The standard investment limit for the TSP (and other 401(k) type retirement savings plans) is rising to $23,000 for 2024, from $22,500 in 2023. That “elective deferral limit” is the total investment allowed in traditional balances (pre-tax on investment, taxable on withdrawal), Roth balances (after-tax on investment, tax-free on withdrawal if certain conditions are met) or both, for those with both types of balance.
However, the separate “catch-up contribution” investment limit will remain $7,500 in 2024. That is an additional amount above the standard limit allowed for those who are age 50 or older in a year. For those eligible to make catch-up contributions, any investments beyond the standard limit “spill over”—they are automatically designated as catch-up contributions, up to that limit.
Effective in 2024, Roth balances will no longer be subject to required minimum distributions prior to a participant’s death. Those distributions, which must start after turning age 73 for those retired, “will include only your traditional balance, and only distributions from your traditional balance will count toward satisfying the RMD amount. If you have a Roth balance in your TSP account, this means your 2024 RMD amount may be less than it would have been,” recent guidance from the TSP says.
“Calculations for RMDs from spouse beneficiary participant accounts will still include the entire account balance, and any distribution from a spouse beneficiary participant account will still count toward satisfying the RMD,” it adds.
That announcement also contained a reminder of a policy announced earlier, delaying until 2026 a change originally set to occur in 2024 regarding catch-up contribution investments. That will require that those investments can be made only in Roth status for those whose salary income the prior year exceeded a threshold; that originally was set at $145,000 although it may change before the provision takes effect.
Also during 2024 the TSP will transition the I fund to track a different index of international stocks. That will nearly double the number of countries represented by adding stocks of Canada plus leading emerging market countries and will include stocks of smaller companies in all countries included. The new index meanwhile will drop stocks of the Hong Kong market, currently part of the I fund, and will exclude stocks of China—potentially ending a years-long controversy over that issue.
The TSP has not announced a schedule for the transition for the I fund, which is the second-smallest of the five core funds, larger than only the bond F fund.
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See also,
FERS & CSRS Calculator: See Your Annuity Estimate!
Are Things “OK” for Boomers Nearing Retirement?
What Happens after You Submit Your Retirement Application
Crucial Last Checks before Retiring
