Contributions to the Plans

Retirement Plan Contribution Limits Are Changing If You Are Age 60-63

Scroll down to Annual Limits on Contributions for more information.

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Determining Your Contribution Amount

You can estimate the dollar amount of contributions between 1% and 5% by referring to this conversion table.

Choose How You Pay Taxes

Your contributions, which are deducted from your paycheck, can be made on a pre-tax or Roth basis. This allows you to choose the tax treatment that best supports your long-term goals.

Pre-tax contributions

Pre-tax contributions are tax-deferred, so you don’t pay taxes on the contributions, or on any investment earnings, until you take the money out of your account.

Example: Suppose your monthly pay is $4,000 and you contribute 5%. Your monthly contribution amount would be $200, but your net pay would be reduced by only $144 (at 28% tax bracket). Your tax savings is $56 per month, or $672 per year.

Roth contributions

Roth contributions are taken from your pay after taxes, but all earnings are tax-free if they are taken as a Qualified Distribution (you must be at least 59½ years of age, and you must have made your first Roth contribution to the plan at least five years ago).

Annual Limits on Contributions

The Internal Revenue Service specifies annual limits for the maximum amounts you can contribute to the retirement plans in any calendar year. Please see the table below for the current limits.

Limits on Retirement Plan Contributions
Contribution Type 2025 2024
Elective employee contributions, ages 49 and below $23,500 $23,000
Elective employee contributions, ages 50-59 and 64 and above $31,000 $30,500
Elective employee contributions, ages 60-63* $34,750 N/A
Annual compensation limit for employer contributions** $350,000 $345,000
*In 2025, Penn's retirement savings plan adopted the new super catch-up permitted by the IRS for employees ages 60-63.
**The IRS limits the amount of annual compensation that can be considered when calculating employer contributions. For 2025, the annual compensation limit is $350,000.

Excess Deferrals

Although Penn's payroll system will stop your contributions from your pay when they reach the annual IRS limit, you could make excess deferrals if you also contributed to another employer's retirement plan in the same year. If you made excess deferrals, you will need to take a corrective distribution of that excess. You can read more about excess deferrals and how to request a corrective distribution here.

Penn's Contributions

If you are eligible for the Basic and Matching Plans, Penn makes employer contributions to those plans for you. Penn’s contributions are pre-tax.

Basic Contributions

Penn makes regular, automatic contributions to your Basic Plan account as long as you are eligible, regardless of whether you make your own contributions. These basic University contributions are a percentage of your base salary, according to your age as of January 1 of each year.

University Match Contributions

If you make contributions to the Matching Plan, Penn will match your contributions dollar-for-dollar (subject to the IRS contribution limits above).

 

Total Potential Contributions
Your Age University Basic Contribution University Match Contribution Total Potential University Contribution Total Potential Employee + University Contribution
21-29 2.5% Dollar-for-dollar match on employee contributions up to 5% 7.5% 12.5%
30-39 4% " 9% 14%
40 or over 5% " 10% 15%

If Your Contributions Reach a Limit Early

You can reach an IRS or Plan limit early if your Supplemental Plan contributions were too high and outpaced your Matching Plan contributions. That can happen when somebody receives a change in pay (e.g. annual salary increase, other pay adjustment, summer research position, etc.) and doesn't adjust their salary deferral agreement accordingly. Unfortunately, our Plan does not allow us to process refunds when an employee reaches a maximum early. The Plan is regulated by our Plan Document, which is legally binding on our Plan. The retirement plan is audited to ensure compliance with the Plan Document.

When an employee's contributions to Penn's retirement plan reaches an IRS or Plan limit, the payroll system cuts off the relevant contributions for the rest of the year. In the next year, the contributions will restart according to the salary deferral agreement that was in place when the contributions were cut off (unless you change the salary deferral agreement between the cutoff and the restart).

To change your salary deferral agreement, please follow these steps:

  1. Go to Penn's Saving for Retirement webpage. In the blue 'Enroll or Make Changes' box, click on the TIAA.org link to be taken to your TIAA account webpage.
  2. Select Accounts, then in the drop down under Quick Links select Manage Contributions.
  3. Select Manage Contributions again (next to your UPenn accounts).
  4. Select Manage Contributions.
  5. Follow the steps to set your contribution percentage.

If you have any difficulties navigating the webpages, please call the TIAA Retirement Call Center at 877-736-6738.