Agency Automatic Contributions

AAA

DEFINITION of 'Agency Automatic Contributions'

A benefit that federal government employees receive for participating in the thrift savings plan. More specifically, this benefit refers to how the government agency in which the individual works will automatically make contributions that equal 1% of the individual's pay, regardless of whether the individual elects to make  his or her own contribution.

INVESTOPEDIA EXPLAINS 'Agency Automatic Contributions'

For example, if a federal employee elects to make a 5% contribution toward his or her thrift savings plan, he or she will receive an equivalent amount from the government (assuming that you add the 1% contribution automatically gained from the agency automatic contributions to the 4% gained from the agency matching contributions).

These government contributions are not added to taxable income for the current year's income taxes.

RELATED TERMS
  1. Taxable Income

    The amount of income that is used to calculate an individual's ...
  2. Salary Reduction Contribution

    A cash- or deferred-contribution arrangement of an employer-sponsored ...
  3. Thrift Savings Plan - TSP

    A retirement savings plan created by the Federal Employee's Retirement ...
  4. Opt-Out Plan

    A type of 401(k) plan that automatically enrolls the employees ...
  5. Federal Employee Retirement System ...

    A system that became effective in 1987 and replaced the Civil ...
  6. Cash Bonus

    A lump sum of money awarded to an employee, either occasionally ...
Related Articles
  1. Retire In Style
    Savings

    Retire In Style

  2. Retirement Planning Basics
    Options & Futures

    Retirement Planning Basics

  3. Are fringe benefits deductible for the ...
    Personal Finance

    Are fringe benefits deductible for the ...

  4. What are the benefits and advantages ...
    Retirement

    What are the benefits and advantages ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center