In 2023, there will be some BIG changes to TSP and IRA accounts. In this video, we discuss the changes to contribution limits and income limits.
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As we head into 2023, some notable changes are taking place in the world of Thrift Savings Plan (TSP) and Individual Retirement Accounts (IRA) that could affect your retirement savings strategy. Here are some of the major changes to watch out for.
Thrift Savings Plan (TSP) Changes:
1. TSP Contribution Limits Increase: The maximum contribution limit for TSP accounts is set to increase from $19,500 in 2022 to $20,500 in 2023. Those aged 50 and older will still be able to make catch-up contributions of up to $7,000 per year.
2. More TSP Investment Options: The TSP is adding more investment options to its Portfolio. The Lifecycle funds are updated and ready for 2023. The addition of the individual index funds is imminent.
3. The ‘Auto Enroll’ Option: The TSP will launch its “auto enroll” option in 2023. Over time, this initiative will help new federal employees to automatically contribute to TSP accounts. The goal is to encourage more people to save for retirement by making it easier for them to get started.
Individual retirement account (IRA) Changes:
1. IRA Contribution Limits Increase: The maximum contribution limit for IRA accounts will increase from $6,000 to $6,500 in 2023, those aged 50 and older will still be able to make catch-up contributions of up to $1,000 per year.
2. No Roth IRA income limits: The income limits for contributing to Roth IRA accounts are being removed. That means anyone can contribute to a Roth IRA regardless of their income. Before, people making more than $140,000 (single) or $208,000 (married filing jointly) were not allowed to contribute.
3. RMD Age Increases to 73: The age at which you must start taking required minimum distributions (RMDs) from your traditional IRA account will increase from 72 to 73 in 2023. This gives you an extra year to take advantage of tax-deferred savings before having to start withdrawals.
4. IRA to Roth IRA Conversions: The limit on IRA to Roth IRA conversions is being removed. Previously if you made over $100,000 you were not allowed to convert.
In conclusion, the changes happening in TSP and IRA accounts may benefit investors in a big way. If you’re currently saving for retirement, consider taking advantage of the increased contribution limits and investment options, as well as the new auto-enroll option. And if you’re currently making too much money to contribute to a Roth IRA, 2023 may be the year you can start. Be sure to consult with a financial advisor to ensure that these changes align with your overall retirement plan.
How do I change my contributions from 5% to higher? What website and where on the website, would be helpful. Thanks in advance.
Thanks for the info! I have only 1 yr in federal service and originally started my contribution to Traditional TSP. I have since switched contributions to Roth TSP. I am in the process of switching federal agencies. Would it be possible to rollover my Traditional TSP to a Charles Schwab Traditional IRA then convert to Roth IRA?
It looks like this is the last year that catch-up contributions will be non-Roth.
Been waiting for this… thank you. It’s go Roth or go home.