2025 TSP Contribution Limits
The Thrift Savings Plan (TSP) has announced updated contribution limits for 2025, providing federal employees and uniformed service members with enhanced opportunities to bolster their retirement savings. Here's a detailed breakdown of these changes:
Elective Deferral Limit
The elective deferral limit—the maximum amount employees can contribute to their TSP accounts through traditional (pre-tax) and Roth (after-tax) contributions—has increased to $23,500 for 2025, up from $23,000 in 2024.
Catch-Up Contributions
Catch-up contributions allow participants aged 50 and above to contribute additional funds beyond the standard elective deferral limit. For 2025, the catch-up contribution limits are as follows:
Ages 50 to 59 and 64 and Over: The catch-up contribution limit remains at $7,500, enabling these participants to contribute a total of $31,000 ($23,500 + $7,500).
Ages 60 to 63: In accordance with the SECURE 2.0 Act, participants in this age group have a higher catch-up contribution limit of $11,250, allowing for a total contribution of $34,750 ($23,500 + $11,250).
Annual Additions Limit
The annual additions limit, which encompasses the total contributions made to your TSP account—including employee contributions, agency/service automatic (1%) contributions, and matching contributions—has increased to $70,000 for 2025, up from $69,000 in 2024.
Strategic Considerations for TSP Participants
To maximize the benefits of these increased contribution limits, consider the following strategies:
Adjust Your Contributions: Review and adjust your payroll deductions to align with the new limits, ensuring you take full advantage of the increased opportunities for tax-advantaged savings.
Age-Specific Planning: If you're approaching or within the specified age brackets for catch-up contributions, plan accordingly to maximize your contributions during these peak earning years.
Monitor Total Contributions: Keep track of all contributions to ensure they do not exceed the annual additions limit, especially if you receive agency or service matching contributions.
Consult Financial Advisors: Engage with a financial advisor to tailor your retirement strategy, taking into account the updated limits and your individual financial goals.
By staying informed and proactively adjusting your contribution strategies, you can make the most of the increased TSP contribution limits in 2025, thereby enhancing your retirement readiness.