The Thrift Savings Plan (TSP) is one of the best investment opportunities for military members. Like a civilian 40 1(k) plan, the TSP plan gives investors the opportunity to lower their taxable income by contributing tax deferred income. The money is contributed to your TSP before it is taxed, where it will grow tax free until you withdraw the funds from your TSP during retirement.

2009 TSP Contribution Limits Announced

The Federal Retirement Thrift Investment Board recently announced an increase in the 2009 contribution limits for the Thrift Savings Plan. The 2009 limit has  been increased to $16,500, up from $15,500 for 2008. Catch-up contributions will increase to $5,500, up from $5,000. Catch up contributions are available to civilian and military employees age 50 and older.

TSP for military members. The TSP is available to all military members. Military members can contribute any whole percentage of basic pay, as long as the annual total of the tax-deferred investment doesn’t exceed $16,500 for 2009. Military members also have the option of contributing any portion of their incentive pay, bonuses, or special pay so long as they contribute a portion of their basic pay.

Tax free combat zone contributions. Members serving in tax-free combat zones are allowed to contribute up to $49,000 in 2009. This total includes tax-exempt combat zone contributions and regular deferred contributions.

TSP for civilians. Civilians can contribute any whole percentage of their basic pay or a whole dollar amount each pay period to a regular TSP account. This amount is subject to the $16,500 annual maximum for 2009.

Related posts:

  1. 2009 Thrift Savings Plan Contribution Limits
  2. 2009 Retirement Plan Contribution Limits
  3. Should You Rollover Your TSP Account Into an IRA?
  4. What is the Thrift Savings Plan?
  5. What Should You Do with your TSP When You Leave the Service?