We want to make you aware of an upcoming IRS rule that may affect how you make retirement contributions.
What’s Changing?
Beginning Jan. 1, 2026, employees who are age 50 or older and make catch-up contributions to the University System of Maryland (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 of 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.
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.
Visit the Supplemental Retirement Accounts webpage for more information.