The 2026 Roth catch-up rule applies only to employees whose prior-year FICA wages from the employer sponsoring the plan exceeded a specific threshold. The number is $145,000 for 2026. The number is also the source of more confusion than almost any other part of the rule, because the figure is not on the pay stub, not on the SF-50, and not on the leave and earnings statement. It is on the W-2, in Box 3, and even there only as a total — not a TSP-specific figure.
For federal employees, the rule’s threshold applies to FICA wages paid by the federal agency that employs them. Federal employees with multiple W-2s (dual employment, prior year employment with a different agency, etc.) need to be careful about how the rule is applied.
What counts as “FICA wages”.
For IRS purposes, “FICA wages” generally means the wages subject to Social Security and Medicare tax withholding. On a W-2, this is Box 3 (Social Security wages) and Box 5 (Medicare wages). The thresholds are different. For Social Security, the wage base for 2026 is higher (in the $180,000s); for Medicare, there is no wage base.
IRS Notice 2023-62 specifies that the threshold test uses FICA wages as reported in Box 3 of Form W-2 (Social Security wages) for the prior year, from the employer sponsoring the plan. For a federal employee with one W-2, that is the figure in Box 3. For a federal employee with multiple W-2s from different federal agencies, the test is applied separately for each agency’s plan.
Why “prior year” matters.
The rule looks backward, not forward. The Roth catch-up requirement in 2026 is determined by FICA wages in 2025. Threshold status in 2027 is determined by FICA wages in 2026. An employee can move in or out of the rule from year to year based on a single high bonus, a promotion, a change in assignment, or a return from extended leave.
This creates the most common planning mistake I see: an employee who crosses the threshold in a single high-earning year and assumes the rule will apply to them forever. It often does not. The rule re-tests every year.
How the TSP applies the threshold.
The TSP receives W-2 data from each federal agency’s payroll provider (typically the agency’s HR/payroll system interfacing with the National Finance Center or a similar service provider). The TSP uses that data to determine whether each participant’s catch-up contributions for the current year must be Roth.
Participants whose catch-up contributions are required to be Roth see a specific designation on their TSP statements and election forms. The TSP will not, however, unilaterally redirect a Traditional catch-up election to Roth — it is the participant’s responsibility to make a Roth election if the rule requires it.
The $145,000 threshold in context.
A federal GS-13 step 1 in the Washington, DC locality pay area earns a base salary in the low- to mid-$120,000s. A GS-13 at higher steps, or a GS-14 or GS-15, can easily exceed the threshold. Senior political appointees, SES, and Senior Executive Service employees are almost universally above it. Many law-enforcement and Title 38 (VA) employees at the GS equivalent of 13 and above also cross it.
Federal employees earning close to the threshold should pay particular attention to year-end FICA wages, because bonuses, awards, and lump-sum leave payouts can push Box 3 wages across the line in a single pay period.
Common misreadings.
Three misreadings come up most often:
- Reading the wrong box on the W-2. Box 1 (federal taxable wages) is not the test. Box 3 (Social Security wages) is. The two differ for high earners because of pre-tax deductions like TSP contributions.
- Looking at basic pay instead of FICA wages. Basic pay is the figure the agency uses for the agency match calculation. FICA wages include additional items.
- Ignoring prior-year data.The test is the prior year. The current year’s expected salary does not determine threshold status for current-year catch-up contributions.