As before, investments will automatically “spill over” into catch-up status once the standard limit is reached. Image: Aysezgicmeli/Shutterstock.com
By: FEDweek StaffThe TSP has said it will issue notices later this year to account holders who will be eligible to make additional investments beyond the normal limits starting in 2025 under the Secure 2.0 Act.
Currently, actively employed investors who are age 50 and older during a year may make “catch-up” contribution investments, currently up to $7,500 a year, if they already have invested the standard maximum for the TSP and similar plans, which this year is $23,000.
Under the Secure 2.0 Act of late 2022, effective next year is an increase to “the limit for active participants turning ages 60, 61, 62, or 63 in the calendar year to either $10,000 or 50 percent more than the regular catch-up contribution limit, whichever is greater. The increased amounts will be indexed for inflation after 2025,” the TSP said in a notice to agencies about its planning for that change.
If the 2025 catch-up limit were to remain $7,500—the figures for both the standard and catch-up limits are announced by the IRS late in a year for the following year—that formula would produce a limit of $11,250 for those in that age range next year.
As before, investments will automatically “spill over” into catch-up status once the standard limit is reached, until the second limit is reached. The TSP stopped requiring separate elections for catch-ups in 2021.
“Just as with the current process, participants turning age 50 or older will not need to make a separate election for catch-up contributions. Participants can make one contribution election, and this will carry over every year unless the participant chooses to stop or change the election. Participants who already have a contribution election on file do not need to change that election or make a new election because of this provision. Their previous election can continue if that is their choice,” it adds.
Investors who do not wish to contribute to the higher catch-up contribution limit “should use their agency or service’s payroll system to adjust their contributions accordingly,” it says. Those who stop but later decide to restart “will need to make a new election to restart making any contributions when they are ready to do so.”
OPM Advises Agencies on Conducting RIFs During Shutdown
Updated Shutdown Contingency Plans Show Range of Impacts
Use Shutdown as Justification for More RIFs, OMB Tells Agencies
Unions Win a Round in Court Disputes over Anti-Representation Orders
Deferred Resignation Periods End for Many; Overall 12% Drop
Senate Bill Would Override Trump Orders against Unions
See also,
How to Handle Taxes Owed on TSP Roth Conversions? Use a Ladder
The Best Ages for Federal Employees to Retire
Best States to Retire for Federal Retirees: 2025
