The IRS increased the Thrift Savings Plan contribution limit for 2026. If you have not updated your contribution election, you may be leaving significant tax-advantaged savings on the table every year.
2026 TSP Contribution Limits
- Standard limit: $23,500 per year
- Age 50+ catch-up contribution: An additional $7,500 per year
- Age 50+ total maximum: $31,000 per year
- Special catch-up (ages 60-63): Up to $34,750 per year under SECURE 2.0 rules
Why This Matters More Than You Think
The difference between contributing at the old limit versus the new one seems small month to month. But over a career, compounding turns small annual increases into significant retirement wealth.
At a 6% average annual return, contributing an additional $500 per year for 20 years grows to approximately $18,400. That is money sitting in your TSP that costs you nothing but a quick update to your contribution election.
How to Update Your TSP Contribution Election
Federal civilian employees update TSP contributions through their agency payroll system, typically Employee Express, myPay (for DOD civilians), or your agency-specific HR portal. The change usually takes effect within one to two pay periods.
You can elect to contribute a percentage of your salary or a flat dollar amount per pay period. Contributing a percentage automatically scales with pay raises, which is generally the smarter long-term approach.
Traditional TSP vs. Roth TSP: Which Should You Choose?
Traditional TSP contributions are pre-tax. You reduce your taxable income now and pay taxes on withdrawals in retirement. This makes sense if you expect to be in a lower tax bracket in retirement than you are today.
Roth TSP contributions are after-tax. You pay taxes now and qualified withdrawals in retirement are tax-free. This makes sense if you expect to be in the same or higher tax bracket in retirement, or if you want tax diversification.
Many federal employees benefit from splitting contributions between both, particularly mid-career employees who are uncertain about future tax rates.
Do Not Forget the Agency Match
FERS employees receive automatic agency contributions of 1% of basic pay plus matching contributions up to 4% more if you contribute at least 5% of your salary. That is up to 5% of your salary in free money that disappears if you contribute less than 5%.
If you are not contributing at least 5%, that is the first number to fix before worrying about the annual limit.
Educational content only. Not personal financial or investment advice. Consult a licensed financial planner for decisions specific to your situation.
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