Michigan University Retirement SECURE ACT 2.0 ROTH Mandate
- Alex Potter, CFP®
- May 29
- 4 min read
If you're a Michigan University employee over 50 earning more than $150K, this post is for you.
It's called the SECURE 2.0 Act Roth Mandate. And if you're contributing catch-up dollars to your 403(b) SRA or 457(b), it directly changes your 2026 tax bill.
This one rule has generated more confused conversations than any retirement change I can remember.
Here's the plain-English version.
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FIRST — KNOW YOUR BUCKETS
Michigan University employees actually have three separate retirement buckets. Most people lump them together. Don't.
1. 401(a) Basic Retirement Plan — Michigan University's 10% This is the employer 10% that Michigan University contributes for you. It flows into a 401(a) plan, NOT your 403(b). It's not an elective deferral. It does not count against the $24,500 employee limit. It sits in its own bucket and falls under the 415(c) annual additions ceiling ($72,000 for 2026).
Translation: nothing your employer puts in eats into what you can put in.
2. 403(b) — Your 5% Basic + your SRA This is YOUR money. The mandatory 5% you contribute to the Basic Retirement Plan and any voluntary SRA contributions all live inside the same 403(b) elective deferral limit.
3. 457(b) Deferred Compensation Plan Completely separate plan with its own elective deferral limit.
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THE RULE
Starting 1/1/2026, your age-50+ catch-up contributions MUST be Roth — you no longer get to choose pre-tax if BOTH are true:
→ You're age 50+ by 12/31/2026 → Your 2025 Social Security wages (W-2 Box 3) from Michigan University exceeded $150,000
The wage test runs every year against the prior year's W-2.
Key point most people miss: the mandate applies plan-by-plan, not in aggregate. Catch-up dollars going into your 403(b) SRA must be Roth. Catch-up dollars going into your 457(b) must be Roth. But your base contributions to either plan can still be pre-tax.
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THE NUMBERS FOR 2026 — MICHIGAN UNIVERSITY EDITION
403(b) side — ONE shared $24,500 limit: Your mandatory 5% Basic + your SRA together cannot exceed $24,500 pre-tax. Anything above that — the $8,000 age-50 catch-up or the $11,250 age 60–63 catch-up — has to be Roth SRA if you're subject to the mandate.
457(b) side — SEPARATE $24,500 limit:
$24,500 base — pre-tax or Roth, your choice
+$8,000 catch-up (or $11,250 at 60–63) — must be Roth if you're subject to the mandate
The 403(b) and 457(b) limits don't talk to each other. They stack. And again — Michigan University's 10% to the 401(a) is in its own bucket and doesn't reduce either limit.
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A QUICK EXAMPLE
58-year-old Michigan University employee earning $210K. Maxing everything in 2026.
401(a) — Michigan University's contribution:
10% employer match: $21,000 (does NOT count against your $24,500)
403(b) side:
Basic Retirement Plan (mandatory 5%): $10,500 pre-tax
SRA fills the rest of the pre-tax bucket: $14,000 pre-tax
SRA catch-up: $8,000 Roth (forced)
457(b) side:
Base: $24,500 pre-tax
Catch-up: $8,000 Roth (forced)
Employee totals: $65,000 deferred. $49,000 pre-tax. $16,000 Roth. Total dollars going into retirement (incl. Michigan University's 10%): $86,000.
That $16,000 of Roth catch-up used to be pre-tax. Now it's fully taxed this year. Real impact on your paycheck and your 2026 tax planning.
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THE 457(b) EXCEPTION WORTH KNOWING
The Roth mandate does NOT apply to the special 457(b) catch-up — the one available in the three years before normal retirement age. That one stays pre-tax even for high earners.
If you're within three years of normal retirement age and you have unused 457(b) contribution room from prior years, this is a real planning lever. Worth a conversation if this is you.
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IS THIS GOOD OR BAD NEWS?
Honest answer: it depends on you.
Roth makes sense if:
You expect higher brackets later
You want to manage Medicare IRMAA in retirement
You're planning for tax-efficient wealth transfer
You want flexibility between retirement and RMDs
Pre-tax would have been better if:
You expect a meaningfully lower bracket in retirement
You're planning to relocate to a no-income-tax state
The mandate removes the choice on catch-up dollars. It doesn't mean you're worse off, it just means Congress made the call for you.
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WHAT TO DO RIGHT NOW
Pull your 2025 W-2. Check Box 3.
Log into Wolverine Access → Benefits → Retirement Savings Elections.
Check both TIAA and Fidelity. You may have one or both.
Look at the full picture — 401(a), 403(b), and 457(b) together.
Re-run your tax withholding with your CPA.
Ask whether the money is actually invested the way you want it to be. That's a separate conversation worth having.
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Friendly reminder, I'm a CFP® professional, not a CPA. Loop in a tax professional before changing withholding or estimated payments.
If you want a second set of eyes on how this affects your bigger picture — your Roth strategy, your investments inside Fidelity or TIAA, your overall plan — I'm happy to have a conversation.
Go Blue.
*Cambridge does not offer tax or legal advice.
ROTH Stats
Gen Z: 25% own a Roth vs. 12% Traditional
Millennials: 29% Roth vs. 20% Traditional
Gen X: 21% Roth vs. 31% Traditional
Boomers: 24% Roth vs. 46% Traditional
*Source: https://www.investmentnews.com/ria-news/younger-americans-are-changing-the-dynamics-of-iras/259889
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. This communication is strictly intended for individuals residing in the states of MI, IN, OH. Cambridge and Foundation Wealth Management are not affiliated.
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