Employer Update

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

Monitor Catch-Up Contributions

Employers will need to monitor wages paid to participants in the Commonwealth of Virginia 457 Plan. If their pay exceeds the $145,000 threshold, then only after-tax contributions will be allowed as age-based catch-up contributions.

The IRS sets an annual deferral limit for retirement savings. In 2025, for example, the normal limit is $23,500.

Employees participating in the Commonwealth of Virginia 457 Plan can use one of two aged-based catch-up options, which allows them to contribute an additional amount over the regular IRS annual contribution limit:

Ages 60-63 (Super) Catch-Up:
$11,250 in 2025

A higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63.

Age 50+ Catch-Up:
$7,500 in 2025

Employees who are 50 or older during the calendar year may contribute an additional amount over the regular IRS annual contribution limit to the 457 Plan. They cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year.

If participants earning $145,000 or more exceed the normal contribution limit during the year, the new Secure Act Roth provision will need to be applied to the excess age-based contributions.

Voya is developing a process to help prevent contributions from coming into the system incorrectly. Look for more communication around the change later in the year.