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SECURE Act 2.0 and The Thrift Savings Plan

ByEd Zurndorfer

Jan 21, 2026 Featured, federal retirement law updates, Roth TSP changes, SECURE Act 2.0 TSP, TSP catch-up contributions, TSP RMD rules
FEDZONE Ed Zurndorfer

To help individuals save for their retirement, Congress passed the Setting Every Community Up for Retirement Enhancement Act of 2022 (SECURE Act 2.0). SECURE Act 2.0 was signed into law by former President Joseph Biden on December 29, 2022.

There are several provisions in SECURE Act 2.0 which affect the Thrift Savings Plan (TSP) and in particular how TSP participants contribute to and withdraw their TSP savings. This column summarizes these changes, their effective dates, and which TSP participants are affected.

SECURE Act 2.0 Section 107 – RMD Age Increases

SECURE Act 2.0 increases the age a federal employee must begin taking required minimum distributions (RMDs) from his or her traditional TSP account. The age increased from age 72 to age 73 for TSP participants born between January 1,1951 and December 31, 1958. For TSP participants born after December 31,1958, the first RMD must be taken at age 75.

TSP participants should be aware that the TSP RMD rules apply only if a TSP participant has retired from federal service. If the TSP participant is still in federal service and has reached RMD age, then the first TSP RMD does not have to be taken until April 1 following the year the TSP participant retires from federal service. However, those TSP participants who own traditional IRAs and/or qualified retirement accounts (such as a traditional 401(k) plan) should be aware that traditional IRAs and traditional qualified retirement plans are also subject to RMD. The TSP participant who has reached RMD age is required to take an RMD from the traditional IRA and any traditional qualified retirement plan each year. This is the case even though the TSP participant continues working in federal service.

SECURE Act 2.0 Section 302 – Reduced Excise Tax on Missed RMD Amount

If a retiree is subject to RMD and does not take his or her full RMD in a given year, then the individual may be subject to an IRS excise tax. SECURE Act 2.0 reduced that excise tax from 50 percent to 25 percent of the RMD amount not paid by the retirement plan participant or traditional IRA owner. SECURE Act 2.0 further reduces the excise tax to 10 percent of the amount not paid by the retirement plan participant/traditional IRA owner if he/she meets the conditions of section 4974E of the Internal Revenue Code and the RMD is corrected within two years.

SECURE Act 2.0 Section 325 – Roth TSP Balances Are No Longer Subject to RMDs

Upon reaching his/her required beginning date (RBD) (currently April 1 following the year a retired TSP participant becomes age 73)  a retired TSP participant must take a TSP RMD from his or her TSP account every year. Effective January 1, 2024, a TSP participant’s Roth TSP account balance will not be used in the calculation of the TSP participant’s annual TSP RMD. Only the traditional TSP account balance will be used. Prior to January 1, 2024, a TSP participant’s TSP RMD was calculated using both the traditional TSP and the Roth TSP account balances.  The inclusion of only the TSP participant’s traditional TSP account balance in the RMD calculation will continue until the TSP participant’s death.

The result of the Roth TSP account balance not being included in the TSP RMD calculation is that  the TSP participant’s RMD amount will likely be less than it would have been before January 1, 2024. A smaller TSP amount also likely means less federal and state income tax liability.

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SECURE Act 2.0 Section 109 – Higher TSP “Catch-Up” Contribution Limits at Age 60, 61, 62 or 63

TSP participants turning 60, 61, 62 or 63 during the calendar year have a higher “catch-up” contribution limit than the regular “catch-up” contribution limit. During 2026, the regular “catch-up” contribution limit is $8,000, applicable to employees aged 50  to 59 and employees aged 64 and older. Employees age 60, 61, 62 and 63 during 2026 have a “super catch-up” contribution limit of $11,250.

The higher catch-up contribution limits became effective January 1,2025. The following table summarizes the regular catch-up contribution limit and the “super catch-up” contribution limit for the year 2026.

 

 

 

Age of TSP participant

during 2026

  

 

Maximum amount of

 “catch-up” contributions

 Maximum amount of “super catch-up”

contributions
50-59, > 64 $8,000 -
60,61.62,63 -        $11,250

SECURE Act 2.0 Section 603- Eligible “Catch-up” Contributions Must be Roth Contributions if Prior-Year Social Security Wages from TSP-Eligible Positions Are Above a Certain Threshold.

Effective January 1, 2026, eligible “catch-up” contributions must be Roth TSP contributions if a TSP participant’s prior year wages from TSP-eligible positions are above a certain threshold. The IRS adjusts this wage threshold for inflation and will announce it each year. For 2025 wages, the threshold is $150,000.

Wages refer to a TSP participant’s prior year Social Security wages. A TSP participant may find their 2025 Social Security wage by looking at Box 3 of their 2025 W-2 statement (Social Security Wages). Federal payroll offices will be mailing or emailing 2025 W-2 statements during January 2026.

This means that if a TSP participant’s 2025 Social Security wages are greater than the $150,000 Social Security wage threshold, then any catch-up contribution will be deposited into the participant’s  Roth TSP account.

Beginning in 2026, if this provision applies to a TSP participant (older than age 49)  who has  elected payroll deferrals to the traditional TSP, then the participant’s contributions will change automatically to all Roth TSP contributions. This will occur when the participant meets the annual elective deferral limit ($24,500 during 2026).

Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

TSP: The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you're eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.

RMDs: RMD's are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation.

401(k) Plans: 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

IRAs: Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status, and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

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Ed Zurndorfer, EA, ATA, CFP®, CLU®, ChFC®, CEBS®, ChFEBC℠: Federal Employee Benefits Expert

A former career Federal employee, Ed has published a staggering 1,200+ separate articles on Federal Benefits and Retirement!
Just “Google” his name, and you are likely to find a plethora of sites that contain his writings. Drawn to its mission to reach, teach
and serve Feds, Serving Those Who Serve is the only financial planning practice with which Ed has chosen to affiliate in over
20 years teaching. In addition to conducting Federal Benefits seminars for Serving Those Who Serve, you can find Ed’s
writings here on our blog in the FedZone, and on Fed-Soup, MyFederalRetirement, FederalNews Radio and NITP.

He is a member of the Maryland Society of Accountants, the National Association of Enrolled Agents, the International Society of Certified Employee Benefits Specialists, the Financial Planning Association, the National Association of Health Underwriters,
and the Society of Financial Service Professionals. Since 1999, Ed has taught many thousands of Federal employees about
their benefits, in person and at Federal agencies all over the country. Ed is a true national treasure.

Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street - Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.