How Much Can You Contribute to a TSP?

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services. Understanding the annual contribution limits is key to maximizing the benefits of this plan. These limits, which are periodically adjusted by the Internal Revenue Service (IRS), dictate how much a participant can save each year. Navigating these rules allows account holders to plan for their retirement and take full advantage of the tax benefits offered by the TSP.

Employee Elective Deferral Limits

The primary contribution rule for the TSP is the employee elective deferral limit. This limit, governed by Internal Revenue Code Section 402, establishes the maximum amount a participant can contribute from their pay within a calendar year. For 2025, the elective deferral limit is $23,500. This figure represents a personal cap on your contributions and applies to the aggregate of all such retirement accounts you may have, not just the TSP.

This single limit encompasses both Traditional and Roth contributions. Participants can choose to direct their savings into the Traditional TSP, where contributions are made on a pre-tax basis, or the Roth TSP, where contributions are made after taxes have been paid. The total combined amount contributed to both types of accounts cannot exceed the annual elective deferral limit. For instance, a federal employee could contribute $15,000 to their Traditional TSP and $8,500 to their Roth TSP.

Participants covered by the Federal Employees Retirement System (FERS) should plan their contributions carefully. If a FERS participant contributes the maximum amount before the final pay period of the year, they could miss out on Agency Matching contributions. To avoid this, employees can calculate the per-pay-period contribution needed to reach the limit by the end of the year. For 2025, with 26 pay periods, this would be approximately $904 per pay period.

Contribution elections can be made or adjusted at any time through an employee’s self-service portal. The pay date, which is set by the employing agency, determines the calendar year to which the contributions are applied. This date may differ from when the funds are actually posted to the participant’s TSP account.

Catch-Up Contributions for Participants Age 50 and Over

Participants who are age 50 or older have an opportunity to save more for retirement through catch-up contributions. This provision, authorized under Internal Revenue Code Section 414, allows eligible individuals to contribute an amount above the standard elective deferral limit. For 2025, the standard catch-up contribution limit is $7,500. This means a participant aged 50 to 59 can contribute a total of $31,000 for the year.

A special rule enacted as part of the SECURE 2.0 Act provides a higher catch-up limit for those aged 60, 61, 62, or 63. For 2025, individuals in this age range can make a catch-up contribution of up to $11,250. This increases their potential total contribution to $34,750 for the year. Once a participant reaches age 64, the limit reverts to the standard catch-up amount.

The process for making these additional contributions has been simplified. Participants no longer need to make a separate election for catch-up contributions. Instead, any contributions made after reaching the regular elective deferral limit will automatically start counting toward the catch-up limit, a process known as “spillover.” This allows for a seamless transition to making catch-up contributions without any extra administrative steps.

The Annual Additions Limit

Beyond the limits on an employee’s own contributions, there is a broader cap known as the annual additions limit. This limit, detailed in Internal Revenue Code Section 415, restricts the total amount of contributions that can be added to a participant’s account from all sources in a calendar year. For 2025, the annual additions limit is $70,000, or 100% of the participant’s compensation, whichever is less.

This limit is calculated by summing up the employee’s own elective deferrals (both Traditional and Roth), any Agency or Service Automatic (1%) Contributions, and any Agency or Service Matching Contributions. For the purpose of this limit, working for different federal agencies within the same year is considered as having a single employer.

While an employee’s own contributions are capped at $23,500 (plus any applicable catch-up amount), the total additions to their account, including employer contributions, cannot exceed the much higher $70,000 ceiling. Exceeding this limit can lead to the need for corrective distributions under IRS procedures.

Special Contribution Rules for Combat Zones

Members of the uniformed services who receive tax-exempt pay while serving in a designated combat zone are subject to special TSP contribution rules. Contributions from tax-exempt pay are split between the Roth and traditional TSP accounts. Any contributions up to the standard elective deferral limit ($23,500 in 2025) are directed to the participant’s Roth TSP.

Any additional contributions are directed to their traditional TSP account. These are treated as tax-exempt traditional contributions, which do not count against the elective deferral limit but do count toward the much higher annual additions limit ($70,000 in 2025). This structure allows a service member in a combat zone to contribute far more than their civilian counterparts.

The tax treatment of these funds in retirement is also unique. For the Roth contributions, the contributions are withdrawn tax-free, but the earnings are taxed. For the tax-exempt traditional contributions, both the contributions and their earnings are completely tax-free upon withdrawal.