Rules for Mandatory Roth TSP Catch-Up Contributions Beginning January 1, 2026 for Certain Feds

Starting in January 2026, some federal employees face a significant change regarding catch-up contributions to their Thrift Savings Plan (TSP). This article will explore the following:

• Review the new rule starting January 2026: If federal employees' taxable income in 2025 exceeds $150,000, they will have to put any TSP catch-up contributions into a Roth TSP account during 2026. 
• Chart showing tax liability difference: Illustrate when catch-up amounts are put in Roth vs. a traditional account. 
• Strategies for high-earners subject to the new rule:Make contributions to an IRA ($8600 is the contribution limit in 2026 for those able to make catch-up contributions) instead of a Roth TSP. Talk with financial advisor.

Details of the Mandatory Roth Catch-Up Contributions Starting January 2026

Starting in January 2026, a provision of the SECURE Act 2.0 will go into effect, impacting how some federal employees make catch-up contributions to their TSP accounts. Specifically, the new rule states that if a TSP participant's income in 2025 exceeded $150,000 (adjusted from $145,000 in the original bill), any catch-up contributions must be made to a Roth TSP account in 2026. In earlier years, employees could elect to make catch-up contributions to either a traditional TSP or a Roth TSP, regardless of their income. Unlike with a Roth IRA, which have income limitations to contribute at all in a given tax year, Roth TSP accounts still do not have an income maximum to participate, but now some feds may be forced to contribute to a Roth account if they want to make catch-up contributions to their retirement savings via their Thrift Savings Plan. 

Estimate your future retirement savings with our TSP Calculator for civilian and military federal employees. 

Comparison of Traditional and Roth TSP Accounts

As a refresher, here are the main differences between Traditional and Roth TSP Accounts:

Traditional Thrift Savings Plan	Roth TSP Account
Contributions	Pre-Tax	After-tax
Qualified* Withdrawals	Subject to Income Tax	Not taxed
Subject to RMDs?	Yes	No

*withdrawals made at the qualifying age (typically age 59.5 or older, but possibly 55 or even younger if you retire early or under FERS Special Provisions) and with the Roth TSP, after the 5-year rule is satisfied.

Matching Contributions Go Into the TSP, Traditional Account No Matter What

While the new rule mandates Roth catch-up contributions for high-income earners working in the federal government, like those in the SES (Senior Executive Service), it's important to note that matching contributions from the federal government will continue to be required to go into the traditional TSP account, regardless of whether the employee is making Roth contributions. This means that even if a TSP participant is required to make Roth catch-up contributions due to the income limit, the matching 5% from normal contributions will still be tax-deferred, adding to their traditional TSP balance. 

Tax Liability and Strategy Between Traditional or Roth Accounts

To illustrate the tax liability differences, let's look at the differences for an impacted TSP participant between next year and previous years, when not required to put mandatory contributions to the Roth TSP when making eligible catch-up contributions. With a traditional TSP, the contribution reduces taxable income for that year, but withdrawals (both contributions and earnings) are taxed in retirement. Conversely, with a Roth TSP, taxes are paid upfront on the contributions made, but qualified withdrawals, including earnings, are tax-free in retirement, offering potential tax advantages, especially if future tax rates are higher.

Tax Liability for Roth vs. Traditional TSP Contributions Starting in January 2026

For illustrative purposes, here is a chart to show the immediate tax consequences for catch-up contributions made to a Roth account in the Thrift Savings Plan vs. a traditional one, for an individual who has taxable income at $150,000 before contributing to the TSP. 

