Mayo 403(b): A Simple Guide (2025)
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The Mayo 403(b) Plan helps employees save for retirement with tax advantages and employer contributions. Here’s an easy-to-follow breakdown of what you need to know.
Table of Contents
- Who Can Participate?
- How Do Contributions Work?
- Employer Matching
- Vesting
- Investment Options
- Loans and Withdrawals
- Payments in Retirement
- Taxes
- Other Key Rules
Who Can Participate? (SPD p. 6–7)
Most Mayo employees paid on a W-2 can participate. You are automatically enrolled at 4% of pay about 45 days after becoming benefit-eligible. If you don’t want to contribute, or want to adjust your percentage, you must do so through Fidelity NetBenefits or by calling Fidelity at 1-800-343-0860.
Non-benefit-eligible employees can still enroll manually through Fidelity.
How Do Contributions Work? (SPD pp. 8–9)
You may contribute 1–50% of your pay each period, up to IRS limits:
- 2025 annual limit: $23,500.
- If age 50 or older, you can add catch-up contributions up to $7,500 (2025 limit).
Two contribution types:
- Pre-tax deferrals: Lower taxable income now; withdrawals are taxed later.
- Roth deferrals: Taxes are paid now; withdrawals (including earnings) can be tax-free if qualified.
Employer Matching (SPD pp. 9–11)
Mayo provides a match based on years of benefit service under the Mayo Pension Plan:
- Less than 20 years: 50% match on your contributions, up to 4% of pay.
- 20–29 years: 75% match up to 4%.
- 30+ years: 100% match up to 4%.
Important: The match is calculated each pay period. If you front-load contributions early in the year and stop, you could miss some match. Mayo offers a year-end “true-up” to make sure you get the full annual match if eligible.
Since 2022, Mayo also offers a student loan match: employees can receive the same match if they make qualifying U.S. student loan payments (must be linked in Fidelity NetBenefits). (SPD p. 12)
Mayo 403(b) Employer Match
Mayo boosts your retirement savings with a higher match the longer you work there.
Mayo matches 50% of what you contribute, up to 4% of pay.
Mayo matches 75% of your contributions, up to 4% of pay.
Mayo matches dollar-for-dollar, up to 4% of pay.
Match is calculated each pay period. A year-end “true-up” helps ensure you don’t miss the full match. (SPD pp. 9–11)
Vesting (SPD p. 14)
- You are always 100% vested in your own contributions and rollovers.
- Mayo’s match contributions vest after 3 years of service.
- If you leave before 3 years, unvested match funds are forfeited (can be restored if rehired before 5 consecutive breaks in service).
Investment Options (SPD pp. 15–17)
You control how contributions are invested. Options include:
- Lifecycle (target-date) funds: Managed mix that automatically shifts as you approach retirement.
- Core funds: A menu of stock, bond, and short-term funds.
- Expanded options: Wider range of mutual funds for experienced investors.
- Self-directed brokerage (Fidelity BrokerageLink®): Access to many mutual funds beyond the plan menu.
You can change investment elections anytime through Fidelity.
Loans and Withdrawals (SPD pp. 18–19)
- Loans: Borrow up to 50% of vested balance (min $1,000, max $50,000). Only one loan may be outstanding. Loan repayments are made outside payroll via checking/savings.
- Hardship withdrawals: Allowed for major needs such as medical expenses, tuition, home purchase, or foreclosure prevention.
- Other withdrawal types (added 2023–24):
- Domestic abuse withdrawal: Up to $10,000 or 50% of vested balance within 12 months of abuse.
- Emergency expense withdrawal: Up to $1,000 once per year (with repayment rules).
- Qualified disaster withdrawal: Up to $22,000 within 180 days of a FEMA disaster.
- Birth or adoption withdrawal: Up to $5,000 within 1 year of event.
Most withdrawals before age 59½ are taxable and may carry a 10% penalty.
Payments in Retirement (SPD pp. 19–20)
Once you leave Mayo, you can choose:
- Lump sum.
- Installments (monthly, quarterly, annually).
- Annuity (life-only or joint-life).
You must begin payments by April 1 following the year you turn 73 (Required Beginning Date). If still employed past 73 and not a 5% owner, you can delay until after employment ends.
If you pass away, your spouse or beneficiary receives your account balance. Spousal consent is required if naming someone other than your spouse.
Taxes (SPD pp. 21–22)
- Pre-tax deferrals: Taxed as ordinary income when withdrawn.
- Roth deferrals: Withdrawals are tax-free if “qualified” (after age 59½, death, or disability AND after a 5-year participation period).
- Lump sums not rolled over: 20% federal withholding plus applicable state tax.
- Early withdrawals (before age 59½) generally incur a 10% penalty unless an exception applies.
Other Key Rules
- Claims process: If you believe there’s an error, you must file a written claim within 1 year; appeals must be filed within 60 days of a denial (SPD pp. 23–24).
- Fees: Investment, plan administration, and transaction fees may apply (SPD pp. 25–26).
- Plan changes/termination: Mayo may amend or terminate the plan; if terminated, you are fully vested (SPD p. 27).
- No PBGC insurance: Unlike a pension, the 403(b) is not insured by PBGC (SPD p. 26).
About Fortress
Fortress Financial Group is an independent, fee-only fiduciary wealth-management firm in Rochester, MN. Our advisory team includes CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals and other specialists. We combine proactive tax planning, technology-driven clarity, and personal care to help pre-retirees and retirees keep more of their wealth and make confident choices about retirement. More than 350 families in Southeast Minnesota and across the country trust Fortress with their financial future.
References
Mayo Clinic 403(b) Plan Summary Plan Description, January 2025.
- Eligibility: p. 6–7
- Contributions: p. 8–9
- Match & student loan match: p. 10–12
- Vesting: p. 14
- Investments: p. 15–17
- Loans/withdrawals: p. 18–19
- Payments: p. 19–20
- Taxes: p. 21–22
- Claims: p. 23–24
- Fees/expenses: p. 25–26
- Amendments/termination: p. 27
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Fortress Financial Group, LLC (“Fortress”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Fortress and its representatives are properly licensed or exempt from licensure.
All information provided is from sources believed to be accurate and updated. The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.
The views in this page are the views of Fortress Financial and not the views of Mayo Clinic. Mayo Clinic and Fortress Financial Group are not affiliated.
