Secure Act Requires Employers to Monitor Catch-Up Contributions for High Earners
Beginning January 1, 2026, employers participating in the Commonwealth of Virginia 457 Deferred Compensation Plan will need to manage age-based catch-up contributions differently for high-earning employees.
The federal SECURE 2.0 Act (Section 603) requires that age-based contributions for employees who made at least $145,000 in the prior year be made as after-tax contributions (Roth). Section 603 does not apply to contributions made under the standard catch-up provision.
Participating employers will need to monitor wages paid to participants in the Commonwealth of Virginia 457 Plan. If a plan participant’s FICA wages exceeded the $145,000 threshold in the previous year, only after-tax contributions will be allowed as age-based contributions in the current year.
Additional Resources
Job aid: Voya has provided formatting instructions for producing a new Mandatory Roth Catch-up (MRC) indicator file that employers will submit to Voya annually. See the Employer Secure 2.0 Section 603 Job Aid. The initial file is due January 31, 2026. Voya will accept updates throughout the year.
Reporting to Voya: The Sample Mandatory Roth Catch-up (MRC) indicator file alerts Voya of participants who had FICA wages exceeding $145,000 in the previous year. You will provide the file annually or through a mid-year update.
Webinar: Watch the recorded version of the Defined Contribution Employer Secure 2.0 webinar. It covers the changes affecting age-based catch-up contributions.
VRS and Voya will provide additional guidance on the process later in the year.
