Important TSP Updates For 2023

The Thrift Savings Plan (TSP) has been a cornerstone of federal benefits for government employees since its inception. If you are nearing retirement, it is important to be aware of the updates and changes that have been made to the TSP to ensure that you are taking full advantage of your retirement plan. 

In this guide, we will review some of the important TSP updates for 2023 that all federal employees should be aware of.

What is the Thrift Savings Plan? 

The Thrift Savings Plan, commonly referred to as the TSP, is a retirement savings plan offered to federal employees and members of the military. Each year, there are changes made to the plan to improve its offerings and better serve government employees. In 2023, there will be several new changes introduced that are set to benefit participants.

New Changes to the TSP in 2023

In 2023, government employees stand to benefit from significant changes coming to their Thrift Savings Plan (TSP). These changes are aimed at improving the retirement benefits of federal employees and making the TSP more flexible. As a result, government employees can look forward to new investment options and greater flexibility in deciding how they receive their pensions.

One of the most notable changes coming to the TSP in 2023 is an increase in contribution limits. Currently, participants can contribute up to $19,000 per year to their TSP accounts. However, beginning in 2023, this limit will be raised by an additional $1,000 for those under age 50 and by an additional $6,000 for those over age 50 who wish to make catch-up contributions.

Another significant change is the introduction of Roth investments within TSP. Starting in 2023, you’ll have the option to invest your contributions into a Roth account instead of traditional pre-tax contributions.

In addition, there will be new investment options available within the TSP. Currently, there are only five funds available for investment within the plan including:

• G Fund: Invests in short-term U.S. Treasury securities and is considered one of the safest options within the TSP.
• F Fun: Invests in bonds issued by corporations and governments outside of the United States. 
• C Fund: Invests in stocks of large U.S.
• S Fund: Invests in small- to mid-sized companies that are not included in the Standard & Poor’s 500 Index
• I Fund: Invests primarily in international stocks outside of the United States.

SECURE 2.0 Act 

On December 29, 2022, President Biden signed the Setting Every Communities Up for Retirement Enhancement (SECURE) 2.0 Act of 2022.

In accordance with SECURE 2.0, the mandatory minimum distribution start age will rise from 72 to 73 in 2023 and eventually to 75 in 2033. Once additional information is confirmed, we will keep you updated on how SECURE 2.0 will impact your TSP contributions.

Read More > Federal Retirement Numbers to Know in 2023 

Stay Informed of 2023 TSP Changes

Federal employees need to stay informed of the potential changes to the TSP in 2023. With proactive planning and an understanding of the current regulations, federal employees can prepare their finances and retirement funds to be in a strong position as the changes go into effect. 

Moreover, consulting with an advisor like our team at Federal Educators can help ensure that individuals are making smart decisions with their money as they plan for retirement. 

The Federal Educators can give you all the help you need if you need it with retirement planning for a secure future. Reach out to our Tampa office at (813) 755-7037 or ask for a benefits analysis today.