TSP Contribution Limits 2026: Maximising Your Government Match
The Thrift Savings Plan (TSP) is the federal government's tax-advantaged retirement savings plan, similar to a private-sector 401(k). For 2026, the IRS has set new contribution limits that determine how much you can save—and how much free money you get from the government match.
2026 TSP Contribution Limits
| Category | 2026 Limit | Authority |
|---|---|---|
| Elective Deferral (under age 50) | $24,500 | IRC §402(g); IRS Notice 2025-67 |
| Standard Catch-Up (ages 50–59, 64+) | $8,000 | IRC §414(v) |
| Super Catch-Up (ages 60–63) | $11,250 | SECURE 2.0 Act §109 |
| Max under 50 | $24,500 | |
| Max ages 50–59 | $32,500 | |
| Max ages 60–63 | $35,750 | |
| Max 64+ | $32,500 |
Source: IRS Notice 2025-67 and TSP Bulletin 25-3.
The Government Match: Up to 5% Free Money
FERS employees receive a government match that follows a tiered formula defined in 5 U.S.C. §8432(c). This is legally required for all FERS employees—it is not discretionary.
| You Contribute | Agency Auto (1%) | Agency Match | Total Agency |
|---|---|---|---|
| 0% | 1% | 0% | 1% |
| 1% | 1% | 1% | 2% |
| 2% | 1% | 2% | 3% |
| 3% | 1% | 3% | 4% |
| 4% | 1% | 3.5% | 4.5% |
| 5%+ | 1% | 4% | 5% |
Key insight: The match structure means the first 5% you contribute is the most valuable. Contributing 5% of your salary gets you 5% from the government—a 100% return on the first 3% and 50% on the next 2%. Contributing more than 5% still saves you more for retirement, but without additional matching.
Even if you contribute 0%, the agency automatic 1% still goes into your TSP account. You are always vested in your own contributions. Agency contributions vest after 3 years of FERS-covered service (or 2 years for some positions).
SECURE 2.0 Changes for 2026
Super Catch-Up for Ages 60–63
Starting in 2026, employees who are age 60, 61, 62, or 63 during the tax year can contribute up to $11,250 in catch-up contributions (instead of the standard $8,000). This is authorized by SECURE 2.0 Act §109. Employees who turn 64 revert to the standard $8,000 catch-up limit.
Mandatory Roth Catch-Up for High Earners
Also starting January 1, 2026: if your prior-year FICA wages exceeded $150,000, your catch-up contributions must be designated as Roth (after-tax). This is required by SECURE 2.0 Act §603. Many GS-14 and GS-15 employees in high-locality areas will be affected.
How TSP Affects Your Take-Home Pay
Traditional TSP contributions are pre-tax: they reduce your federal taxable income, lowering your current income tax withholding. Roth TSP contributions are after-tax: they do not reduce your taxable income. Neither type reduces your FICA wages—you pay Social Security and Medicare tax on the full amount regardless of TSP elections.
Sources & Legal Citations
2026 Limits: IRS Notice 2025-67 — IRS Announcement
TSP Bulletin: TSP Bulletin 25-3
Government Match: 5 U.S.C. §8432(c)
Super Catch-Up: SECURE 2.0 Act §109
Mandatory Roth Catch-Up: SECURE 2.0 Act §603
TSP Investment Funds
The TSP offers six core investment funds. The G Fund (Government Securities) is the lowest-risk option, investing in special-issue Treasury securities. The F Fund (Fixed Income) tracks the Bloomberg U.S. Aggregate Bond Index. The C Fund (Common Stock) tracks the S&P 500. The S Fund (Small Cap Stock) tracks the Dow Jones U.S. Completion Total Stock Market Index. The I Fund (International Stock) tracks international developed markets. The L Funds (Lifecycle) are target-date funds that automatically adjust allocation based on your expected withdrawal date.
All TSP funds have extremely low expense ratios—currently around $0.42 per $1,000 invested (0.042%). This is significantly lower than typical 401(k) plans and even most index funds available to retail investors. This cost advantage compounds significantly over a 20-30 year career.
How to Calculate Your Optimal Contribution
At minimum, contribute 5% to capture the full government match. This is the most basic financial advice for any FERS employee—contributing less than 5% leaves free money on the table. After that, the optimal percentage depends on your retirement goals, other savings, and tax situation.
