The Thrift Savings Plan (TSP) just became even more powerful in 2026, thanks to new TSP contribution changes that raise the annual limit to $24,500. For military families and federal employees, this adjustment creates valuable opportunities to strengthen long-term retirement savings. As independent financial advisors dedicated to helping service members navigate complex benefits, we’ve created this guide to explain what the 2026 TSP contribution changes mean — and how you can maximize them to build a more secure financial future.

What’s New in 2026? A LOT!

In-Plan Roth Conversions

Starting January 28,2026, the TSP will allow in-plan Roth conversions. This means that TSP participants will be allowed to convert, or move money from their traditional IRA to their Roth IRA—without transferring out of the TSP. There are several things to keep in mind when it comes to in-plan Roth conversions.

Money coming out of the traditional TSP and going into the Roth TSP will be taxed. This will increase your taxable income for the year in which you make the conversion.
You will have to pay taxes on the conversion from outside funds. If you do a conversion, you are expected to pay the taxes at the time of the conversion. Since there is no withholding, you may need to increase your FIT withholding from your regular pay or make a quarterly estimated tax payment to the IRS.
For those with non-taxable contributions in their traditional TSP, you will not be able to select only the non-taxable portion. Your conversion amount will include proportional amounts of tax-deferred (taxable) and non-taxable balances.

Whether to make an in-plan Roth conversion or not depends on your unique situation. There are many things to consider, too many to include in this article. If you are considering whether making an in-plan Roth conversion is right for you, our team, which includes a Certified Professional Accountant, Certified Financial Planner™ and Accredited Financial Counselors™, can help.

Higher Elective Deferral Limit

For 2026, the IRS raised the maximum elective deferral limit by $1000, allowing participants to contribute up to $24,500 of their own pay into the Thrift Savings Plan. The elective deferral limit is the maximum you can personally contribute each year—not including agency or service matching contributions. Deployed service members may be able to contribute more than the limit of $24,500. We will cover those excess contributions later.

For example, as a military member receiving matching benefits, you can contribute the full $24,500 and still get your full 5% automatic and agency match on top of that. This creates a powerful way to grow your retirement contributions faster.

Catch-Up Contributions for Ages 50+

For participants age 50 and older, the catch-up contribution limit increases $8,000 in 2026. This means you can go beyond the elective deferral cap, contributing up to $32,500 ($24,500 + $8,000) toward your retirement savings.

New “Super Catch-Up” for Ages 60–63

A major 2025 update comes from the SECURE 2.0 Act. Beginning in 2025, if you are between ages 60 and 63, you qualify for a new “Super Catch-Up” contribution. Starting in 2026, the Super Catch-Up Contribution limit increases to $11,500. This boosts your total allowable contributions to $36,000 ($24,500 + $11,550).

While not many military members are still serving at age 60, many of our federal employee friends are still actively employed and contributing to the TSP. Many military members separate or retire and pursue encore careers. For those with employer retirement plans (401k, 403b), the Super Catch-Up Contribution is available through those plans.

For anyone nearing retirement, this change is an excellent opportunity to maximize contributions during your peak earning years.

Annual Additions Limit Raised

In addition to personal contributions, the annual additions limit (your contributions plus agency/service matching) also increased. For 2026, the total rose from $70,000 to $72,000. This higher ceiling gives both federal employees and military members more room to build long-term retirement security.

Service members deploying to a Combat Zone Tax Exclusion area (CZTE) can take advantage of the higher $72,000 ceiling and max out their contributions as long as cash flow allows. There are several things to be aware of when pursuing this path.

BRS members should calculate contributions so that they maintain monthly contributions of at least 5% to get their full matching throughout the entire year.
Prioritize Roth TSP contributions up to the elective deferral limit. ($24,500 for 2026)
Contribute the remainder to the Traditional TSP. This will add additional tax-exempt pay to the traditional TSP.
Maxing your contributions while maintaining your monthly matching takes planning. Clear Insight Wealth Management can help.

Why the 2026 TSP Changes Matter for Military Members

For service members, the Thrift Savings Plan isn’t just another retirement account—it’s a core benefit of the Blended Retirement System (BRS). Understanding how the new 2026 TSP changes impact your contributions can help you make the most of your military benefits and build long-term wealth.

