The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: FIREandMONEY on December 07, 2015, 09:53:12 AM

Warning: This is more of a theoretical problem than an actual problem that anybody worries about. Only the nerdy and overanalytical need respond! :P
I got this sent to me in my work email today: https://www.abc.army.mil/TSP/TSP2016Chart(OA&FA).pdf
It shows how much you need to contribute/PP to max out the $18K TSP limit.
It says $693 per pay period, which multiplied 26 PP comes out to $18,018. I was always under the impression that any amount you pay over the contribution limit, you are giving up a portion of your matching contribution.
Assuming a 25% tax rate, would it actually be more efficient to contribute $692 (17,992=692*26), get the full amount of matching and then contribute the difference ($8) to a brokerage account?
My matching contribution is $142.20. $142.2/692=0.205 That means for every dollar I contribute, I get a match of ~20.5 cents. If I contribute $693, I gain an extra ~$1.64 in annual matching, but then $18 will get removed from the final matching amount right? So my final TSP matching in my earnings statement would be $142.20$18=$124.2 Basically that would be like giving someone $26 and them giving you back $9.64 in return right?
I know the difference dollar wise is negligible in the big picture, that's why I said this is more of a math problem, but what do the rest of you guys say?
Better to contribute $8 UNDER the $18,000 max or $18 OVER?
I think the answer is under, but I just wanted to see if I was forgetting anything.

I'm in for an answer to this as well, just because I'm not sure how it works.
I changed my contribution to $693 about a month ago.

I found it!
Second footnote on page 3 describes the agency adjustment to the last paycheck so you don't exceed the limit.
https://www.tsp.gov/PDF/formspubs/oc9113.pdf
Looks like $693/PP is the amount to contribute to max the TSP for 2016.