Big Changes Ahead for 401(k) Plans in 2026
As we move into 2026, several important regulatory updates are coming to 401(k) plans. These changes are designed to help give employees more flexibility and help employers stay compliant with evolving regulations. Here’s what you need to know.
Higher Contribution Limits and Catch-Up Provisions
The annual contribution limit has increased to $24,500. For those aged 50 and older, catch-up contributions are now $8,000, allowing additional savings as retirement approaches. If you’re between 60 and 63, the special catch-up provision remains at $11,250, offering even more opportunity to maximize contributions during peak earning years. These figures represent statutory limits and do not guarantee improved investment outcomes. Participants should consider their individual financial circumstances before making contribution decisions.
Roth-Only Catch-Up Contributions for High Earners
If your income is $150,000 or more, there’s a key change to note: all catch-up contributions must now be made on a Roth basis. This means contributions are after-tax, and withdrawals in retirement are generally tax-free. Employers should confirm their plans include Roth options to meet compliance requirements.
SECURE 2.0 Implementation and Compliance Deadlines
The SECURE 2.0 Act continues to shape retirement plans. New rules include mandatory auto-enrollment for newly established plans and expanded hardship withdrawal options. Employers have until the end of 2026 to update plan documents. Compliance depends on timely implementation and ongoing oversight.
Fiduciary and Cybersecurity Considerations
Protecting participant data is more critical than ever. Employers should monitor service providers and maintain strong cybersecurity measures to safeguard sensitive information. Clear fee transparency and diligent oversight help manage fiduciary risk.
Participant Behavior and Personalization
Employees increasingly expect personalized options like Roth accounts, lifetime income options, and financial wellness tools. Offering these can help improve engagement.
Plan Design Enhancements
To attract and retain talent, employers are exploring innovative plan designs. Options such as profit-sharing contributions, true-up matching, and cash balance plans are becoming more common. These enhancements can help make retirement benefits more competitive and appealing to a diverse workforce.
Regulatory and Legislative Watch
The regulatory landscape continues to evolve. Employers should stay alert for new guidance on private market investments and changes to fiduciary standards. Compliance remains a top priority, as failure to meet requirements can result in penalties and reputational risk.
Preparing for What’s Ahead
Now is the time to review your 401(k) strategy and confirm your plan aligns with the latest rules. Whether you’re an employer ensuring compliance or an employee maximizing contributions, taking proactive steps today can help make navigating these changes easier.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.
Patricia L. Hutchinson
Director of Retirement Plan Services
AIF®, MBA