TSP and 401(k) in the Same Year: One Deferral Limit, Two Plans

Total your TSP deferrals before you leave

Plenty of people assume a new employer means a fresh limit. It doesn't. The IRS deferral limit belongs to you, not to the plan, so traditional and Roth TSP deferrals plus any 401(k) or 403(b) deferrals share one cap each calendar year.

Your age on December 31 decides which 2026 cap applies:

One exception follows the rule. TSP tax-exempt contributions from combat-zone pay don't count toward the $24,500, though they do count toward the $72,000 total limit. Agency and service matching never count toward the deferral limit, whether you're under FERS or the Blended Retirement System. So a deployed year can leave you more room than your LES alone suggests.

• Under 50: $24,500
• 50 to 59: $32,500
• 60 to 63: $35,750
• 64 and older: $32,500 again

Write down the room left

Room left equals your age-based limit minus the year-to-date TSP deferrals on your final LES or TSP statement. If you're 66 with $16,000 deferred, that's $32,500 minus $16,000, or $16,500 of room. Write that one number down before the new employer's benefits portal opens, because the 401(k) plan has no way to see your TSP. Nobody in payroll will warn you when the two plans together cross the line, so the number has to come from you.

When does the new 401(k) need your number?

The new 401(k) needs your number before the first enrollment window closes, which often opens in the first weeks on the job. Some plans auto-enroll you at a default percentage if you do nothing. Set a percentage that spreads your room left across the paychecks remaining in the year.

Before Savant Wealth Management suggests a new 401(k) rate, it takes the TSP year-to-date figure from the final LES and divides the room left by the number of paychecks remaining. With $16,500 of room and 12 paychecks left, that's $1,375 each paycheck.

Changing the 401(k) election before your last TSP deduction posts is a timing error. A final paycheck can still carry a deferral, so wait for the final statement before you settle on the rate.

One rule matters for higher earners. If your prior-year FICA wages from that employer topped $150,000, catch-up deferrals there must be Roth. A brand-new employer has no prior-year wages for you, so it usually won't apply in year 1.

What happens if the TSP and 401(k) in the same year go over?

If the TSP and 401(k) in the same year add up to more than your age-based limit, the extra is an excess deferral. Get it refunded by April 15 of the next year and you pay tax on it once. Miss that date and the excess is taxed in the year deferred and again when you withdraw it.

A hypothetical household shows how this plays out. Troy, 66, and Olga, 63, are a Marine Corps retiree with 18 years under FERS and a retired nurse. They hold $900,000 across the TSP and IRAs, and they watch the IRMAA tiers closely. Troy leaves his FERS job at the end of May with $16,000 deferred to the TSP. In July he starts a $120,000 contractor job and elects $19,000 to the new 401(k) for July to December.

Before the fix, the arithmetic is short. $16,000 + $19,000 = $35,000 deferred. His limit at 66 is $24,500 + $8,000 = $32,500. That leaves $35,000 − $32,500 = $2,500 of excess.

After the fix, the 401(k) election drops to $16,500. Now $16,000 + $16,500 = $32,500, exactly the limit. The match survives too: a 5% match on $60,000 of pay from July to December is $3,000, and a $16,500 election is far more than the 5% ($3,000) Troy must defer to earn it.

Skip the fix and the cost shows up twice. The $2,500 is taxed in the year deferred, then taxed again when it comes out of the plan. At an illustrative 25% rate, $2,500 × 25% = $625 more than necessary.

The later withdrawal also adds $2,500 to that year's income. For a couple keeping income under the next IRMAA tier, that matters: for 2026, CMS sets the standard Part B premium of $202.90 a month for joint income up to $218,000 (measured two years earlier), and the next step is $284.10.

Olga's limit is separate and untouched. Troy's fix is only about his own paychecks: the final LES, the July pay stubs and one new percentage.

Leave room for the new match

Putting more into the TSP before you leave gets money invested sooner, and that's the pull. But under FERS and the Blended Retirement System, matching is figured each pay period with no year-end true-up, and a new 401(k) match usually requires you to defer from each paycheck. If the new employer matches, keep enough room to defer at least the match percentage. All investing carries risk, and you can lose money, including what you put in, so an employer match deserves priority over early TSP dollars.

Married couples have two limits, not one. Olga, 63, could defer $35,750 in her own plan if she went back to nursing, but Troy can't borrow her unused room.

Balance size and age change the weighing. With a small balance, say $80,000, a 5% match is a large share of the year's growth, so don't give it up. Someone separating at 42 has decades for extra TSP dollars to compound. Someone at 62 is in the $35,750 window and has more room to fit both plans.

Add up Box 12 in January

Payroll will catch it, people assume. It won't. Each employer reports only its own plan, so you add the deferrals from Box 12 of each W-2 yourself in late January. The TSP statement and the contractor's W-2 rarely land on the same day.

This checklist covers six items, and five of them sit on documents you already hold; only the refund request date needs a call to the plan administrator.

Run these six checks against your own accounts:

Decision rule: if your year-to-date TSP deferrals plus your planned 401(k) deferrals exceed your age-based limit ($24,500; $32,500 at 50 and older; $35,750 at 60 to 63), lower the 401(k) election now. Keep it at or above the match percentage only while room under the limit remains. How the TSP gets drawn down later is a separate topic, covered under TSP withdrawal planning.

• Final LES TSP year-to-date
• Box 12 on each W-2
• Roth and traditional together
• Age-based limit for the year
• Any tax-exempt TSP amounts set aside
• Match collected on each plan

When is an excess too late to fix?

An excess is too late to fix after April 15 of the following year, and often earlier, because plans set their own refund-request date, commonly in early March. Ask either plan in writing before its date and it refunds the excess, then issues a corrected 1099-R.

Signing the new 401(k) enrollment form without counting the TSP deferrals already made, then missing the plan's refund-request date, turns Troy's $2,500 excess into income taxed twice, about $625 extra at an illustrative 25% rate. To undo it, send a written request to either plan (you choose which one refunds) before that plan's own due date.

After April 15 of the following year, a refund is no longer possible. You include the excess as income on that year's return (amend it if it's already filed), and you're taxed on it again at withdrawal.

Stopping 401(k) deferrals completely to fix an excess, before the match has been collected, gets the order wrong. Lower the rate instead, and keep the match percentage while there's still room.

One limit to this page: if your second career is with a state or local government that offers a governmental 457(b), this math doesn't apply, because that plan has its own separate limit on top of the TSP. The $72,000 total limit isn't covered here either; it applies separately for unrelated employers.

Savant Wealth Management checks the second plan

In the year you change employers, Savant Wealth Management can add your final LES and your new pay stubs together and write down the 401(k) rate that keeps both plans under one limit. If you want that number before your next enrollment window closes, send it through the request form. That's one decision with a due date, and the numbers are all on paper you already have.