Q. I will turn 50 on March 8. I wanted to ensure that I did the catch-up contributions, so when I called ABC center to confirm that I did everything right, the representative asked me if I saw a box in which I could contribute and a submit button. I replied: “Yes.” He said I could enter the info for the contribution that day (this was Dec, 21, 2016) and the contribution would be effective on Dec. 25, 2016. I explained to the gentleman that I didn’t turn 50 until the year 2017. He said the pay period included 2017. Will I have to pay a penalty because I contributed effective Dec. 25, 2016? I made a $1,000 contribution. I plan to do this every pay period for six pay periods. Is this financially savvy? Or should I break it down to much smaller portions over the next year?
A. The TSP will automatically limit the contributions you make to the allowed amount for the year, so there should not be any risk of over-contributing to the TSP. In general, the odds favor early contributions — that is, you are more likely to make money than lose money in the investment markets — but this is not guaranteed. There may be times when these odds are skewed against you and this may be one of those times for the F Fund, for example. The G Fund is the exception. It is the only TSP fund that guarantees a positive return, month in and month out.
