Hump Day Help – Snatch the Match
Welcome to the Hump Day Help. Each Wednesday we take one of the weekly actions from Jonathan Clements‘ blog Humble Dollar and “militarize” it for you. Jonathan Clements was a longtime personal finance columnist for The Wall Street Journal, and he offers great advice at the best price you can get…free. Here is this week’s Hump Day Help:
SNATCH THE MATCH. Are you on track to contribute enough to your 401(k) to get this year’s full matching employer contribution? If not, crank up your contribution now, so you can spread the required sum over this year’s remaining paychecks. In 2018, the maximum 401(k) contribution is $18,500, or $24,500 if you’re age 50 or older.
This wasn’t an issue for those in the military, but it is now due to the new Blended Retirement System (BRS) and its matching Thrift Savings Plan (TSP) contributions. To refresh your memory, if you contribute 5% of your pay to the TSP you get up to a 5% match. If you are in the BRS and you don’t contribute at least 5% every month, you are leaving free money on the table:
Also, you want to make sure you don’t fill up your TSP too early. While many service members will find it hard to get to the 2018 annual limit of $18,500, for those that do they want to space it out over the whole year. If you fill up your TSP in October and can no longer contribute for November or December, you won’t a get a match that month and will lose out on that money.
While I’m not in the BRS, I do a few things with my TSP contributions that I’d recommend everyone do:
- Contribute from your basic pay and not from bonuses or other variable or one-time pays. Your basic pay is the most consistent so use that.
- Spread it out over the whole year. For 2018, I’m contributing about $1540/month so that I come in just under the $18,500 limit in December.
- I see how much of my TSP is left after the November LES is released, and adjust December to get as close to the limit as possible.