January 18, 2021 on ForYourBenefit, host Bob Leins, CPA® welcomes Tammy Flanagan, Senior Benefits Director at NITP, Inc. to talk about the Voluntary Contribution Program (VCP) and changes to Thrift Savings Plan for 2021.
- VCP available only to CSRS and CSRS-Offset employees.
- VCP allows such employees to contribute funds that can equal up to 10 percent of the total basic pay they have earned in Federal service toward their own retirement.
- CSRS employees who want to participate in this program must establish an account by completing an application to make voluntary contributions (no later than while their retirement application is being processed by OPM).
- Steps for putting the monies into other retirement investment vehicles, such as traditional and Roth IRAs.
- The VCP is a way to enhance your retirement income. In OPM’s brochure “Retirement Facts 10,” the Civil Service Retirement System offers this explanation: “At retirement, each $100 in your voluntary contributions account (including interest earned) will provide an annual annuity of $7 a year, plus 20 cents for each full year you are over age 55 at the time you retire.” However, it is also possible to withdraw all voluntary contributions at any time before receiving this annuity.
Thrift Savings Plan
- The Big Change – reaching the elective deferral limit before the end of the year but continue to save, contributions will automatically continue toward the catch-up limit for those age 50 or older in 2021, even if you turn 50 by the end of the CY.
- For 2021, elective deferral limit remains unchanged at $19,500 and catch-up contributions remain at $6,500.
- What about contributions spilling over toward the catchup limit?
For questions or comments, email us in advance at ForYourBenefit@nitpinc.com