TSP and the Blended Retirement System (BRS)

Under the BRS, the government automatically contributes 1% of your base pay to your TSP and matches up to an additional 4% of your contributions. That means by saving at least 5% of your pay, you ensure you receive the full 5% government match. With the 2026 contribution limit rising to $24,500, you now have even more room to maximize this benefit.

Deployment-Related Savings Opportunities

Military members on deployment often have access to tax-advantaged savings opportunities, such as contributing tax-exempt income earned in a combat zone to the TSP. These contributions can grow tax-free in a Roth account or tax-deferred in a traditional account. Pairing these special savings opportunities with the higher 2026 limits can give your retirement contributions a significant boost. Pair a bonus with a CZTE area deployment, and you can supercharge your tax-free retirement savings.

Matching Contributions Add Up

Even if you don’t hit the full elective deferral limit, the government’s matching contributions are part of your hard-earned compensation. By contributing enough to trigger the full match each month, you’re setting yourself up for stronger long-term returns. Not only that, but you are also ensuring you are receiving all the benefits you work so hard to earn. This is especially important for military members who may not stay in service long enough to vest in the pension portion of BRS.

The Compounding Power of TSP Contributions

The biggest reason these TSP changes matter is the compounding effect. Every extra dollar you contribute in 2026 has the potential to grow exponentially over time. For example, an additional $1,000 contributed this year has the potential to grow to several thousand dollars by retirement. For younger service members, starting early and taking full advantage of higher limits can mean the difference between a good retirement and a great one. It can be the difference between retiring at 55 or 60 or retiring at 67 or 70.

Tax Benefits of Higher TSP Contributions

One of the biggest advantages of the TSP is the ability to choose between the Traditional TSP and the Roth TSP—or to split your contributions between both. Under the new 2026 contribution limits, these choices have become even more powerful for managing taxes now and building wealth for retirement.

Traditional TSP: Lower Taxes Today

Contributions to the Traditional TSP are made before taxes, which lowers your taxable income for the year.

Example: If you are a single military member earning $70,000 a year and contribute the new maximum of $24,500 to the Traditional TSP, only $45,500 of your income is taxed. At a 22% tax rate, this could mean nearly $5,000 in tax savings for 2026 alone. Your $24,500 TSP contribution would only cost you $19,473 from your net cash flow.

Roth TSP: Tax-Free Withdrawals Tomorrow

With Roth TSP contributions, you pay taxes upfront, but your money grows tax-free. When you retire, qualified withdrawals, including all earnings, are completely tax-free.

Example: Suppose you contribute an extra $1000 in 2026 (the amount the elective deferral limit increased) and every year for 30 years. If that $1000 grows at 7% annually for 30 years, it becomes about $102,000. With Roth, you owe zero taxes on that growth when you make withdrawals at 59 ½. You would have contributed $30,000, and your money would have grown by $72,000. That is $72,000 that you don’t pay taxes on.

Why Both Matter


Feature	Traditional TSP	Roth TSP
When you Pay Taxes	Contributions are made before taxes, reducing your taxable income now.	Contributions are made after taxes, no reduction in taxable income now.
Tax Benefits	Lowers your income taxes for the current year.	Qualified withdrawals in retirement (contributions + growth) are 100% tax-free.
Best For	Military members or federal employees who want immediate tax savings or expect to be in a lower tax bracket in retirement.	Military members who expect to be in a higher tax bracket later, or who want to lock in tax-free growth.
Example Impact in 2026	Contributing the max of $24,500 could reduce taxable income by that amount. At a 22% tax rate, that’s nearly $5,000 in tax savings this year.	Contributing an extra $1000 in 2026 (the increase in the TSP limit) could grow to about $102,000 tax-free over 30 years at 7% annual growth.
Long-Term Growth	Growth is tax-deferred; you’ll pay income tax on withdrawals in retirement.	Growth is tax-free, meaning you keep every dollar your investments earn.

Strategies to Maximize the New Limits

The 2026 TSP changes present an opportunity to rethink your retirement contributions strategy. By being intentional with how you allocate and increase your savings, you can take full advantage of the higher limits and strengthen your long-term retirement outlook.

