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HomeFinancialEducationBase Guides
Retirement Planning

Maximizing TSP Contributions in 2024: A Military Guide

Coleman Marlatt
November 20, 2024
11 min read
2024 TSP Contribution Limits

Regular Contributions

  • Annual Limit: $23,000
  • Monthly Max: $1,916.67
  • Per Pay Period (Bi-weekly): $884.62
  • Applies to both Traditional and Roth TSP

Catch-Up Contributions (Age 50+)

  • Additional Limit: $7,500
  • Total Possible: $30,500
  • Monthly Additional: $625
  • Available starting the year you turn 50
Military-Specific TSP Advantages

Combat Pay Exclusion Benefits:

  • Can contribute tax-free combat pay to Roth TSP
  • No federal taxes on contributions or growth
  • Doesn't count toward annual contribution limits
  • Maximum benefit: contribute entire combat pay amount

Automatic Enrollment (BRS Members):

  • Automatic 3% contribution to Traditional TSP
  • Automatic 1% government contribution
  • Up to 4% additional matching
  • Total possible government contribution: 5%
Traditional vs. Roth TSP Strategy

Traditional TSP (Pre-tax)

Best for:

  • Higher current tax bracket
  • Expecting lower retirement tax bracket
  • Need immediate tax reduction
  • Senior enlisted/officers

Roth TSP (After-tax)

Best for:

  • Lower current tax bracket
  • Young service members
  • Expecting higher retirement income
  • Tax-free growth preference

Hybrid Strategy:

Many financial advisors recommend splitting contributions between Traditional and Roth TSP to provide tax diversification in retirement. Consider 60% Roth / 40% Traditional for younger service members, or 40% Roth / 60% Traditional for senior personnel.

TSP Fund Selection Strategy

Lifecycle (L) Funds - Recommended for Most:

  • L 2065: For those retiring around 2065 (born 2000-2002)
  • L 2060: For those retiring around 2060 (born 1995-1999)
  • L 2055: For those retiring around 2055 (born 1990-1994)
  • Automatically adjusts risk as you approach retirement
  • Diversified across all TSP funds

Individual Fund Strategy (Advanced):

Aggressive (Young/High Risk Tolerance):

  • 80% C Fund (S&P 500)
  • 10% S Fund (Small Cap)
  • 10% I Fund (International)

Moderate (Mid-Career):

  • 60% C Fund
  • 20% S Fund
  • 10% I Fund
  • 10% F Fund (Bonds)
Maximizing Contributions by Rank

Junior Enlisted (E1-E4):

  • Start with at least 5% to get full BRS match
  • Focus on Roth TSP due to lower tax bracket
  • Increase by 1% with each promotion
  • Target: 10-15% total contribution

Senior Enlisted (E5-E9):

  • Target 15-20% total contribution
  • Consider mix of Traditional and Roth
  • Maximize during deployment (combat pay)
  • Use catch-up contributions if over 50

Officers:

  • Aim to max out annual contribution ($23,000)
  • Lean toward Traditional TSP due to higher tax bracket
  • Consider supplemental IRA contributions
  • Plan for post-military career income
2024 Action Plan
  1. Log into your TSP account and review current contributions
  2. Calculate your target contribution percentage based on rank and goals
  3. Decide on Traditional vs. Roth allocation
  4. Update your contribution percentage through myPay
  5. Review and adjust fund allocation (consider L Funds)
  6. Set up automatic annual increases
  7. Plan to maximize combat pay contributions during deployments
  8. Review beneficiaries and account information

Remember: The TSP is one of the best retirement benefits available. Even small increases in contributions can result in significant long-term growth. Start where you can and increase gradually over time.