Roth Conversions For TSP Investors Coming January 28, 2026

Annual Contributions and Roth Conversions

At the monthly meeting of the Federal Retirement Thrift Investment Board (FRTIB), the Thrift Savings Plan (TSP) contribution limits were listed as follows:

• Annual deferral limit $24,500
• Catch-up contributions for those 50 and up $8,000
• Catch-up contribution for ages 60 to 63 $11,250
• Communications have been updated

For more information, check out Rising Limits, Rising Opportunities.

Also, it was announced that the Roth In-Plan Conversion launch will be on January 28, 2026. More information will be available at that time. For more information on Roth Conversions for TSP participants, check out these articles:

• Tax Today, Freedom Tomorrow: Understanding the TSP’s New In-Plan Roth Conversion Proposal
• Roth TSP Conversions Coming in 2026: What Federal Employees Need to Know
• Big Changes Coming to the Thrift Savings Plan in 2026
• Navigating Roth Conversions

SECURE 2.0 Act and Your TSP Contributions

Under a change made in the SECURE 2.0 Act of 2022, a higher catch-up contribution limit applies for employees aged 60, 61, 62, and 63 who participate in the TSP. For 2026, this higher catch-up contribution limit remains $11,250, rather than the $8,000 noted above.

An IRS Notice about the SECURE 2.0 Act states that under this law, catch-up contributions for eligible participants earning over $145,000 will be designated as Roth Contributions. The TSP also has information on this Act in this TSP bulletin and has noted with regard to this requirement that:

The Federal Retirement Thrift Investment Board (FRTIB) will take advantage of the full two-year transition period and implement system and process changes required to administer SECURE Act 2.0 §603 on January 1, 2026. As a result, catch-up contributions that would otherwise be required to be made on a Roth basis in accordance with §603, can continue to be made on a traditional (pre-tax) basis until the provision is implemented for the Thrift Savings Plan (TSP).

A Volatile Month for Stocks

The market has seen significant movement this month. Here are the results for your TSP core stock funds so far this month:

Here is what is occurring in the stock market this month:

The market is obviously moving up and down more now than in recent months. The “fear gauge” (VIX) has jumped, indicating investors expect larger price moves in stocks.

The major stock indices have seen sharp one-day moves and several days of up or down markets of 1% or more.

Some of the sharpest weakness comes from the “mega-cap” tech stocks — those that drove much of the market’s advance earlier. These are the same stocks that have driven much of the market’s momentum during the current bull market.

The rapid moves may just be a “healthy reset” for a stock market that has gone up significantly. Investment risk is also higher than it has been recently. As noted in this financial advice: “We don’t view the pullback as a bursting stock bubble, but rather a healthy reset following a sizeable advance.”

Reasons for These Market Fluctuations

Investing in the stock market always involves risks and there are no guarantees it will always provide positive returns. It is certain that the market will go up and down, but no one can accurately predict when events will create sudden moves in stock prices.

Here are some of the reasons for the current fluctuations.

1. Elevated valuations/sector concentration – Many big tech/AI-driven companies are trading at high valuations now. When the market questions the sustainability of that growth, volatility rises.
2. Policy & data uncertainty – The Federal Reserve has given more hawkish signals than many expected; at the same time, there’s been a “data fog” due to government shutdowns and delayed economic releases. All of this makes forecasting harder.
3. Shift in leadership & investor sentiment – The rally to date has been heavily led by large-cap growth/tech. Investors are now wondering whether that leadership can continue or whether they should rotate into other sectors (value, cyclical, smaller company stocks). That kind of “leadership change” creates investor uncertainty about which markets they should invest in.
4. Global nervousness – It is not just the U.S. where stock prices are uncertain. Markets in Europe and Asia are showing signs of increased stress, which spills back into U.S. markets.

Higher volatility does not necessarily indicate a major decline in stock prices is imminent. It often means the market is pricing in more questions and the impact on stock prices.