Dear Colleagues,

We would like to share an upcoming IRS rule under the SECURE 2.0 Act that may impact how you make retirement contributions.

What is changing?
Beginning January 1, 2026, employees who are age 50 or older and who make catch-up contributions to the USM Supplemental Retirement Plans will be required to make those contributions on a Roth (after-tax) basis if they earned $150,000 or more in wages from USM during the prior calendar year. Roth contributions grow tax-free, and qualified withdrawals in retirement are tax-free.

Who is impacted?
You will be affected by this change if all the following are true:

• You will be age 50 or older in 2026, and
• You elect to make catch-up contributions, and
• Your 2025 wages from USM are $150,000 or more.

Employees who earned less than $150,000 in the prior year may continue to make catch-up contributions on either a pre-tax or Roth basis, depending on plan options. This change applies only to catch-up contributions. Your regular retirement contributions are not affected and may continue to be made on either a pre-tax or Roth basis, depending on plan options.

Eligibility for the 2026 Roth catch-up requirement is based on wages earned in the 2025 calendar year.

2026 IRS Contribution Limits:

Contribution Type and 2026 Limit

• Standard Employee Contribution (Under 50)-$24,500
• Catch-up Contribution (Age 50+)-$8,000
• Enhanced Super Catch-Up (Age 60-63)-$11,250

What are catch-up contributions?

Catch-up contributions allow employees age 50 or older to save additional money for retirement above the regular annual IRS limits.

What do impacted employees need to do?

If you are affected, beginning in 2026, your catch-up contributions will automatically be treated as Roth (after-tax) contributions.

• No action is required at this time. Your Roth catch-up contributions will be identified separately within your retirement account.
• Because Roth contributions are made after taxes, impacted employees may see a difference in take-home pay.

If you wish to make a change to your deferral because of this update, you can review or change your contribution elections at any time through the Retirement@Work portal.  Your elections can be updated at any time during the year and will apply to future pay periods.

Contribution changes apply only to future pay periods and cannot be applied retroactively.

Participants in the Maryland State Employees Supplemental Retirement Plan (MSRP)
If you also participate in an MSRP plan, you will receive additional information directly from Empower, the plan's recordkeeper, explaining how SECURE 2.0 will apply to your MSRP contributions.

Why is this happening?
This change is required by federal law (SECURE 2.0 Act, Section 603) and applies to all employers that offer 401(k), 403(b), 457(b), and similar retirement plans.

We will keep you informed
Please look for additional information about this change from TIAA, Fidelity or Empower. If you have questions about catch-up contributions or your retirement plan elections, please contact HRBenefits@umbc.edu