Federal retirement contribution limits and service credit interest rates will shift in 2027, according to announcements.
The elective deferral limit cap on allowable investments in the Thrift Savings Plan will increase from $24,500 to $25,500, FEDweek reported. The standard catch-up contribution limit for investors age 50 or older will rise from $8,000 to $8,500. Workers aged 60 through 63 face a higher limit of $11,750 for 2027. These caps apply to traditional pre-tax investing and Roth after-tax investing combined.
Combined investments into multiple TSP accounts or tax-advantaged plans like a private sector 401(k) cannot exceed IRS limits. Agency contributions for Federal Employees Retirement System participants and rollovers from prior employers do not count against these caps. FERS employees must structure contributions to maintain at least 5 percent of salary per pay period to secure the maximum government match.
Federal Service Credit Interest Rates
The interest rate charged on payments needed to capture credit for service toward federal retirement benefits will increase to 4.5 percent. This figure compares with this year’s rate of 4.25 percent.
The rate applies to deposits and redeposits into the federal employee retirement fund for service without retirement contributions, refunds received during a break in service, or military service time. Employees with extended breaks in service or those buying back several years of military time face higher final costs.
Retirement COLAs and Social Security tax thresholds change
Federal retirement cost-of-living adjustments will take effect in January. Civil Service Retirement System retirees receive a 3.6 percent COLA, while eligible FERS retirees receive 2.6 percent.
The Social Security payroll tax of 6.2 percent will apply to earnings up to $192,300, increasing from $184,500. FERS employees stop paying the Social Security tax at that threshold and pay only civil service retirement contributions ranging from 0.8 to 4.4 percent based on their hire date.
Retirement Contribution Limits
| Contribution Type | Current Limit | 2027 Limit |
|---|---|---|
| Elective Deferral Limit | $24,500 | $25,500 |
| Standard Catch-Up (Age 50+) | $8,000 | $8,500 |
| Catch-Up (Ages 60–63) | Not Applicable | $11,750 |
| Social Security Tax Wage Cap | $184,500 | $192,300 |
Frequently Asked Questions
Do agency contributions count toward the TSP elective deferral limit?
Agency contributions into the accounts of FERS employees do not count against the IRS limits, nor do rollovers into a TSP account from retirement savings plans of prior employers.
Which employees are eligible for the 3.6 percent COLA in January?
A federal retirement COLA will be paid in January of 3.6 percent for those retired under CSRS.
What civil service retirement contribution rates apply after reaching the Social Security wage cap?
FERS employees pay only the civil service retirement contribution of 0.8, 3.1, or 4.4 percent after the Social Security tax cuts off at the $192,300 earnings threshold.
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