Traditional Contributions	Roth Contributions	Taxable Income for 2026
Not Subject to New Rule, age 50+	$32,500 ($24,500 + $8000 Catch-Up)	$0	$117,500 ($150,000 - $32,500)
Not Subject to New Rule,  age 60 - 63	$35,750 ($24,500 + $11,250 Catch-Up)	$0	$106,250
Subject to New Rule,  age 50+	$24,500	$8000	$125,500
Subject to New Rule,  age 60 - 63	$24,500	$11,250	$125,500

Understanding RMDs: Traditional vs. Roth Balance in Retirement

One crucial distinction between traditional and Roth accounts lies in Required Minimum Distributions (RMDs). Traditional TSP and traditional IRA funds are subject to RMDs, mandating that you begin taking distributions (and owe the subsequent taxes) at a certain age, regardless of whether you need the income. This can increase your tax liability in later years. Roth accounts, including Roth TSP and Roth IRA accounts, are not subject to RMDs during the original owner's lifetime.

Long-term Impact on Tax Strategy with New TSP Catch-Up Rule

The new mandatory Roth TSP catch-up requirement from the "Setting Up Every Community for Retirement Enhancement Act of 2022" aka the SECURE 2.0 Act, can significantly impact long-term tax strategies for high-income earners. The decision to make Roth catch-up contributions or explore other options, like contributing to a Roth IRA, depends on individual circumstances, such as anticipated future income and tax rates. It's crucial to consider how the Roth TSP balance will interact with the traditional TSP balance and other retirement assets, as well as the potential implications of RMDs. Careful planning is essential to optimize tax efficiency and retirement income.

Strategies for High Earners Affected by the New Rule from SECURE Act 2.0

For high-income earners affected by the mandatory Roth TSP catch-up requirement starting in January 2026, exploring alternative contributions to a Traditional IRA can be a strategic move. Instead of making Roth TSP catch-up contributions, individuals can contribute to a Traditional IRA if they're not already, potentially offering more flexibility and control over immediate tax liability and available investments. The contribution limit for an IRA is $8,600 in 2026 for those able to make catch-up contributions. Instead of contributing the $8000 catch-up amount in your TSP account, subject to the mandatory Roth catch-up rule, you can put $8600 to a traditional IRA. The IRA money would be made with taxed dollars, but you can then deduct the whole amount deposited so it reduces your taxable income. Contributions to a Roth IRA outside the TSP would be the same tax-wise as if made to the Roth TSP. 

Mandatory Roth TSP Catch-up Contributions, Roth In-Plan Conversions

There are 2 big changes coming to the TSP next year:

• Contributions you make for 2026 toward the catch-up limit will be automatically designated Roth contributions if your 2025 taxable income exceeds the $150,000 limit. (If you're 50 or older in 2026, you can contribute up to the regular catch-up limit. If between 60 and 63, there is an enhanced higher catch-up limit - also thanks to the SECURE Act 2.0.) 
• At some point in January 2026, In-Plan Roth Conversionswill be allowable within the Thrift Savings Plan for the first time ever. This will allow you to convert money from your traditional TSP to go to your Roth balance without transferring to an IRAfirst. Note you cannot use money from the TSP account to pay taxes due from such a conversion. 

Consulting a financial advisor is crucial for high-income earners to assess their individual circumstances, understand the implications of the mandatory Roth TSP catch-up, and develop a tailored strategy, including determining if a Roth conversion is a good idea for their financial goals. 

Book a free consultation with a Fed-Expert Retirement Planner Here.

A financial advisor can provide personalized advice on how to maximize retirement savings, optimize tax efficiency, and achieve long-term financial goals, considering the nuances of traditional and Roth accounts.

What Next? Maximize Your Roth TSP Contributions

Register for our upcoming TSP webinar.

This webinar will provide detailed insights into the new rules, offer practical strategies for optimizing your retirement savings, and answer any questions you may have about the impact of the Secure Act 2.0 on your TSP account. Join us to make sure you’re well-prepared for these changes.

Let the Roth Balance in Your TSP Account Work For You

As we approach 2026, proactive planning is essential for federal employees to adapt to the mandatory Roth TSP catch-up requirement. By understanding the implications of this rule, exploring alternative contribution strategies, and seeking expert advice, individuals can effectively manage their retirement savings and secure their financial future.