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From active duty to civilian TSP contribution limit?

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  • #1

    From active duty to civilian TSP contribution limit?

    Hello!

    I am separating from the Army this June and have maxed out my TSP for the 2020 year with military income ($19,500). I am transitioning to the exact same job position as a civilian in June as well. I am assuming I cannot add an additional $19,500 with this new job for the same tax year of 2020. Is this correct? Thanks for any advice and words of wisdom.
    Tags: 401k, retirement, tsp
  • #2
    your question was already answered in your previous thread:
    Military doc Solo 401k with two 1099 incomes? - The White Coat Investor Forum - Investing & Personal Finance for Doctors
    https://www.whitecoatinvestor.com/forum/retirement-accounts/11652-military-doc-solo-401k-with-two-1099-incomes
    I am a military physician (W-2job) with two 1099 incomes from separate moonlighting gigs, with expected earnings of apx $40k and $30k from each for the 2019 tax year. I am looking in to opening up a solo 401k. I plan on contributing $19,000 for my employee contribution. My question is if am I able combine the sums of both 1099 incomes to have the 25% employer contribution using the $70k figure? Or, can I only do an employer contribution of 25% of the $40k? Additionally, any recommendations on a traditional solo 401k vs roth solo 401k? For background, my husband and I are both active duty military doctors, but only for the next 1 and 2 years, respectively. We are currently in a 24% marginal tax bracket for combined joint income. We have no debt, no loans, no mortgage. We will both have significantly higher income potentials as civilian providers (2x and 3-4x our current salary given our specialties). We max out our TSP, both do back door Roth IRAs, and have two 529 plans for our children. Any advice o

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    • #3
      Not as 1099 income, but as w-2. I apologize if I did not clarify.

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      • #4
        The source of the compensation does not matter. There is only one employee deferral limit for all 401k, 403b and SIMPLE IRA plans.

        There is a separate (employee + employer) annual addition limit for each unaffiliated employer.
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        • #5
          Ddoc you are correct—once you put 19500 in your 401k/tsp for the year you are done, you don’t get a reset by changing jobs mid year. Congrats on your pending discharge! Given that it sounds like you are separating rather than retiring from the military, if you are taking a FERS eligible position and think you will stay at least 5 years look into buying back your military time to add to your eventual pension.
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          • #6
            Here's a second vote in favor of buying back your time if you go to the VA or somewhere else that's FERS eligible. Also, some states will credit you for military time, though you may need a buy-back.

            Not sure if you had a great time on active duty or are counting the days until you can leave. If you do take a position with the VA, a county hospital, or other large employer setting, consider looking into Guard and Reserve opportunities. This goes double if you're a W-2 employee who isn't in an eat what you kill pay situation.

            If you're a sole dermatologist hanging out your shingle, paying rent or mortgage, staff, and a practice acquisition loan, then you might not be able to afford getting activated and deployed for a year or more.

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