TSP. We talk about it constantly — and for good reason. For many federal employees, especially those maxing out funding annually for years, the Thrift Savings Plan is the backbone of retirement flexibility. Without proper TSP planning, the hedge that could increase your standard of living in retirement may not do what you expect it to do.
Now there’s a new wrinkle — and it’s one that can quietly sneak up on you if you’re not paying attention.
Beginning with recent IRS rule changes, some federal employees will no longer have a choice about whether their catch-up contributions go into Traditional TSP or Roth TSP. If your earnings are too high, Roth is mandatory. No election. No override. No appeal.
At first glance, that may sound restrictive — even frustrating. But like many things buried deep in the tax code, this change may actually help you more than it hurts you. In fact, for disciplined savers already max-funding TSP, this rule may turn out to be one of those rare cases where a government mandate quietly improves long-term planning outcomes.
Let’s unpack what’s changing, who it affects, why it can catch people off guard, and why being “forced” into Roth may be a blessing in disguise.
What Is A TSP Catch-Up Contribution?
If you’re age 50 or older, you’re allowed to contribute above the standard annual TSP limit. That additional amount is called a catch-up contribution, designed to help higher-earning or later-starting savers accelerate retirement funding during peak earning years.
A great deal of the federal employees we work with — and likely many reading this — are already max-funding their TSP. Catch-up contributions aren’t an afterthought; they’re built into the plan. They represent intentional, disciplined saving.
Historically, you could choose whether those catch-up dollars went into Traditional TSP (pre-tax now, taxed later) or Roth TSP (after-tax now, tax-free later). That choice gave high earners flexibility in managing current taxes versus future taxes.
That choice is now limited for some.
The New Rule: High Earners Must Use Roth For Catch-Up
As I write this, the IRS rule is straightforward: if your prior-year wages exceed a certain threshold, your catch-up contributions must go into Roth.
This is not a TSP-specific policy decision. It comes from the IRS and applies broadly across employer-sponsored retirement plans. The TSP is simply enforcing the rule and enforcing it efficiently.
Here’s the key detail that trips people up: the test is based on prior-year W-2 wages, not what you earn this year.
That means your earnings in 2025 determine how your catch-up contributions are treated in 2026. By the time the rule applies, the window to plan around it has already closed.
This is one reason the change can feel sudden. Nothing about your current pay may look different — yet your contribution treatment changes automatically.
2025 Earnings → 2026 Catch-Up Example
As of this writing, if your 2025 W-2 wages exceed $145,000, then in 2026 any eligible catch-up contributions must be directed into Roth TSP.
There is no form to fill out. No box to check. Payroll systems enforce it quietly in the background. It’s sort of a relief that it is automated.
Why This Can Sneak up on You
This rule catches people off guard for three common reasons.
First, it’s based on last year’s income. Many high earners stop paying close attention to annual thresholds once they’ve comfortably crossed them.
Second, payroll systems enforce it automatically. You don’t receive a warning letter or an advance notice that says, “Next year your catch-up will be Roth.” The change simply happens.
Third, it feels like a loss of control. For federal employees who have spent decades carefully optimizing benefits, taxes, and retirement elections, losing an option — even a small one — can feel unsettling.
I’ve had more than one employee say, “I didn’t choose Roth — why did this change?”
The answer is simple: you didn’t choose it. The IRS did.
Does the TSP Have Safeguards in Place?
Yes — and this is actually one of the strongest features of the TSP.
TSP payroll systems are designed to enforce IRS compliance automatically. That means you are protected from accidentally exceeding limits, misclassifying contributions, or triggering IRS penalties that must be corrected later.
In plain terms, the TSP prevents you from making a mistake you might not discover until tax filing season — or worse, years later.
This level of automatic compliance is not always present in private-sector plans.
Does This Apply to 401(k) Plans Too?
Yes. This rule is IRS law, not a TSP invention.
401(k) plans are subject to the same requirement. The difference is that enforcement varies by employer and payroll system. Some private-sector plans are still catching up, which can lead to confusion, corrections, or delayed implementation.
For spouses of federal employees — or for households managing both TSP and 401(k) accounts — this distinction matters.
Why the IRS Is Forcing Roth Catch-Up Contributions
When you contribute to Traditional TSP, the government delays collecting taxes. They are effectively saying, “We’ll collect our share later — when you retire.”
The challenge is that “later” has become increasingly unpredictable.
Future tax rates are unknown. Retirement behavior varies widely. Required Minimum Distributions may change. Large balances may be spread over long lifespans or passed to heirs under evolving tax rules. From the government’s perspective, that creates uncertainty about how much tax revenue will ultimately be collected — and when.
By requiring high earners to place catch-up contributions into Roth, the IRS removes much of that uncertainty. The tax is collected today, while income is high and predictable, instead of decades later under unknown rules.
In plain English: the government would rather collect a known tax today than gamble on what it might collect tomorrow.
Ironically, that same certainty can work in your favor as well.
Why Forced Roth May Be a Blessing in Disguise
Roth contributions change the nature of your retirement income.
First, they provide tax certainty. You know exactly what tax rate you’re paying today. You cannot know what tax rates will be in 10, 20, or 30 years.
Second, qualified Roth withdrawals are completely tax-free. That matters when Social Security taxation, Medicare premium surcharges, and Required Minimum Distributions begin stacking income on top of income.
Third, Roth assets give you control. Having both Traditional and Roth buckets allows you to decide which dollars to pull — and when — rather than being forced into taxable withdrawals later.
Think of Traditional TSP as a bar tab. Roth is paying as you go. The tab feels lighter early on — until it closes.
Neither approach is wrong. But being nudged into prepaying part of the tab may prevent unpleasant surprises later in retirement.
Look, as Congress meets, tax laws can change. No one knows what tomorrow brings, and 10 or 15 years from now, who knows where tax rates will be and what the national deficit will be? We don’t want you dodging tax bullets in retirement. We want you bulletproof in retirement.
The Big Picture for High Earners
If you are GS-13 through GS-15 or equivalent and already max-funding your TSP, this rule is not a punishment. It is a nudge — one that aligns with sound long-term planning whether you asked for it or not.
The real risk is not the rule itself. The risk is being unaware of how it affects your broader tax and retirement strategy.
Final Thought
Tax rules are rarely written with the individual saver in mind. But occasionally, a rule designed to serve the system ends up helping disciplined planners who understand how to use it. This Roth catch-up requirement is one of those moments.
If you want to stay ahead of changes like this — before they affect your plan — we publish clear, plain-English guidance on federal benefits, TSP strategy, and retirement timing through our monthly newsletter. Because in retirement planning, awareness is often the most valuable asset you have.
