On December 29, 2022, President Biden signed the Setting Every Community Up for Retirement Enhancement Act of 2022 (SECURE Act 2.0) into law. The goal: to help make it easier for working Americans to save for retirement. A number of provisions in the new law affect how TSP participants manage their retirement savings, now and in the future.
Changes To TSP Required Minimum Distributions (RMDs)
Raising the age for RMDs helps provide you with more flexibility when planning your retirement and gives your TSP investments more time to grow.
- Effective January 1, 2023, the age for RMDs has been raised 73 for those born after December 31, 1950.
- Starting on January 1, 2024, Roth TSP balances are no longer be subject to RMDs and your RMD calculation will only include your traditional TSP balance.
- Starting in 2033, the age for RMDs will increase to age 75.
“Effective January 1, 2026, if wages from a TSP-eligible position are above a certain threshold, Catch-Up Contributions must be Roth contributions.”
Changes To TSP Contributions
- Beginning January 1, 2025, TSP account holders age 60 through age 63 will have a higher Catch-Up Contribution Limit set at the greater of $10,000 (indexed for inflation) or 50% more than the regular Catch-Up limit.
- Effective January 1, 2026, if wages from a TSP-eligible position are above a certain threshold, Catch-Up Contributions must be Roth contributions. (Note: the current threshold for 2023 wages is $145,000; the threshold will be adjusted for inflation and announced by the IRS each year)
Changes To Withdrawals & Distributions
- In effect for tax year 2023 and later, qualified Public Safety employees are not subject to the 10% early withdrawal penalty if they have 25 years of service when they separate from service (even if they have not yet turned age 50 at the time of separation).
- Effective January 1, 2024, when a TSP participant meets requirements for an exception to the 10% early withdrawal penalty by receiving substantially equal periodic payments, the exception will continue to apply to a rollover of the account (if payments continue) or to the purchase of an annuity that satisfies RMD rules.
Other TSP Changes Currently In Effect
- You can now roll over money from your Roth TSP balance to a SIMPLE (Savings Incentive Match Plan) IRA and a SEP (Simplified Employee Pension Plans).
- You can submit beneficiary designations entirely online using a tool in My Account or by calling the ThriftLine at 877-968-3778. Go to how to designate beneficiaries for more information.
Connect with an FRC® trained advisor who can help you to take advantage of these current and future TSP changes when planning your retirement.
Source: https://www.tsp.gov/news-and-resources/secure-2-0-and-the-tsp/
