Under the federal SECURE 2.0 Act, a new rule requires that catch-up contributions for highly compensated employees be made on a Roth after-tax basis. While this requirement was originally set to take effect earlier, implementation has been delayed until January 1, 2026 to give employers and recordkeepers time to prepare.
What this means for employees
- Employees with 2025 W-2 FICA earnings from the university under $145,000: No change.
- Employees with 2025 W-2 FICA earnings from the university of $145,000 or more: You may continue to contribute pre-tax dollars to the University’s 403(b) and 457(b) Plans up to the IRS annual maximum (the same as all employees). However, Age 50 catch-up contributions and special Age 60–63 “super” catch-up contributions must be made with after-tax Roth dollars.
The $145,000 threshold is based on 2024 dollars and is expected to increase slightly before the rule goes into effect. Toward the end of each year, HR sends a universal availability notice that includes the updated IRS limits for the upcoming year.
HR is coordinating with our systems teams to ensure compliance by January 1, 2026. Employees subject to this requirement will be notified after 2025 W-2s are issued. We expect that no action will be required on your part – catch-up contributions will automatically shift from pre-tax to Roth for those who cannot make pre-tax catch-up contributions.
All employees can start, stop, or change their elective deferrals to the retirement plans at any time through UBenefits.