To max out the $24,500 limit in 2026, divide by 26 pay periods: you need to contribute $942.31 per paycheck. For a GS-12 Step 5 in the DC area ($102,415 salary), that is approximately 24% of gross biweekly pay ($3,939/pay period). For a GS-15 Step 10 at the pay cap ($197,200), maxing out requires about 12.4% of biweekly pay.
If you are age 50 or older and want to add catch-up contributions ($8,000), the total $32,500 requires $1,250 per paycheck. If you are age 60-63 and qualify for super catch-up ($11,250), the total $35,750 requires $1,375 per paycheck.
Common TSP Mistakes to Avoid
Contributing less than 5%: You miss the full match. Front-loading contributions: If you max out early in the year, you may miss matching contributions in later pay periods (TSP matches each pay period, not annually). Keeping everything in the G Fund: While safe, the G Fund historically underperforms inflation-adjusted returns over long periods. Not adjusting contributions after a pay raise: A WGI or promotion means your percentage contribution buys less relative to your new income if the dollar amount does not increase.
TSP Withdrawals in Retirement
After separating from service, you have several withdrawal options: single payment, series of monthly payments, TSP annuity, or a combination. If you separate in or after the year you turn 55 (or 50 for special provision employees), you can access your TSP without the 10% early withdrawal penalty. Traditional TSP withdrawals are taxed as ordinary income; qualified Roth TSP withdrawals are tax-free.
TSP Loan Provisions
The TSP allows two types of loans: a general-purpose loan and a residential loan (for purchasing a primary residence). You can borrow from $1,000 to 50% of your vested account balance (up to $50,000). General-purpose loans must be repaid within 1-5 years; residential loans within 1-15 years. Payments are made through payroll deductions. Interest rates are set at the G Fund rate at the time of the loan.
While TSP loans can be useful in emergencies, they reduce your invested balance and the compound growth it would have generated. If you separate from service with an outstanding loan balance, the unpaid amount is treated as a taxable distribution (and may be subject to a 10% early withdrawal penalty if under age 55 at separation).
Hardship Withdrawals
In-service hardship withdrawals are available for specific financial hardship situations (recurring negative cash flow, medical expenses, personal casualty losses, or legal expenses). However, hardship withdrawals are subject to income tax and potentially the 10% early withdrawal penalty. Additionally, you are prohibited from making TSP contributions for 6 months after a hardship withdrawal. This makes hardship withdrawals a last resort.
Catch-Up Contribution Timing
Catch-up contributions are separate from regular elective deferrals. When you reach the $24,500 regular limit during the year, any additional contributions (up to $8,000 standard or $11,250 super catch-up) are automatically treated as catch-up contributions. However, you must be contributing enough per paycheck to reach the regular limit before catch-up begins. If your per-period contribution is too low, you may not hit the regular limit before year-end and will miss catch-up opportunity. Plan your per-period percentage so that you reach the $24,500 limit with enough pay periods remaining to make catch-up contributions.
TSP matching applies to each pay period's contribution independently. If you front-load your contributions and stop contributing mid-year (because you hit the limit), you will miss matching contributions for the remainder of the year. To avoid this, calculate a steady per-period percentage that spreads contributions evenly across all 26 pay periods while still maximizing the total annual amount.
Frequently Asked Questions
How much can I contribute to TSP in 2026?
The elective deferral limit for 2026 is $24,500. If you are 50 or older, you can add $8,000 in catch-up contributions ($32,500 total). If you are specifically age 60-63, the catch-up limit increases to $11,250 ($35,750 total) under SECURE 2.0 §109. Source: IRS Notice 2025-67.
What is the maximum government TSP match?
The maximum agency contribution is 5% of your basic pay when you contribute at least 5%. This consists of a 1% automatic contribution plus a 4% match (dollar-for-dollar on the first 3%, then 50 cents on the dollar for the next 2%). Authority: 5 U.S.C. §8432(c).
Do I get any TSP match if I contribute 0%?
Yes. All FERS employees receive the 1% agency automatic contribution regardless of whether they contribute anything. This is required by law (5 U.S.C. §8432(c)).
What is the mandatory Roth catch-up rule?
Starting January 1, 2026, if your prior-year FICA wages exceeded $150,000, your TSP catch-up contributions must be designated as Roth (after-tax). This is required by SECURE 2.0 Act §603 and cannot be waived.
Does TSP reduce my Social Security taxes?
No. TSP contributions (whether Traditional or Roth) do not reduce your FICA wages. You pay Social Security and Medicare taxes on your full salary minus FEHB premiums only.