Over $150K? Your TSP Catch-Up Is Now Roth-Only

If your income is over $150,000, your TSP catch-up contributions... now have to go into the Roth.

If you're not familiar, the TSP has two sides to it.

It's got the traditional side and it has the Roth side and the traditional, you get a tax break for putting money in there, but it comes out taxable at the end of the day.

Roth is the opposite.

There's no tax break now, but it comes out tax-free later.

Let's talk through how this actually works though for people.

Again, you got to have 2025 FICA wages above $150,000 for for this to impact you.

So it's not gonna impact everybody.

It's just if your FICA wages, your wages is over $150,000.

And by definition, it's only your catch-up contributions, right? So the core amount you can invest in the TSP, which I've got a slide for in just a second, doesn't count.

It's only if you're age 50 plus where this applies to you, because that is when you can actually do catch-up contributions, all right? Now here's the catch-up.

Again, the regular limit is 24,500.

The normal catch-up is 8,000.

So normally, this 8,000 is the only amount that has to go into the Roth.

That's it.

So if you only do 24,000, it can go wherever you want, whether traditional or Roth.

But anything above that would have to go to the Roth.

If you are between 60 and 63, the... amount you can put in is actually more.

You can do up to 11,250 extra, a catch-up.

So the blue is what would have to go into the Roth, okay? Now, again, the difference is, why is this even a big deal? Putting money into the Roth means you have to pay more of the taxes now.

And if you're a high earner, you may or may not want to do that.

But of course, the whole point of this is you don't have a choice.

The only thing you have control over is what you do with the first 24,000 is, right? You can't contribute.

Anything above that, of course, has to go to the Roth.

Now, I'm a huge fan of the Roth.