TSP Contribution Limits 2025–2026How to Max Out Before You Retire
The Thrift Savings Plan is one of the best retirement accounts available to federal employees — low fees, tax-deferred growth, and a government match. But most employees contribute far less than the IRS allows. Here's what the limits are and why maximizing them matters for your retirement.
2025–2026 TSP Contribution Limits
| Category | 2025 Limit | 2026 Limit |
|---|---|---|
| Standard contribution limit | $23,500 | $24,500 |
| Catch-up (age 50–59, 64+) | +$7,500 | +$8,000 |
| Catch-up (age 60–63) — SECURE 2.0 | +$11,250 | +$11,250 |
| Maximum if age 50–59 or 64+ | $31,000 | $32,500 |
| Maximum if age 60–63 | $34,750 | $35,750 |
2026 limits confirmed by IRS. SECURE 2.0 super catch-up ($11,250) applies to ages 60–63 only; regular catch-up ($8,000) applies to ages 50–59 and 64+.
The FERS Government Match: Don't Leave It on the Table
How the FERS Match Works
- • Agency automatically contributes 1% of your salary (even if you contribute $0)
- • Agency matches 100% of your contributions up to 3%
- • Agency matches 50% of your contributions on the next 2%
- • Maximum match: 5% of your salary (when you contribute at least 5%)
Example: $80,000 Salary
- Your 5% contribution: $4,000/year
- Agency automatic 1%: $800
- Agency match: $3,200
- Total TSP contribution: $8,000/year
The TSP Matching Vesting Schedule
The government's TSP contributions are subject to a vesting schedule — meaning you must complete a minimum period of federal service before the matching contributions are fully yours. Understanding this schedule is important if you are considering separating from federal service.
| Years of Service | Agency 1% Automatic | Agency Matching |
|---|---|---|
| Under 2 years | Not vested | Not vested |
| 2 years | Vested | Vested |
| 3+ years | Vested | Vested |
Note: Your own contributions are always 100% vested immediately. Only the agency's contributions are subject to the vesting schedule.
Traditional vs. Roth TSP: Which Should You Choose?
Traditional TSP
- ✓ Reduces taxable income now
- ✓ Better if you expect lower tax rate in retirement
- ✓ Good if you're in a high bracket now (GS-14/15)
- ✗ Withdrawals taxed as ordinary income
- ✗ RMDs required starting at 73
Roth TSP
- ✓ Tax-free withdrawals in retirement
- ✓ Better if you expect higher tax rate later
- ✓ Good hedge if tax rates rise nationally
- ✓ No RMDs on Roth IRA (if rolled over)
- ✗ No current-year tax deduction
Many federal employees near retirement benefit from a split approach — contributing to Roth TSP while still working (lower future taxes) while also funding traditional TSP for immediate tax deductions.
How to Change Your TSP Contribution Percentage
You can change your TSP contribution percentage at any time through your agency's payroll system. Most federal agencies use one of the following systems: MyPay (military and some civilian), Employee Express, or a direct HR portal. Changes typically take 1–2 pay periods to take effect.
- 1Log in to your agency payroll portal (MyPay, Employee Express, or agency HR system)
- 2Navigate to "TSP" or "Thrift Savings" in the financial settings
- 3Enter your desired contribution percentage (or dollar amount) for traditional and/or Roth TSP
- 4Confirm the change — it becomes effective for the next available pay period
- 5Verify your next Leave and Earnings Statement (LES) to confirm the new deduction amount
What Happens to TSP When You Retire
When you retire from federal service, your TSP account remains open. You have several options for managing it in retirement:
Leave it in TSP
Your money stays invested with TSP's low-cost funds. You can take withdrawals at any time, set up installment payments, or purchase a TSP annuity. TSP expense ratios are among the lowest in the industry (typically 0.04%).
Take installment payments
You can set up monthly, quarterly, or annual payments based on a fixed dollar amount, a specific number of payments, or life expectancy. Payments are subject to ordinary income tax (or tax-free if Roth).
Take a single withdrawal
You can withdraw the entire balance as a lump sum. This triggers a large taxable event in a single year — usually not recommended unless you have specific tax planning reasons.
Roll over to an IRA
You can roll traditional TSP to a Traditional IRA and Roth TSP to a Roth IRA. IRAs offer more investment choices and eliminate RMDs on Roth funds.
TSP Fund Options: The Key Choices
No risk
Government securities. No risk of loss — guaranteed return. Good for capital preservation near retirement.
Low risk
Bond index fund. Slightly higher returns than G, some interest rate risk.
Medium-high
S&P 500 equivalent. Long-term growth engine. Core holding for most employees 10+ years from retirement.
Medium-high
Small/mid-cap US stocks. Higher growth potential, higher volatility.
Medium-high
International stocks. Geographic diversification.
Varies
Lifecycle funds that auto-adjust allocation by target retirement date. Good for hands-off investors.
Frequently Asked Questions About TSP
Q: Can I contribute to both a TSP and an IRA in the same year?
A: Yes. TSP and IRA contribution limits are completely separate. You can max out your TSP ($23,500 in 2025) and also contribute up to $7,000 to an IRA ($8,000 if you're 50+) in the same year.
Q: What is the TSP "Rule of 55" and how does it affect FERS retirees?
A: If you separate from federal service in the calendar year you turn 55 or later, you can withdraw from your TSP without the 10% IRS early withdrawal penalty. This applies to your TSP balance only — not to IRAs rolled over from TSP. FERS retirees who retire at 55+ can access their TSP immediately penalty-free.
Q: Do I have to take Required Minimum Distributions (RMDs) from TSP?
A: Yes. Traditional TSP is subject to RMDs starting at age 73, just like a Traditional IRA or 401(k). Roth TSP is also subject to RMDs while in the TSP — but if you roll Roth TSP to a Roth IRA, the Roth IRA has no RMD requirement during the owner's lifetime.
Q: Can I still contribute to TSP if I take a FERS disability retirement?
A: No. TSP contributions require active federal employment. Once you separate (including for disability retirement), you can no longer contribute to TSP. However, your existing balance remains in TSP until you choose to withdraw or roll it over.
Q: How does VERA affect my TSP access?
A: If you accept VERA and are 55 or older in the year you separate, you can access TSP penalty-free under the Rule of 55. If you are younger than 55 at separation, you must wait until 59½ for penalty-free withdrawals (or use SEPP/72(t) distributions). See our VERA guide for the full analysis.
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For educational purposes only. TSP rules and IRS limits change annually. Consult the TSP website or a qualified financial advisor for current limits.