Making matters more complicated, 2026 marks a year of notable change not just in terms of catch-up contribution rules and income limits, but audit expectations as well.
As a result, employers may need to review their own employee benefits plans as they head into the new year to avoid compliance issues down the road.
The SECURE 2.0 Act was passed in 2022, but its effects on employee benefit plans are still being felt today. In fact, beginning in 2026, a few new provisions will go into effect that will reshape retirement plan requirements for employers and employees alike.
For starters, employees age 50 and older with previous-year FICA wages exceeding $150,000 are now required to make Roth (after-tax) catch-up contributions.
Also, beginning in 2026, employers are now required to provide employees with a minimum of one paper benefit statement each year, unless the employee has opted out.
In addition to the above changes under the SECURE 2.0 Act, the Internal Revenue Service recently released its updated limits for retirement accounts. These have been adjusted to keep up with inflation and higher costs of living. The updated limits are as follows for 2026:
Defined benefit limits - $290,000 annually
Defined contribution limits - Employee deferrals up to $24,500, with maximum annual additions up to $72,000
Compensation limits - $360,000, with a threshold for highly compensated employees at $160,000
IRA limits - $7,500
Social Security taxable wage base - $184,500
Mandatory Roth catch-up wage threshold - $150,000
In recent years, the DOL announced plans to renew its focus on plan audit quality. Its last study was in 2020, where it was discovered that of all the audits sampled, 30% had at least one deficiency. Often, these deficiencies stem from such issues as:
Internal controls
Party-in-interest transactions
Audit planning
Distributions
Investments
In 2026 and moving forward, employers are encouraged to work with audit firms that have proven experience and success. In doing so, they may be more likely to avoid deficiencies in their audits that could lead to compliance penalties as the DOL cracks down on these problems.
Speaking of errors and mistakes, the DOL has also announced a new feature as part of its Voluntary Fiduciary Correction Program (VFCP). Specifically, this program now includes a self-correction component, which allows plan sponsors to make corrections on some ERISA violations without needing to complete and submit a full application.
This feature could be a great way for employers to cut down on the cost and administrative burden associated with correcting minor errors while potentially avoiding penalties down the road.
As we head into 2026, there's a good chance you've already heard about the trend of exploring alternative investments in the form of private equity, real estate and venture capital for retirement funds.
Although these alternative investments do offer potentially higher returns, they also come with some inherent risks. As a result, employers should exercise caution and consult with experienced financial advisors before making any kind of shift towards alternative investments.
So, what are some of the most important tips employers should keep in mind when it comes to employee benefit plans in 2026 and beyond?
For starters, employers should review updated contribution and income limits and ensure employees have access to this information as well. Likewise, to comply with new reporting requirements in 2026, employers should come up with a plan to deliver at least one paper statement (with the ability for employees to opt out) throughout the year.
As most of the provisions of the SECURE 2.0 Act were in effect in 2023 and 2024, implementation is still occurring with certain provisions. It is important to ensure that employers are taking the appropriate steps to amend their plan documents by December 31, 2026.
Lastly, employers are also encouraged to review their auditing practices and to secure a quality, experienced auditor if they haven't done so already. Ideally, auditors should have a reputation for minimal discrepancies and take diligent measures to document plans as accurately as possible.
With many changes on the horizon for employee benefit plans, now is a good time for employers to review their own practices and policies and to consult with an experienced advisor for further guidance where needed.
This way, employers can continue to offer hardworking employees the benefits they deserve while remaining compliant with changing laws and regulations.