Five concrete 2026 changes shape federal retirement in 2027, and you should factor them into your plan. These include a 2.6% FERS cost-of-living adjustment (COLA), a $24,500 Thrift Savings Plan (TSP) elective deferral limit, and a new mandatory Roth catch-up rule for employees whose 2025 Social Security wages exceeded $150,000. The list also covers the launch of TSP in-plan Roth conversions on January 28, 2026, and a 10.9% average increase in the Federal Employees Health Benefits (FEHB) enrollee premium share for the 2027 plan year.
None of these touched the FERS or CSRS annuity formula itself. But each one changes how much you contribute, how much you receive, and how much you pay out of pocket starting in January 2027. These combined changes are part of a broader 2027 federal benefits squeeze that federal employees should consider when reviewing their retirement plans.
This guide walks through each change in the order it affects a 2027 retirement plan, with the primary sources behind every figure. Federal Pension Advisors, a retirement planning firm specializing in federal employee benefits, publishes these summaries using primary sources. Those sources include the U.S. Office of Personnel Management (OPM.gov), the Thrift Savings Plan (TSP.gov), the Internal Revenue Service (IRS), and the Social Security Administration (SSA).
The 2026 Changes You Should Factor Into Your 2027 Plan
The five developments below were announced or took effect during 2026 and will affect 2027 retirement planning. If you plan to retire in 2027, or are already retired and want to understand your January 2027 payment, these are the items to confirm. Check them against your own pay statement, TSP account, and FEHB plan brochure. If you are enrolled in Blue Cross and Blue Shield, review the latest 2027 Blue Cross FEHB premiums to understand how your health insurance costs may change.
- 2027 FERS and CSRS COLAs (set from 2026 inflation data)
- Higher 2026 TSP contribution limits, alongside the existing FERS agency matching rules
- Mandatory Roth treatment of catch-up contributions for higher earners
- TSP in-plan Roth conversions, available since January 28, 2026
- FEHB and Postal Service Health Benefits (PSHB) premium changes for the 2027 plan year, available for selection during the 2026 Open Season
A sixth factor, the proposed 2027 federal pay freeze, affects anyone whose high-3 average salary will include 2027 earnings. We cover that at the end.
The 2027 COLA Set by 2026 Inflation Data
The 2027 cost-of-living adjustment is already set. It's an important change for current retirees.
The Social Security Administration announced a 3.6% COLA for 2027 on October 14, 2026, the largest annual adjustment since 2023. Under the statutory formula OPM applies to federal annuities, that 3.6% figure translates into different increases depending on your retirement system.
According to OPM's Benefits Administration Letter 26-101, CSRS annuities will rise 3.6% and FERS annuities will rise 2.6%. The adjustment takes effect December 1, 2026, with the first higher payment issued January 4, 2027. Alongside these benefit increases, federal employees approaching retirement should also consider how application processing timelines may affect their transition. Read our latest update on the OPM retirement backlog falling below 10,000 claims to understand what the improved processing numbers mean for retirement applications.
The gap between the two systems is not a mistake. Under FERS, the so-called "diet COLA" formula caps the adjustment when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rises above 3%. The qualifying increase above 3% produces a FERS adjustment one percentage point lower, yielding a 2.6% FERS COLA for 2027.
Two eligibility details often get missed. First, under 5 U.S.C. 8462(c)(3), a FERS COLA does not take effect for an annuitant who is under 62 on December 1, 2026. To get the 2027 FERS COLA, you generally need to be 62 on or before that date. Narrow exceptions apply for special-provision retirees, survivors, and most disability annuitants.
Second, FERS COLAs apply to the basic annuity only, not the FERS Special Retirement Supplement (SRS). Retirees whose annuity began mid-2026 receive a prorated COLA of one-twelfth of the full adjustment for each month on the roll.
