A bill (HR-2954) newly offered by the leaders of the House Ways and Means Committee would revise several retirement savings policies that would affect the TSP along with similar programs. Among numerous other features, the bill would:
* Increase the age at which “required minimum distributions” must begin from the current 72 to 73 effective with those who turn 72 starting next year. The age would remain 73 through 2028, when it would be increased to 74 for three years and then to 75.
* Increase the “catch-up contribution” limit to $10,000 for those who are age 62-64, beginning in 2023. Those are additional investments, of up to $6,500 this year, allowed for investors age 50 or above in a calendar year above the standard limit for investing in such plans ($19,500 this year).
* Make more generous the mechanism for increasing both the standard investment limit and the catch-up limit to account for inflation.
* Permit penalty-free withdrawals of the greater of $10,000 or half of the value of the account for victims of domestic abuse.
Sponsors expressed optimism that the measure will be enacted into law, stressing that it includes provisions supported by both parties and that it builds on a bipartisan law enacted in late 2019 called the “Secure Act” that among other things raised the required minimum distribution age to the current 72 from the prior 70 ½.
What it Takes to Be a TSP Millionaire in Today’s Dollars
With a long enough timeline, involving consistent large contributions and decent long-term stock returns during the period, it’s possible to become a millionaire from compounding a middle-class or upper middle-class income, including most jobs in federal service.