For TSP, 2026 Brings Higher Investment Limits, In-Plan Roth Conversion Option

Effective in 2026, TSP catch-up investments must be made in Roth status for those whose earnings in the prior year exceeded a threshold—which for 2026 purposes will be $150,000 in 2025 earnings. Image: Leny Studio/Shutterstock.com
By: FEDweek Staff

The standard investment maximum investment limit for TSP investors is rising for 2026 from $23,500 to $24,500; that is the “elective deferral limit” applying in the TSP along with other similar tax-favored retirement savings plans, and applies to the combination of traditional pre-tax investing and Roth after-tax investing, for those making both types

A separate general “catch-up contribution” limit for TSP investors who are—or who will be by the end of the year—age 50 or above also is rising, from $7,500 to $8,000; that also applies to a combination of traditional and Roth investing, for those making both types. Those age 60, 61, 62, or 63 in a given year have a higher catch-up limit of $11,250, unchanged.

For those who invest in two TSP accounts (civilian and uniformed services) during a year, the combined investments into all such plans cannot exceed the IRS limits. Similarly, the investments are combined for those who invest in the TSP and another tax-advantaged plan during a year—such as the 401(k) plan of a private sector employer before or after government employment. However, agency contributions into the accounts of FERS employees do not count against the limits, nor do rollovers into a TSP account from retirement savings plans of prior employers.

Also effective in 2026, TSP catch-up investments must be made in Roth status for those whose earnings in the prior year exceeded a threshold—which for 2026 purposes will be $150,000 in 2025 earnings.

Further, starting January 28 the TSP will begin allowing in-plan conversions of traditional balances to Roth status, exempting those funds from the “minimum distribution rule” requirement while also making them tax-free on withdrawal—but triggering an up-front tax liability because the converted amount will be treated as taxable income for the year the conversion occurs. (One way to handle the tax hit is to use a ladder – a strategic series of conversions over time.)

Conversions will be available to active and separated participants and spousal beneficiaries, with a minimum amount of $500 and up to 26 allowed during the course of the year. Participants generally must retain at least $500 in each of their tax-deferred employee contribution, tax-exempt contribution, agency automatic contribution, and agency matching contribution balances. Spousal beneficiaries aren’t subject to that “hold back” requirement, nor is money rolled into the TSP from another retirement savings plan.

Amounts on investment through the mutual fund window feature must first be transferred back into one or more of the funds the TSP itself offers. Conversions are to made through in the My Account section of www.tsp.gov as a dollar amount or as a percentage of the eligible funds, with a maximum of 26 conversions per year.

Pay Raise Coming, but Not Immediately; Some Benefit Changes to Result

For TSP, 2026 Brings Higher Investment Limits, In-Plan Roth Conversion Option

OPM Issues Final Regs on Looser Recruitment, Relocation Incentives

2026 Pay Raise Guidance Issued; Pay Tables Posted GS, LEO

VA Announces Reorganization of Health Branch, Says Cutting Jobs Isn’t the Goal

OPM Previews Plans to Seek Forced Ratings Distribution for All Federal Employees