TSP: SECURE 2.0 Act contribution limit changes coming in 2026

Officials with the federal government’s 401(k)-style retirement savings program announced Wednesday that the Thrift Savings Plan will use the entirety of a recently announced two-year “transition period” to prepare to implement new rules governing how older federal employees can make catch-up contributions as they approach retirement.

Last December, Congress passed the SECURE 2.0 Act, legislation designed to make it easier for people to save for retirement. Among the law’s provisions are reforms to expand automatic enrollment in employer-sponsored retirement plans and increasing the age at which people must begin taking required minimum distributions from their 401(k)-style retirement plans from the current 72 years old to 75.

The law also establishes new rules governing catch-up contributions, a method by which people who are 50 or older may contribute additional money toward their retirement accounts above the normal annual cap. By 2024, retirement plans like the Thrift Savings Plan were set to require all participants making at least $145,000 per year to make catch-up contributions only via Roth—post-tax—accounts.

But after employers and retirement program managers warned they would not be able to implement the provision in time, the IRS issued guidance in August clarifying that it would set up a two-year “administrative transition period” for the new catch-up contribution rules, effectively delaying the deadline for implementation until 2026. The guidance also corrected a drafting error in the bill that could have effectively barred all catch-up contributions beginning in 2024.

The Federal Retirement Thrift Investment Board, the agency that administers the TSP, announced in a bulletin Wednesday that they will use the entirety of that period to prepare to implement the provision.

“The FRTIB will take advantage of the full two-year transition period and implement system and process changes required to administer SECURE Act 2.0 §603 on Jan. 1, 2026,” the agency wrote. “As a result, catch-up contributions that would otherwise be required to be made on a Roth basis in accordance with §603, can continue to be made on a traditional (pre-tax) basis until the provision is implemented for TSP.”

Other provisions of the law will continue to be implemented along the original timetable spelled out in the legislation. In the meantime, federal employees who make at least $145,000 per year and are eligible to make catch-up contributions through the TSP can continue to do so either as Roth or standard 401(k)-style contributions.