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Secure 2.0 IRS Update

Effective Jan. 1, 2026, an IRS update (Secure 2.0) went into effect and will affect voluntary retirement plan contributions for some UTSW employees.

If you earn an annual salary of $150,000 or more, are participating in a voluntary retirement plan (e.g., TSA, DCP), and use a catch-up program, you will experience a change in the contribution process. Effective Jan. 1, 2026, the IRS established a new limit of $24,500 on pre-tax contributions for voluntary retirement plans, and any contributions exceeding that limit will transition to post-tax.

Annual Deferral Limit for Voluntary Retirement Plans

  • Ages 50-59 can contribute up to $32,500:
    • $24,500 would be pre-tax and/or in a ROTH account.
    • Up to $8,000 would be post-tax in a ROTH account.
  • Ages 60-63 can contribute up to $35,750:
    • $24,500 would be pre-tax and/or in a ROTH account.
    • Up to $11,250 would be post-tax in a ROTH account.
  • Age 64+ can contribute up to $32,500:
    • $24,500 would be pre-tax and/or in a ROTH account.
    • Up to $8,000 would be post-tax in a ROTH account.

Our team is here to help guide you through this change and answer any questions you may have. Please feel free to reach out to our Benefits team via phone at 214-648-9830.

Next Steps

Our team will reach out to all employees who may be included in this change. We also encourage you to review your retirement plan and ensure it aligns with your financial goals.

  • Review your financial strategy: Consider your 2025 contributions and how this change may affect your 2026 savings goals.
  • Consult a financial professional: Understand the tax implications of ROTH catch-up contributions and how they fit into your overall plan.
  • Adjust your contributions: Log in to your UTRetirement Manager to update your elections for 2026.

FAQ

How does this IRS update affect the UT Voluntary Retirement Programs?

For IRS purposes, a high earner is defined as anyone who earned $150,000 or more in FICA wages (Box 3 of your W-2). Any UTSW employee with an annual salary of $150,000 or more participating in a voluntary retirement plan (e.g., TSA, DCP) and utilizing a catch-up program will experience a change in the contribution process. Effective Jan. 1, 2026, the IRS established a new limit of $24,500 on pre-tax contributions for voluntary retirement plans, and any contributions exceeding that limit will transition to a post-tax ROTH account.

Who is eligible to participate in the Voluntary Retirement Program?

All employees can participate, and you can learn more about your options on the UT System Retirement Benefits page.

How much can I contribute in 2026 if I am age 49 or younger?

You may contribute up to $24,500 pre-tax and/or after-tax into a ROTH account.

How does this change affect catch-up contributions?

Starting in 2026, employees ages 60-63 can contribute up to $11,250 or 150% of the regular catch-up limit. Also starting in 2026, employees earning $150,000 or more who are age 50+ must make catch-up contributions post-tax in a ROTH account.

Has the required minimum distribution (RMD) age changed?

Yes. The age for starting RMDs increased to 73 in 2023, and it will increase again to 75 in 2033.

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