2026 TSP Contribution Limits and the "Super Catch-Up"
The TSP, or Thrift Savings Plan, is the federal government's tax-advantaged retirement savings program. It had three overlapping 2026 changes that shape 2027 planning.
Per IRS Notice 2025-67, the 2026 TSP elective deferral limit is $24,500. Employees who turn 50 or older in 2026 can add an $8,000 catch-up. Those who turn 60, 61, 62, or 63 can add an $11,250 "super catch-up," bringing the age 60 to 63 total to $35,750.
You can still use these ceilings between now and December 31, 2026 to boost a 2027 retirement balance.
The elective deferral limit doesn't determine agency contributions. Under FERS, the agency automatically contributes 1% of basic pay and matches employee contributions on top of that. The match works like this: dollar for dollar on the first 3% of basic pay you defer, and 50 cents on the dollar for the next 2%. As you review your retirement benefits and prepare for upcoming decisions, use this October 2026 federal retirement checklist to help organize important tasks and review key retirement considerations.
Employees generally need to contribute at least 5% of basic pay each pay period to receive the full agency match. That matching contribution is an important employer retirement contribution to capture before any Roth or super catch-up conversation.
The super catch-up window is narrow and worth planning around. SECURE Act 2.0 created this contribution window for federal employees between 60 and 63. Employees who age into the window partway through a year can shift payroll deductions upward for the remainder of 2026, then revert to the regular catch-up at 64.
If you're planning a 2027 retirement date and will be 60 to 63 during 2026, this is one of the few actions that can still meaningfully move your TSP balance before you leave.
The Mandatory Roth Catch-Up Rule for High Earners
Effective January 1, 2026, SECURE Act 2.0 changed where your catch-up contributions have to land if you are a higher earner.
The rule applies to federal employees who meet two conditions. They'll be 50 or older as of December 31, 2026. Their 2025 Social Security wages from the federal government, shown in Box 3 of their 2025 W-2, exceeded $150,000.
If both apply, your 2026 TSP catch-up contributions must be made on a Roth basis. In plain terms: your $8,000 or $11,250 catch-up for 2026 can't go into traditional (pre-tax) TSP. It has to go into Roth TSP. These contribution rules are part of the broader changes affecting federal employees, making it important to understand how federal workforce changes can affect your retirement strategy and long-term retirement planning.
The planning implication for 2027 retirees is significant. A Roth catch-up offers no current-year tax deduction. That can push a late-career federal employee into a higher marginal bracket than they expected.
On the other side of the ledger, the catch-up dollars grow tax-free. Under current rules, Roth TSP balances are generally not subject to lifetime required minimum distributions (RMDs) for the original account owner. Roth IRA balances also have no lifetime RMD requirement for the original owner.
Some employees retire into a high-income first year, with a buyout, lump-sum leave payout, or final locality bonus. For them, the forced Roth treatment can actually align with a longer-term tax plan rather than disrupt it.
The test applies to wages from the employer sponsoring the plan. A federal employee's prior-year wages from private-sector work don't count toward the $150,000 threshold for TSP purposes. New federal hires without prior-year federal wages typically aren't subject to the rule in their first year.
Confirm your federal W-2 Box 3 figure before assuming the rule applies to you.
TSP In-Plan Roth Conversions: Available Since January 28, 2026
A significant 2026 TSP change for 2027 planners is a new feature that didn't exist before. As you review how these changes may affect your retirement savings, use the TSP calculator to estimate your potential Thrift Savings Plan balance and explore how different contribution amounts may affect your long-term retirement savings.
The Federal Retirement Thrift Investment Board (FRTIB) published a final rule in the Federal Register on January 15, 2026. Effective January 28, 2026, TSP participants can convert amounts from their traditional TSP balances to their Roth TSP balances, subject to applicable tax consequences.
Under the final rule, a TSP participant or beneficiary participant can request up to 26 Roth in-plan conversions per calendar year.
