SECURE Act 2.0 and The Thrift Savings Plan

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.

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.