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TSP and 403b

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  • TSP and 403b

    Hello All,

    If my wife is employed by the VA and has access to a TSP, but also employed at an academic center and has access to a 403b, is there any issue with maxing out both of these?

    Other posters have mentioned that TSPs are governed by a different portion of the tax code and I am aware of other physicians that are maxing both of these accounts out, but would like confirmation that putting $20,500 into both of these for the 2022 tax year does not violate IRS contribution limits.

    The IRS website states "The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $20,500."

    Thank you all for any information you are able to provide!

  • #2
    Bumping this in the hopes that some of our members can answer this. Alas, I can't!


    • #3
      Take advantage of the dual appointment -- absolutely fine. TSP is a 401k.

      Our VA docs+ UC have two pensions and double huge tax sheltered buckets available. TSP (401k), 403b, and 457 along with 401a (for now)


      • #4
        As I pointed out in the other thread. While the TSP has its own tax code section, almost all 401k rules apply. The TSP is certainly subject to the Employee Deferral Limit (2021 = $19.5K).

        See Page three (3) of the TSP's Annual Limit on Elective Deferrals

        For the Statutory Authority see 5 CFR ยง 1600.22 Maximum employee contributions

        A participant's employee contributions are subject to the following limitations:

        (a) The maximum employee contribution will be limited only by the provisions of the Internal Revenue Code (26 U.S.C.).

        (b) A participant may make traditional contributions and Roth contributions during the same year, but the combined total amount of the participant's tax-deferred employee contributions and Roth contributions cannot exceed the applicable Internal Revenue Code elective deferral limit for the year.

        (c) A participant who has both a civilian and a uniformed services account can make employee contributions to both accounts, but the combined total amount of the participant's tax-deferred employee contributions and Roth contributions made to both accounts cannot exceed the Internal Revenue Code elective deferral limit for the year.

        The other physicians you are aware of who are maxing out the employee deferral limit to both the TSP and 403b are making significant excess deferrals. Those excess deferrals must be reported as other income and removed with taxable earnings by 4/15 following the year of the excess deferrals.

        Failure to remove them by this deadline results in their distributable nature being the same as any other employee deferrals. The earliest they can be removed is on separation of service or age 59 1/2. Since they must claim the amount as other income, they essentially become non-deductible contributions subject to double taxation.

        If the other physicians did this prior to this year and they didn't report the excess deferrals as other income. They should file amended returns and do so immediately.

        As I pointed out in the other thread, 457b contributions are not included in the employee deferral and annual additional limits. It is ok to max out the TSP and 457b or 403b and 457b, but most definitely not the TSP and 403b.


        • #5
          Agree with spiritrider! You can only contribute 20,500 total next year between the 403b and tsp. You should definitely contribute enough each month to the tsp to get your match ( and remember you can't frontload your tsp or you don't get the match). If you also get a match to the 403b then you have to figure out how much you have left to contribute to get a match there. Although at our university there is no 403b match, employer contributions go into a 401a. So in that case it's easy to just contribute everything to tsp and nothing to the 403b.


          • #6
            Ah; that's probably what my colleagues are doing: 5% per paycheck on TSP to get the full match; and then 403b. Thanks spiritrider for the clarification!