The standard dollar limit on investments in the TSP, the “elective deferral limit,” will be unchanged in 2021 at $19,500, while the “catch-up contribution” limit also will remain at its current amount of $6,500.
The catch-up figure is an additional investment above the standard amount allowed for investors who are at least age 50 during the year. Effective in calendar year 2021 no separate election will necessary; for those eligible to make catch-up contributions, any investments beyond the standard limit will “spill over”—they will be automatically designated as catch-up contributions, up to that second limit. Anyone wishing to make catch-up contributions for 2020 still must to specifically elect to make them, however.
In both cases the figures involve personal investments only and don’t include government contributions for those under FERS or any transfers into the TSP from retirement savings accounts from prior employers. For those investing in both the traditional (tax-free on investment, taxable on withdrawal) and Roth (after-tax on investment, tax-free on withdrawal so long as certain conditions are met), each limit applies to the combined total of both types.
The figures are set by the IRS based on an inflation-adjustment formula used for 401(k) and other similar employer-sponsored retirement savings vehicles. Inflation did not rise by enough to trigger an increase in either, which rise in increments of $500.