The Internal Revenue Service has officially announced the new, higher contribution limits for retirement accounts in 2026, giving federal employees a valuable opportunity to accelerate their savings. For those contributing to the Thrift Savings Plan (TSP), the federal government’s version of a 401(k), the new limits mean you can set aside more of your paycheck for a secure retirement.
📈 The New 2026 Contribution Limits
Thanks to cost-of-living adjustments, the IRS has increased the contribution limits across the board. Here are the key numbers you need to know for 2026:
- TSP / 401(k) Contribution Limit: The maximum employee contribution for 2026 has increased to $24,500. This is a $1,000 bump from the $23,500 limit in 2025.
- Standard Catch-Up (Age 50+): If you are age 50 or older, your separate “catch-up” contribution limit has increased to $8,000 (up from $7,500). This allows you to contribute a total of $32,500 for the year.
- “Super” Catch-Up (Ages 60-63): Per the SECURE 2.0 Act, if you are aged 60, 61, 62, or 63, your catch-up limit remains at $11,250. This means you can contribute a massive $36,000 ($24,500 + $11,250).
A New Rule for High-Earners: Starting in 2026, a new rule takes effect. If your prior-year FICA wages were over $145,000, all your catch-up contributions must be made to a Roth account (like the Roth TSP).
📊 Are You Maxing Out? Most Aren’t.
While these higher limits are fantastic news, the reality is that very few Americans take full advantage of them. According to a 2025 report from Vanguard, only about 14% of 401(k) participants maxed out their contributions in the previous year.
For federal employees, “maxing out” is one ofthe most powerful steps you can take to build wealth, especially when combined with your FERS pension and the 5% government match on your TSP contributions. Failing to contribute at least 5% means you are leaving free money on the table.
🧭 How to Make These New Limits Work for You
A higher limit is just a number. Turning it into a meaningful part of your retirement strategy takes a plan. This is especially true for federal employees, who must balance their TSP goals with their pension, Social Security, and unique benefits like FEHB and FEGLI.
This is where expert guidance becomes critical. The team at Internal Benefit Advisors is dedicated to educating federal and state employees on their complete benefits package. They can help you:
- Create a Contribution Plan: Analyze your budget and paycheck to help you create a strategy to meet or get closer to the new $24,500 limit.
- Optimize Your Catch-Up Strategy: If you’re 50 or older, they can help you decide how to best use the $8,000 or $11,250 catch-up provisions, especially in light of the new Roth rules for high-earners.
- Balance Traditional vs. Roth TSP: The new limits reignite the most important question: should you be contributing pre-tax (Traditional) or post-tax (Roth)? They provide the clear, unbiased education needed to understand the long-term tax implications of each choice.
- Integrate Your TSP: Your TSP is just one piece of your retirement. They provide a holistic analysis to ensure your TSP, pension, and Social Security are all working together to achieve your goals.
Don’t let this valuable new contribution space go to waste. Use this as your call to action to review your retirement strategy for 2026.
Take the definitive step to maximize your federal benefits. Contact Internal Benefit Advisors today for a consultation to build a plan that takes full advantage of these new limits.
References
- CNBC. (2025). IRS announces new 401(k) contribution limits for 2026.
- Internal Revenue Service (IRS). (2025). 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500.
- Vanguard. (2025). How America Saves 2025.
- Internal Benefit Advisors. Retrieved from https://internalbenefitadvisors.com
