Finance Friday Articles and Changes to TSP Catch-Up Contributions

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Also, here is a note I got from the TSP:

Upcoming changes to catch-up contributions in 2026

If you’ll be age 50 or older in 2026, you are eligible to make catch-up contributions to your TSP account. These contributions are additional savings allowed above the IRS elective deferral limit. In 2026, participants age 50 and older can contribute an extra $8,000 in catch-up contributions on top of the $24,500 elective deferral limit, for a total contribution limit of $32,500. (For participants ages 60 to 63, the IRS catch up limit is higher—$11,250—which makes the total contribution limit $35,750 for this group.)

Starting January 1, 2026, a new rule from the SECURE Act 2.0 (provision 603) may change how you make those catch-up contributions.

What’s changing

Under the new rule, if your wages from the prior year exceed the IRS threshold ($150,000 for 2025), the IRS requires any catch-up contributions you make in 2026 go into your Roth (after-tax) TSP balance—not your traditional (pre-tax) TSP balance. If you don’t have a Roth TSP balance, the first Roth contribution will automatically create one.

How this may affect you

  • If your prior-year (2025) wages exceed the threshold and you make only traditional (pre-tax) contributions: Once you reach the IRS elective deferral limit of $24,500, any additional contributions you make will automatically switch to Roth (after-tax) TSP and go into your Roth TSP balance to satisfy the IRS requirement—there’s nothing you need to do.
  • If you make both traditional (pre-tax) and Roth (after-tax) contributions during the year: Once your combined contributions reach the $24,500 elective deferral limit, any Roth contributions you make—or have already made—will count toward satisfying the IRS requirement that your catch-up contributions be Roth up to the $8,000 catch-up contribution limit. You can continue contributing to your traditional balance until your traditional contributions reach the elective deferral limit. If your total traditional contributions reach the elective deferral limit, any additional contributions you make will automatically switch to Roth.
  • If you prefer not to make Roth catch-up contributions: You can stop your contributions once your traditional contributions reach the IRS elective deferral limit of $24,500 before those contributions automatically become Roth. However, you will need to restart your contributions the following year if you wish to continue saving.
  • If you made less than the threshold ($150,000 in 2025): This change does not affect you.
  • If you’re a uniformed services member and earn tax-exempt pay while serving in a combat zone: Your contributions toward the catch-up limit must be Roth regardless of your prior year wages. (The TSP cannot accept traditional tax-exempt contributions toward the catch-up limit.)

Learn more about making catch-up contributions and see scenarios to help you understand how the new rule applies based on your age, income, and contribution choices.

Note: IRS thresholds and limits are subject to change and are updated annually for inflation.

How to determine prior year wages

The IRS uses FICA wages from the previous year—typically found on your W-2. Only wages from TSP-eligible federal positions count toward the threshold. Wages from non-federal jobs are not included.

Questions?

Visit catch-up contributions or call the ThriftLine at 1-877-968-3778. You can also chat with a ThriftLine representative through our virtual assistant, AVA, during business hours.

Sincerely,

Your TSP

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