The ability to make additional catch-up contributions is based on your age. Image: Vitalii Vodolazskyi/Shutterstock.com
We’re only in the second quarter of calendar year 2024, and the Thrift Savings Plan is already planning for implementing more of the changes that were introduced by SECURE 2.0. On January 1, 2025, certain TSP participants will be able to increase the amount of catch-up contributions they can make. As I’m sure you’re aware, catch-up contributions can only be made by those who are at least 50 years old (or who will turn 50 during the course of the year).
The change that will be coming next year applies to a subset of the over 50 crowd. Specifically, it applies to those who are 60, 61, 62, and 63. It will allow those participants to increase the amount of their catch-up contributions to whichever is higher; $10,000 or 50% more than the regular catch-up contribution limit. The $10,000 will be indexed for inflation.
The ability to make these additional catch-up contributions is based on your age. Double check your electronic official personnel folder (EOPF) to ensure that your agency has your correct date of birth. As long as you’re reviewing your EOPF, take a look at the beneficiary forms on file and make sure that they reflect your current wishes.
Let’s look at an example of how this would work. Because we will not know the 2025 catch-up contribution limit until it is announced by the Internal Revenue Service in October or November, we will use the 2024 limit in our example.
The 2024 elective deferral limit is $23,000 and the catch-up limit is $7,500. This would allow a participant who is both eligible to and can afford to make the full contribution to contribute a total of $30,500 to the TSP. If we assume that a 60 – 63 year old participant can contribute 50% more than the $7,500 catch-up limit, they will be able to add an additional $3,750 to their Thrift Savings Plan account (total catch-up contribution of $11,250). Rather than $30,500, their total contribution (both regular and catch-up) would be $34,250.
The TSP’s “spillover” method for catch-up contributions will not be affected by the increase in the allowable amount of catch-up contributions. Just as it is today, the participant will not need to make a separate election as to the amount of catch-up contributions. They will make one contribution election. Do be aware that contribution elections carry over from year-to-year unless changed.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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See also,
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