in EPIC Web will be marked for deletion in PP26, 2020, and will be deleted at the end of the processing of PP26, 2020.

Front-End System Interface (FESI)

Agencies will be responsible for updating their FESI submission in accordance with this change so that they do not submit the 126 TSP Catchup document any longer.

PINE

A new edit message will be added to stop the processing of Document Type 126, TSP Over 50 Catchup. If a Document Type 126 is received, the action will go to suspense with error message 059, Invalid Document Type.

Resources

The procedure manuals for these applications, which are available online at the NFC Web site, are being updated to include the information in this bulletin. To view these procedures, select HR and Payroll Clients from the MyNFC drop-down menu on the NFC Home page. At the HR and Payroll Clients page, select the Publications tab and select the applicable category to access the procedure manuals within the category.

For more information on the spillover method for catch-up contributions to TSP, see www.tsp.gov.

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal.