The Three-Account Wealth Engine

Every federal employee knows that step one is maxing your TSP.

But if you stop there, you’re leaving serious long-term wealth and tax savings on the table.

Because the real federal wealth engine isn’t just the TSP.

It’s the TSP + Roth IRA + HSA working together.

And starting in 2026, that engine gets even more horsepower.

The Three-Account Wealth Engine

Think of your retirement savings like a three-cylinder engine:

• TSP – your core retirement account

• Roth IRA – your tax-free growth booster

• HSA – your stealth wealth account for medical + retirement

Each one has different tax rules. But used together, they do three things:

1. Shrink your tax bill now

2. Reduce tax drag on growth over decades

3. Give you options in retirement so future tax changes don’t wreck your plan

Your 2026 Outlook

The IRS has announced higher contribution limits for 2026.

This gives you more room than ever to move money out of the IRS’s pocket and into your future.

TSP (and 401(k) / 403(b) / 457 / BRS)

• Employee limit: $24,500

• Age 50+ catch-up: $8,000

• Total at 50+: $32,500 you can funnel into your TSP in 2026

Traditional + Roth IRA (combined)

• Under 50: up to $7,500

• 50+: $7,500 + $1,100 catch-up = $8,600

HSA (if you’re in a high-deductible health plan)

• Self-only: $4,400

• Family: $8,750

• Age 55+: extra $1,000 catch-up

Early-Career Stack: Build the Engine (20s–40s)

If you’re GS-7 to GS-13, or junior/mid-career military with 20+ years until retirement, here’s the practical order of operations.

1) TSP first (at least to the match, then push higher)

Start with enough to get your full agency or service match. Then work your way up toward 10–15% of pay.

Example:

• Salary: $90,000

• 15% into TSP = $13,500 in 2026 (well under the $24,500 cap)

You don’t have to get to the max overnight. But you do want a plan to ratchet up 1–2% each year.

2) Roth IRA next (tax-free “sidecar”)

Once you’re capturing the match and saving a solid percentage in TSP, aim to fund a Roth IRA.

Roth’s are particularly attractive early in your career because your current tax rate is often lower than it’ll be later.

Target between $3,000–$7,500 in 2026, depending on your budget

3) HSA third (if you’re on an HDHP)

If your health plan is HSA-eligible, treat the HSA as a long-term wealth tool, not just a “spend it this year” bucket.

Even if you can’t max it, $2,000–$3,000/year into an HSA can quietly build a tax-free pool for future medical costs in your 60s, 70s, and beyond.

What This Actually Does for Your Wealth

Let’s keep the math simple.

Suppose an early-career federal employee in 2026 saves:

• $13,500 to TSP

• $6,000 to Roth IRA

• $3,000 to HSA

• A total of $22,500/year into tax-advantaged accounts

If they keep that up for 30 years and earn a reasonable 6% per year, they’d end up with roughly $1.78 million in tax-advantaged accounts.

But if they did the same saving in a plain taxable brokerage account, where they lose a bit each year to taxes (say 5.4% after tax instead of 6%)…

They’d end up with roughly $1.60 million instead.

That’s about $180,000+ of extra wealth just from using better accounts — not from saving a single extra dollar.

Why This Beats “Just Max the TSP”

Look, there’s nothing wrong with “just max the TSP.”

For many feds, that’s a huge win.

But the three-account engine gives you advantages the TSP can’t match by itself.

➡ Tax diversification

You’re not betting your entire retirement on whatever Congress decides tax brackets should be in 10–20 years.

➡ More flexibility in retirement

Need to keep taxable income low (for IRMAA, ACA, tax brackets, or state taxes)?
You can lean more on Roth IRA and HSA in those years.

➡ Stealth health-care funding

Future medical costs are a wild card for almost every retiree. HSA dollars pulled for qualified medical expenses in retirement can be a powerful pressure valve.

“But I Can’t Max Everything — Does This Still Help Me?”

Yes.

You absolutely do not have to hit every maximum for this to work.

If all you can manage in 2026 is:

• 10% into TSP

• $2,000–$3,000 into a Roth IRA

• $1,000–$2,000 into an HSA

You’re still getting the core benefits.

The real magic is in consistently pushing more of each year’s savings into the most tax-efficient buckets you can reach.

Your TSP is a powerful engine.

But when you sync it with a Roth IRA and an HSA, you’re no longer just saving for retirement.

You’re building a federal wealth machine that works for you now, through retirement, and — if you want — for the next generation too.

Best,
—FWR