The amount of the contributions is the higher of $10,000 or 150% of the regular catch-up limit Image: Vitalii Vodolazskyi/Shutterstock.com
By: John GrobeA recent survey conducted by Vanguard showed that only 15% of 401(k) participants aged 50 and older made catch-up contributions to their employer’s 401(k) retirement plan. I’m inclined to think that the percentage would be higher in the Thrift Savings Plan because federal employees are, on average, better compensated than those in the private sector.
The IRS recently announced the 2025 investment limits for employer sponsored retirement plans, with the elective deferral amount increasing from $23,000 to $23,500. The he catch-up contribution also will not budge from the 2024 amount of $7,500.
Yet, some TSP participants will be able to make larger catch-up contributions (up to $11,250) in 2025. Who might these people be? People between 60 and 63, that’s who. SECURE 2.0 provides for enhanced catch-up contributions for those who will reach 60, 61. 62, and 63 by the end of the calendar year. Note that the enhanced contributions do not extend to those who will reach an age of 64 or older by the end of the calendar year.
The amount of the contributions is the higher of $10,000 or 150% of the regular catch-up limit. With 2025’s catch-up limit likely to remain at $7,500, the age 60 – 63 limit would be $11,250. Not a bad deal if you can afford it.
This increase in catch-up limits for the 60 – 63 cohort does not apply to Individual Retirement Arrangements (IRAs). Though plans like the TSP are similar to IRAs, there are numerous differences.
Did you know that Social Security has taken steps to make doing business with it easier? They are allowing more forms to be submitted with electronic signatures. Those who have a “mySocialSecurity” account will be able to submit 50 forms and almost 80 types of evidence using the website’s new electronic signature feature. The agency has the twelve most frequently used forms in online versions that can be completed, signed and submitted online. We can only hope that the Office of Personnel Management will get on board the e-signature train.
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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