TSP Contributions Are Changing—Here’s What Federal Workers Need to Know About New Limits in 2025

Key Takeaways

1. The TSP contribution limits have increased in 2025, giving federal workers and military service members more opportunities to save for retirement.

2. Understanding the new limits and planning your contributions effectively can help you maximize your retirement benefits.

A Look at the New TSP Contribution Limits for 2025

Federal employees and members of the uniformed services, you’ve got a big update for your retirement planning. In 2025, the contribution limits for the Thrift Savings Plan (TSP) have increased, offering you even more room to grow your retirement savings. Whether you’re actively contributing or planning to make catch-up contributions, these changes are worth your attention.

Here’s what you need to know:

Annual Contribution Limit

The annual contribution limit for TSP has increased to $23,500 in 2025. This means you can set aside more pre-tax or Roth dollars than ever before. This limit applies to employee contributions from your paycheck and doesn’t include agency matching contributions—those are additional savings.

Catch-Up Contributions for Ages 50 and Up

If you’re 50 or older, 2025 is your year to supercharge your retirement. The catch-up contribution limit has risen to $7,500, bringing your total contribution potential to $31,000 for the year. These extra contributions can make a huge difference, especially if you’re playing catch-up on your savings.

SECURE 2.0 Act Special Contributions

For federal employees aged 60 to 63, a special provision allows you to contribute even more. The increased catch-up contribution limit for this group is $11,250, bringing your total possible contribution to a whopping $34,750 for the year. This temporary boost applies only during these specific years, so it’s a great chance to maximize your savings while it lasts.

Why These Changes Matter

Saving for retirement is a marathon, not a sprint. These increased limits let you accelerate your savings during peak earning years or when you’re nearing retirement. The added flexibility is especially valuable if you’re behind on retirement savings or aiming to retire earlier than planned.

Federal workers and service members should take advantage of these limits to ensure they’re well-prepared for the future. Small adjustments now can lead to significant benefits later, thanks to compounding interest and tax-advantaged growth.

Breaking Down TSP Contributions

Not familiar with how contributions work? Let’s simplify it for you.

Employee Contributions

Your contributions can come from your paycheck, either pre-tax (traditional TSP) or after-tax (Roth TSP). The choice depends on your current tax situation and retirement goals. Pre-tax contributions reduce your taxable income now, while Roth contributions offer tax-free withdrawals in retirement.

Agency Matching Contributions

If you’re under the Federal Employees Retirement System (FERS), your agency contributes up to 5% of your salary if you contribute at least that much. This is essentially free money and one of the most compelling reasons to contribute to your TSP.

Spreading Out Contributions

To maximize your TSP benefits, consider spreading your contributions evenly throughout the year. This strategy ensures you receive the full agency match each pay period.

Automatic Increases

Many employees find it helpful to use the automatic increase option, which raises your contributions by a set amount annually. This “set it and forget it” method aligns with long-term financial goals and takes the guesswork out of adjustments.

Maximizing the Benefits of Increased Limits

Higher contribution limits in 2025 open up opportunities to rethink your retirement strategy. Here’s how you can make the most of these changes:

Reevaluate Your Budget

Take a close look at your finances and identify areas where you can redirect funds to your TSP. Even small increases in contributions can add up over time.

Catch Up Strategically

If you’re 50 or older, focus on using those catch-up contributions effectively. Prioritize higher contributions during years when your expenses are lower or your income is higher.

Align Contributions with Goals

Are you planning to retire early? Or are you aiming to maximize your retirement account for a more comfortable lifestyle? Adjust your contribution levels to align with these goals and make the most of tax advantages.

Diversify Your Savings

While the TSP is a powerful tool, don’t forget about other retirement accounts like IRAs. The TSP’s increased limits are great, but a diversified portfolio can provide more flexibility and security.

TSP’s Role in Federal Retirement

For federal workers, the TSP is a cornerstone of your retirement plan. It works in tandem with Social Security and your FERS pension to provide a comprehensive retirement package. The increased contribution limits make this tool even more valuable.

TSP’s Tax Benefits

One of the TSP’s strongest features is its tax advantages. Contributions to the traditional TSP lower your taxable income, and Roth TSP withdrawals in retirement are tax-free if certain conditions are met.

Investment Options

The TSP offers a range of investment funds, from the conservative G Fund to the more aggressive C, S, and I Funds. You can also choose Lifecycle Funds, which adjust your portfolio’s risk level as you approach retirement.

Automatic Payroll Deductions

The ease of automatic payroll deductions ensures consistent saving, making the TSP an effortless way to build your nest egg.

Planning for the Long Term

Retirement planning is not just about contributing more; it’s about contributing smarter. Here are some additional tips to optimize your TSP:

Review Your TSP Regularly

Life changes, and so should your TSP contributions. Review your account annually to ensure it aligns with your retirement timeline and financial goals.

Monitor Performance

Keep an eye on how your TSP funds are performing. Shifting economic trends might prompt you to adjust your investment mix, ensuring that your portfolio stays aligned with your risk tolerance and goals.

Take Advantage of Tools

The TSP website offers calculators and other resources to help you plan your contributions, estimate your retirement income, and make informed investment decisions.

Seek Professional Advice

If you’re unsure how to approach the new limits, consider consulting a financial advisor. They can help you develop a strategy that balances immediate needs with long-term goals.

Maximize Agency Contributions

Always contribute enough to get the full agency match if you’re under FERS. Missing out on this benefit is like leaving free money on the table.

Leverage Roth Options

Consider Roth TSP contributions if you expect to be in a higher tax bracket during retirement. The tax-free withdrawals can provide a significant advantage when you need the funds the most.

Key Dates to Remember in 2025

• January 1: New contribution limits take effect.

• December 31: Last day to maximize your 2025 contributions.

• Open Season (November-December): Time to reassess your federal benefits package, including TSP elections.

Looking Ahead: Secure Your Future Today

The new TSP contribution limits in 2025 offer federal employees and service members a golden opportunity to secure a more comfortable retirement. By taking full advantage of these changes, you’re not just saving money—you’re investing in your future self. Whether it’s through regular contributions, catch-up opportunities, or leveraging the SECURE 2.0 Act, the time to act is now.

Maximize your contributions, review your goals, and explore the investment options that best suit your needs. The path to a financially secure retirement starts with the decisions you make today. Don’t wait—secure your future by taking action this year.