The taxable portion of a conversion is generally included in ordinary income for the year of the conversion. The tax treatment depends on the source of the money being converted, because traditional TSP balances can include both tax-deferred and tax-exempt amounts. When evaluating the broader financial impact of retirement decisions, federal employees should also consider their health insurance costs and coverage options. Review the 2027 FEHB enrollment tiers to compare Self Only, Self Plus One, and Self and Family coverage.
Minimum balance requirements apply at several levels. You need at least $500 in your vested account balance to be eligible for a conversion. Each conversion must be at least $500, and at least $500 must remain in each of four source categories: tax-deferred employee contributions, tax-exempt contributions, agency automatic contributions, and agency matching contributions.
Two features matter for a 2027 retirement timeline. First, there is no income limit. According to TSP.gov, that means federal employees whose income exceeds the Roth IRA contribution limits can now move traditional TSP money into Roth status without leaving the plan.
Second, a conversion isn't wages or self-employment income, so it doesn't count as earnings for the FERS annuity supplement earnings test. This matters for eligible FERS retirees receiving the supplement, such as qualifying MRA+30 retirees. MRA+10 retirees generally don't qualify for the supplement. The Minimum Retirement Age (MRA) is the earliest age a FERS employee can retire with an immediate annuity.
A conversion done in 2026 generates a 2026 tax bill. For employees planning to retire in 2027 into a materially lower bracket, this is often the wrong year to convert.
For retirees already drawing an annuity in a low bracket, the picture is different. The window between January and the start of required minimum distributions can be an additional tax-planning option for eligible participants.
FEHB 2027 Premiums: What OPM Has Announced
Health coverage is often the overlooked line of a federal retirement plan. It's also a significant cost change for 2027.
OPM's Federal Benefits Open Season Highlights for Plan Year 2027 show three key figures. The overall average FEHB premium increased 9.3%, down from 10.2% in 2026. The average enrollee share increased 10.9%, down from 12.3% in 2026.
The government contribution increased 8.6%, down from 9.2% in 2026. This is the third straight year of double-digit average increases to the enrollee share, so even a smaller increase compounds on top of a higher base.
FEHB Open Season for the 2027 plan year runs from Monday, November 9, 2026, through Monday, December 14, 2026. Several FEHB plans and plan options aren't available in 2027. Along with reviewing your health insurance choices, it's important to understand how your retirement income may change when you leave federal service. Use the FERS Supplement Calculator to estimate your potential FERS Special Retirement Supplement and include it in your retirement planning.
Where an entire plan is leaving the program, affected enrollees must select a new plan or get moved into a default. Where only certain enrollment options within a plan are terminating, enrollees in those options may need to pick a different option within the same carrier. OPM's Open Season Highlights lists the specific terminating plans and options to check.
Under the FEHB Protection Act of 2025, employing offices must verify the eligibility of family members an enrollee adds during Open Season. Be prepared to provide supporting documentation if your employing office requests it.
For a 2027 retiree, FEHB is also an eligibility question, not just a cost question. Per OPM, you generally must meet two conditions to carry FEHB coverage into retirement.
First, you must be entitled to an immediate annuity. Second, you must have been continuously enrolled in, or covered as a family member under, an FEHB plan for the five years of service immediately before your annuity begins. Alternatively, you must have been covered for the full period of service since your first opportunity to enroll, if that period is shorter than five years. Meeting these requirements is important, but you should also understand how FEHB premiums affect your overall retirement budget. Learn more about federal retirement income in 2027 and how FERS, TSP, Social Security, and FEHB work together.
You don't have to remain in the same FEHB plan throughout that period. If 2027 is your retirement year, you can change plans during Open Season without restarting the clock, as long as you maintain qualifying FEHB coverage.
What the Social Security Fairness Act Means for CSRS Households in 2027
For retirees under CSRS, the legacy federal retirement system that preceded FERS, the single largest change still rippling into 2027 is the full repeal of two provisions. (FERS began in 1987.) Those provisions are the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
The Social Security Administration reports it completed more than 3.1 million retroactive payments by July 2025 under the Social Security Fairness Act. Those payments totaled about $17 billion.