Adjust Contributions with LES Updates

Your Leave and Earnings Statement (LES) is the key to tracking and managing your TSP contributions. Whenever pay or allowances change, review your contribution percentage to ensure you’re still on track to reach the new $24,500 elective deferral limit. Even a small adjustment—such as increasing by 1% of basic pay—can make a noticeable difference over the course of the year.

Automate Contribution Increases

If maxing out immediately feels out of reach, consider automating gradual increases. Many service members find success by scheduling a 1–2% increase every few months, or by bumping contributions whenever they receive a pay raise or special duty pay. Automating ensures steady progress toward the new limits without having to revisit your TSP elections frequently.

Balance Traditional and Roth Contributions

Your decision to contribute to the Traditional TSP or Roth TSP can shift depending on your current circumstances:

During Deployments: If you’re receiving tax-exempt pay in a combat zone, routing contributions into the Roth TSP can be especially powerful—your contributions start tax-free and your withdrawals in retirement are also tax-free.
Based on Future Taxes: If you expect to be in a lower tax bracket during retirement, the Traditional TSP may make sense for the upfront tax savings. If you expect a higher tax bracket, the Roth TSP could be more advantageous.

Balancing both options can hedge against future tax uncertainty while maximizing the benefits of your retirement contributions.

Leverage Spousal Contributions

If both you and your spouse are eligible for the TSP or other employer-sponsored retirement plans, you can each make contributions. That means potentially contributing up to $49,000 combined in elective deferrals for 2026, not including any catch-up contributions you may be eligible for. Coordinating contributions ensures both spouses are maximizing benefits, especially if employer matching is available.

Common Pitfalls to Avoid

While the new 2026 TSP contribution limits open the door to greater retirement savings, there are several pitfalls that can prevent you from maximizing these benefits. Being aware of these common mistakes can help you stay on course.

Forgetting to Update Contributions Early in the Year

The start of a new calendar year is the perfect time to adjust your contributions to align with the higher limits. If you delay, you may fall behind and miss out on valuable compounding growth. Review your Leave and Earnings Statement (LES) in January to ensure your contribution percentage reflects the new maximum.

Over-Contributing and Missing Employer Matching

For military members and federal employees under the Blended Retirement System (BRS), matching contributions are a critical part of your retirement strategy. If you contribute too aggressively early in the year and hit the limit before December, you risk missing out on agency or service matches in later months. To avoid this, spread contributions evenly across the year to receive the full matching benefit.

Ignoring Investment Allocation

Focusing only on contribution amounts without reviewing TSP investment allocation can leave your portfolio unbalanced. The TSP offers several core funds (G, F, C, S, I) and Lifecycle (L) Funds designed for different retirement timelines. If you haven’t reviewed your allocation recently, your money may not align with your risk tolerance or long-term goals. A strong contribution strategy paired with an appropriate investment mix is the key to maximizing long-term returns.

Planning Beyond the TSP

The Thrift Savings Plan is a powerful foundation for retirement savings, especially with the 2026 TSP changes. But relying solely on the TSP may not be enough to reach your long-term goals. By complementing your TSP with other savings vehicles, you can diversify your strategy, optimize tax advantages, and build financial resilience.

Individual Retirement Accounts (IRAs)

IRAs—both Traditional and Roth—provide an additional way to save for retirement. If you’ve maxed out your TSP contributions, IRAs allow you to continue building tax-advantaged retirement savings. A Roth IRA, in particular, pairs well with the Traditional TSP to balance tax benefits across your lifetime.

Taxable Brokerage Accounts

For those who want more flexibility, a taxable brokerage account can supplement TSP and IRA savings. While contributions are made with after-tax dollars and investment gains may be taxed, brokerage accounts provide liquidity and a wider range of investment options. This flexibility can be especially helpful for large goals before retirement, such as buying a home or funding education.

The Value of Holistic Financial Planning

Coordinating all of these savings vehicles with your TSP requires a big-picture approach.

At Clear Insight Wealth Management, we specialize in helping military members and federal employees integrate their TSP with other retirement and savings strategies. By looking beyond just one account, we can create a comprehensive plan that builds lasting security and confidence for the future.

Boost Your Retirement: Understanding 2026 TSP Contribution Changes