Retirement plan rules are periodically updated, and recent federal legislation will introduce an important change that affects many individuals who participate in employer-sponsored retirement plans.
The SECURE 2.0 Act, passed as part of broader retirement reform efforts, includes changes to how certain catch-up contributions must be treated for tax purposes. As of January 1st, 2026, these changes are now in effect.
What Is Changing Under SECURE 2.0
Under current rules, individuals age 50 or older can make additional “catch-up” contributions to their retirement plans beyond standard IRS limits. SECURE 2.0 preserves the ability to make catch-up contributions, but introduces a key change based on income.
Starting in 2026, employees over the age of 50 whose prior-year wages exceed $150,000 (indexed for inflation) will be required to make any catch-up contributions on a Roth basis, rather than a pre-tax basis. This means those additional contributions will be made after tax, but will be eligible for tax-free growth and withdrawals in retirement.
For University of Michigan employees, this change applies to the 403b Supplemental Retirement Account (SRA) and 457b plans administered through Fidelity and TIAA. These changes will need to be made in Wolverine Access under a new tile box specifically related to the SECURE Act, according to University guidance: University of Michigan Guidance on 2026 Contribution Limits.
Please note that your savings will not be automatically updated. To take advantage of any catch-up contributions, you will need to update your elections on Wolverine Access.
Planning Considerations Moving Forward
These changes present a good opportunity to revisit broader retirement planning assumptions. Questions worth considering include how much pre-tax versus Roth savings you already hold, how future tax rates may impact your retirement income, and whether adjustments to savings rates or contribution timing make sense. The impact of these changes will vary from one household to another.
If you have questions about how the SECURE 2.0 catch-up contribution changes apply to your situation, or how they fit into your broader financial plan, we encourage you to reach out to your advisor. We are always available to help UofM employees make informed, confident decisions aligned with their long-term goals.
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