The retroactive payments and ongoing recalculations ran through 2025. That makes 2026 the first full calendar year many affected CSRS retirees and spouses saw unreduced monthly benefits.
Two eligibility points are worth stating plainly. First, the law doesn't grant Social Security benefits to anyone who didn't already qualify under existing rules.
A CSRS retiree must still have the required Social Security work credits for a retirement benefit. A CSRS spouse or survivor must still meet the standard spousal or survivor eligibility requirements.
The repeal removes the WEP reduction and GPO offset that previously reduced those benefits. It doesn't create a new benefit.
Second, if your WEP/GPO adjustment is still being processed, the retroactive and ongoing amounts may continue to appear on your SSA statements into 2027.
For many affected households, the focus has shifted from the repeal itself to how restored benefits interact with other income, Medicare Income-Related Monthly Adjustment Amount (IRMAA) brackets, and marginal tax rates. Anyone whose adjustment remains unresolved should continue checking directly with SSA. As part of reviewing these financial considerations, federal employees approaching retirement should also understand how retirement timing can affect their benefits and income. See this guide to planning a December 2026 federal retirement for important decisions to review before leaving federal service.
CSRS households whose 2026 withholding didn't reflect the restored benefit may want to revisit withholding for 2027. That helps avoid an underpayment at tax time.
The Proposed 2027 Federal Pay Freeze and Your High-3
The final 2026 change that matters for 2027 retirees hasn't been finalized but is on the table.
On August 26, 2026, the President transmitted an alternative pay plan letter to Congress (House Document 119-189). Under the plan, base pay and locality pay would stay frozen at 2026 rates for most civilian federal employees in 2027.
The plan also directs OPM to use special pay authorities to provide a 3.8% pay increase for law enforcement personnel. The actual implementation may depend on the applicable pay authorities and positions covered. Employees should check their agency's guidance rather than assume every law enforcement position will receive an identical adjustment. Congress can still change the figure before year-end.
If the proposed pay freeze remains in place, most federal employees covered by the alternative pay plan won't receive a general base-pay or locality-pay adjustment in 2027. That doesn't mean your high-3 average can't grow.
OPM defines the high-3 as the highest average basic pay earned during any three consecutive years of service. Other qualifying pay actions can still raise basic pay even in a freeze year. These include within-grade step increases, promotions, and certain types of premium pay included in basic pay for retirement purposes. Once you verify your High-3 salary, understanding the retirement application process is another important step. Read our guide on OPM retirement backlog falling below 10,000 to learn about recent processing trends and what they mean for federal retirement applications.
Were you planning to work another year specifically to raise your high-3? Compare your projected high-3 under different retirement dates before deciding.
Retirement timing depends on many factors, not on the pay-raise figure alone. Those factors include service credit, age eligibility, high-3, annuity commencement date, FEHB five-year coverage, TSP balance, Social Security, and survivor elections.
2026 vs. 2027 Federal Retirement Figures Side by Side
The table below compares the key figures that drive a 2027 federal retirement plan against the 2026 numbers they replaced. The data comes from primary sources at OPM, the IRS, SSA, and FRTIB.
The IRS will announce the 2027 TSP contribution limits in late 2026. They weren't final as of this writing. Confirm them on TSP.gov before you set 2027 payroll deductions.
Putting the 2026 Changes Together for a 2027 Plan
The 2026 changes that most affect federal retirement in 2027 cluster into three decisions you can act on now. The first is how much to put into the TSP before December 31, 2026, including a possible super catch-up. The second is whether to run a 2026 or 2027 in-plan Roth conversion. Reviewing your broader retirement strategy with professional federal retirement planning services can help you understand how these decisions fit into your overall retirement plan.
