How to Max Out Your TSP in 2019

Thrift savings plan TSP written on a piggy bank.

You may have heard that the maximum tax-deductible contribution you can make to an elective retirement plan like the Thrift Savings Plan (TSP) will be going up in 2019. But just what does that mean to you, if you're contributing to the TSP from your military pay?

The short version is: if you use the TSP, your maximum allowable contribution will increase from $18,500 to $19,000 in 2019.

But you won't be able to leverage that new maximum without action. If you are making TSP deductions from your military pay, you will need to make an adjustment for 2019 if you want to contribute the maximum amount.

So, how do you do that?

How To Change TSP Contributions

To change your TSP contributions, you must visit the myPay website. There, you will specify a percentage of your base pay that you wish to contribute to the TSP. That percentage will be withheld from every paycheck.

If you participate in the Blended Retirement System, the Defense Department will match your contributions, up to 5 percent of your basic pay.

Theoretically, you can contribute 100 percent of your basic pay, incentive pay, special pay, or bonuses to the TSP. If you're in a combat zone you may be able to contribute more. You cannot contribute any allowances such as Basic Allowance for Housing, Family Separation Allowance, etc.

How To Determine Your Maximum TSP Contribution

Since you can only tell DFAS a percentage of pay to withhold, how do you calculate the proper contribution to max out your TSP? A bit of simple math will help.

Since the 2019 maximum contribution is $19,000, you divide that by 12 to get a monthly maximum TSP contribution. That calculation results in a max TSP contribution of $1,583.33 each month to reach the goal. Then, you just divide $1,583.33 by your 2019 monthly base pay to get a percentage.

If you are an E-5 with six years of service, your 2019 base pay is $3,001.36 a month and the maximum TSP withholding is $1,583.33. That means you should contribute 53 percent of your base pay each payday. For an O-3 with four years service it would be 28 percent ($1,583.33 divided by the 2019 monthly base pay of $5,671.52).

Check out the 2019 pay rates here.

Sounds like a lot of money? It is -- more than half of your base pay if you're an E-5.

You have to remember that you still draw special pays and all your allowances along with your base pay. If you're on deployment, there may not be a lot of places to spend your money, and if you get a reenlistment bonus, you can contribute that money to the TSP.

Of course, you can withhold nothing and put the entire $19,000 in at a later date. But if you do that, you lose the DoD 5 percent match. You should be contributing at least 5 percent of your base pay each payday to get the matching five percent from DoD. If you don't, you basically are throwing away free money.

You can also change the withholding percentage through myPay at any time. That means you can keep it at 5 percent and then increase it if you deploy or get a bonus.

If you want your withholding percentages to be effective for the first payday of 2019, you must make the change in myPay before December 22. DFAS and myPay usually require about three weeks to make any changes to your TSP withholding.

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