Notice of Proposed Updates to the Retirement System IRS Compliance Policy

The public comment period is open. All comments must be received no later than 4:30 p.m. Alaska Time on November 28, 2025.

The Department of Administration, Division of Retirement and Benefits (Division), is working to update the Retirement System IRS Compliance Policy.

Section 304

This update is intended to maintain compliance of IRC 401(a)(31)(B) where the Secure Act 2.0 has increased involuntary cashout limits from $5,000 to $7,000. This change will affect the State of Alaska qualified retirement plans for Public Employees’ Retirement System (PERS) and Teachers’ Retirement System (TRS) Defined Contribution Retirement Plans, PERS Defined Benefit Plan, State of Alaska Supplemental Annuity Plan (SBS-AP), Judicial Retirement System (JRS), National Guard and Naval Militia Retirement System (NGNMRS).

Secure Act 2.0

Section 401(a)

• b. Certain Involuntary Distributions (Sections 401(a)(31)(B) and 411(a)(11))
• Section 304 of the Secure 2.0 Act permits a plan to increase its involuntary cashout limit to $7,000 (increased from $5,000)

26 USC 401: Qualified pension, profit-sharing, and stock bonus plans
(31) Direct transfer of eligible rollover distributions.

• (B) Certain mandatory distributions.
• (ii) Eligible plan. For purposes of clause (i), the term "eligible plan" means a plan which provides that any nonforfeitable accrued benefit for which the present value (as determined under section 411(a)(11)) does not exceed $7,000 shall be immediately distributed to the participant.

Financial Impacts

The proposed update changes are not expected to require increased appropriation.

Sections to be updated or added to the Retirement System IRS Compliance Policy

1. Public Employees Retirement System Tiers I, II, and III Defined Benefit Plan
2. Public Employees’ Tier IV Defined Contribution Retirement Plan
3. Teachers’ Retirement System Tiers I and II Defined Benefit Plan
4. Teachers’ Retirement System Tier III Defined Contribution Retirement Plan
5. Judicial Retirement System
6. State of Alaska Supplemental Annuity Plan
7. National Guard and Naval Militia Retirement System

Section 603

State Of Alaska Deferred Compensation Plan

This update is intended to maintain compliance with IRC 401(a) where the Secure Act 2.0 stated: Starting January 1, 2026, if you earn over $145,000 in FICA compensation for 2025 and decide to make catch-up contributions, they MUST be made as Roth contributions. This is a result of SECURE Act 2.0 legislation.

Secure Act 2.0

Section 603

Catch up contributions to Section 401(a) qualified plans, Section 403(b) plans, and governmental Section 457(b) plans must be made to on a Roth basis, except for eligible participants whose prior year wages do not exceed $145,000 (indexed for inflation).

Financial Impacts

None/Minimal impact to the Plan(s), Employers, or of the State of Alaksa Retirement Plans. Financial impacts to those who meet eligibility could be minimal to substantial. Each person will be different.

Member Impacts

Eligible participants are subject to the requirements of section 414(v)(7)(A), then any catch-up contributions that are made to the plan on behalf of the participant must be designated as Roth contributions. However, if an eligible participant is not subject to the requirements of section 414(v)(7)(A), then any catch-up contributions that are made to the plan on behalf of the participant are not required to be designated as Roth contributions. In that case, any catch-up contributions under section 414(v) that are made to the plan on behalf of the participant that are not designated as Roth contributions are not includible in the participant’s gross income under section 402(g)(1)(A) (and do not exceed the limitation in section 457(b)(2)) because, in accordance with section 414(v)(3)(A)(i), the limitations on elective deferrals under sections 401(a)(30) and 403(b) (and the limitation on deferrals under section 457(b)(2)) do not apply to those catch-up contributions.

Statutory Authority: AS 39.45, 14.25.003 and 14.25.004.

Fiscal Information: The proposed updates are not expected to require increased appropriation.

Sections to be updated or added to the Retirement System IRS Compliance Policy

1. State Of Alaska Deferred Compensation Plan

Public Comment Period

You may comment on the proposed updates by submitting written comments:

• By Mail: State of Alaska
  Department of Administration
  Division of Retirement and Benefits
  P.O. Box 110203
  Juneau AK 99811-0203
• By Fax: (907) 465-3086
• By Email:

All comments must be received no later than 4:30 p.m. AKST on November 28, 2025.

After the public comment period ends, the Division of Retirement and Benefits will adopt the proposed changes or other provisions dealing with the same subject, without further notice, or decide to take no action. If your interests could be affected, it is recommended you provide comments within the allotted time period.

Written comments received are public records and are subject to public inspection.

The Division of Retirement and Benefits keeps a list of individuals and organizations interested in updates. Those on the list will automatically be sent a copy of all the Division of Retirement and Benefits notices of proposed updates. To be added to or removed from the list, please provide your name, and either your email address or mailing address, as you prefer, for receiving notices to:

Division of Retirement and Benefits
P.O. Box 110203,
Juneau, AK 99811-0203.

Online Public Notice

Below you can find the Online Public Notices for each section.

• Section 304 website
• Section 603 website

Frequently Asked Questions

How will employees be affected by the IRC update?

Any 457(b) catch-up contributions will made as Roth contributions if last year's annual income exceeded $145K in FICA compensation.

How will I know if this affect me?

If you pay FICA and make more than 145k a year, this applies to you.

If you do not pay FICA, this does not apply to you.

Do State of Alaska (SOA) employees pay into Social Security (FICA)?

No. SOA employees pay into a SSA replacement play called the Supplemental Benefit System Annuity Plan (SBS-AP). Therefore, not affected by this update.

If I work for a State of Alaska Political Subdivision or School District does this affect me?

There are some Political Subdivisions and School Districts who pay FICA/Social Security. Therefore, the employees who earned over $145K in the previous year (if same employer) will have catch-up contributions made as Roth contributions.