The third is which FEHB plan to carry into retirement during the 2026 Open Season. Check each one against your own eligibility, your household's tax situation, and your retirement date.
Figures in this guide reflect primary sources as of November 2026. Those sources are the OPM Benefits Administration Letters, IRS Notice 2025-67, the SSA October 14, 2026 announcement, the FRTIB final rule published January 15, 2026, and OPM's Federal Benefits Open Season Highlights for Plan Year 2027.
Confirm any figure that drives a retirement date against OPM.gov, TSP.gov, or SSA.gov for your specific plan year before acting. Federal Pension Advisors, a retirement planning firm specializing in federal employee benefits, publishes updated versions of these summaries as new rules and figures are released. Federal employees can also schedule a free retirement consultation to discuss their individual retirement planning questions.
Frequently Asked Questions
What is the 2027 FERS COLA, and when will I receive it?
The 2027 FERS COLA is 2.6% for eligible FERS retirees age 62 and older. According to OPM, the adjustment takes effect December 1, 2026, and the first higher annuity payment arrives January 4, 2027.
CSRS retirees receive a 3.6% COLA on the same schedule. FERS retirees under 62 generally receive no COLA.
How much can I contribute to my TSP in 2026?
Per IRS Notice 2025-67, the 2026 TSP elective deferral limit is $24,500 for all participants. Employees age 50 or older can add an $8,000 catch-up for a total of $32,500.
Employees who turn 60, 61, 62, or 63 during 2026 can add an $11,250 super catch-up for a total of $35,750. Agency contributions are separate.
Who has to make Roth catch-up contributions in 2026?
Under SECURE Act 2.0, federal employees age 50 or older must meet one test. If their 2025 Social Security wages from the federal government exceeded $150,000, they have to make all TSP catch-up contributions as Roth starting January 1, 2026.
Employees under that threshold can still choose traditional pre-tax catch-up contributions. Most new federal hires without prior-year federal wages can too.
What are TSP in-plan Roth conversions, and when did they start?
TSP in-plan Roth conversions let you move money from your traditional TSP balance to your Roth TSP balance without rolling to an outside IRA. Per the FRTIB final rule published January 15, 2026, the feature launched January 28, 2026.
A participant can request up to 26 conversions per calendar year. Each conversion requires a $500 minimum, and minimum balance rules apply across four source categories.
How much are FEHB premiums going up for 2027?
According to OPM's 2027 Open Season Highlights, the enrollee share of FEHB premiums rises an average of 10.9% in 2027, down from 12.3% in 2026. The overall average premium rises 9.3%.
Actual changes vary by plan. Some plans decreased, and some increased sharply. Compare your plan's 2027 rate before Open Season ends December 14, 2026.
Will there be a federal pay raise in 2027?
Under the President's alternative pay plan letter dated August 26, 2026, General Schedule base pay and locality pay would stay frozen at 2026 rates for most civilian federal employees in 2027. The plan directs OPM to use special pay authorities to provide a 3.8% pay increase for law enforcement personnel.
Congress can still override this before year-end. The pay raise is separate from the annuity COLA.
Disclaimer:
This article is for educational and informational purposes only and should not be considered financial, investment, tax, or legal advice. Federal retirement benefits, including FERS, CSRS, TSP, Social Security, and FEHB, are subject to eligibility requirements, individual circumstances, and changes in federal regulations. The information reflects publicly available sources as of November 2026 and may change. Federal Pension Advisors is not affiliated with or endorsed by the U.S. Office of Personnel Management (OPM), the Thrift Savings Plan (TSP), the Social Security Administration (SSA), or any other government agency. Readers should verify current rules and benefit figures directly with the appropriate government agencies and consult qualified professionals before making retirement decisions.
Stuart Hunsicker
Stuart Hunsicker is a retirement planning professional with over two decades of experience in the financial industry. His work focuses on helping federal employees, educators, and families better understand their retirement options and build strategies designed around long-term financial stability.
