As 2026 proceeds, the SECURE 2.0 Act continues reshaping retirement plans in ways that affect employers’ responsibilities, plan design considerations, and participant communications. Understanding these updates now will help you keep your benefits compliant, competitive, and supportive of employee retirement readiness.
Below are the key changes taking effect in 2026 and what they mean for employers.
1. Mandatory Roth Treatment for Certain Catch-Up Contributions
Beginning January 1, 2026, employees aged 50 and over who earned more than a threshold amount (currently $150,000 in prior-year FICA wages) must make catch-up contributions to a Roth (after-tax) account only. This means:
- Employers need to ensure plan documents allow Roth catch-up contributions. If your plan doesn’t currently offer a Roth option, you’ll need to amend it to accommodate these contributions.
- Payroll systems must be updated to identify eligible employees and correctly process Roth withholding for catchups.
- Catch-up contributions that exceed the standard annual limit must be of the Roth type for those impacted.
Why this matters: This change has tax implications for affected employees and will require clear communication, especially with higher-earning participants who historically relied on pre-tax deductions.
2. Increased Contribution Limits for 2026
While not strictly a legislative change, 2026 sees inflation-adjusted increases to contribution limits that employers must reflect in plan communications and payroll systems:
- The standard employee elective deferral for 401(k), 403(b), and governmental 457 plans increased in 2026 to $24,500, up from $23,500 in 2025.
- Catch-up limits apply for those age 50+ and have increased to $8,000 in 2026, which is up from $7,500 in 2025.
- Under a change made in SECURE 2.0, a higher catch-up (also known as the “super catch-up”) contribution limit applies for employees aged 60, 61, 62, and 63 who participate in these plans. For 2026, this higher catch-up contribution limit remains $11,250 instead of the $8,000 catch-up limit.
Why this matters: You may need to make sure your plan administration, payroll deductions, and participant notices reflect these new limits to avoid compliance issues and help employees maximize savings.
3. Continued Auto-Enrollment & Escalation Requirements
SECURE 2.0’s automatic enrollment and escalation provisions continue to apply (were originally effective January 1, 2025) to plans that started after December 29, 2022:
- Automatic enrollment of employees with elective deferral contributions of at least 3% and no more than 10% in the first year of participation are required.
- Automatic escalation of employee deferrals by 1% annually until reaching at least 10% (but no more than 15%) are required.
Why this matters: This shift aims to increase employee participation and savings but means employers must build these features into new plan designs and monitor defaults closely.
4. Expanded Small Employer Tax Credits
SECURE 2.0 enhances tax credits to help smaller employers adopt and run retirement plans:
- For employers with up to 50 employees, the tax credit for plan start-up costs can cover 100% of qualified administrative expenses (up to $5,000 per year for three years).
- An additional tax credit (up to $1,000 per employee) may be available to offset employer contributions, which is especially helpful for small businesses looking to offer competitive benefits.
Why this matters: If you’ve been on the fence about launching a retirement plan, these incentives make the economics more attractive. Refer to the IRS website for additional details and tax credits for employers with 51-100 employees.
5. Long-Term Part-Time Employee Eligibility and Plan Access
SECURE 2.0 continues to expand retirement plan access for long-term part-time (LTPT) workers. Plans must allow employees who complete 500 hours over two consecutive years (rather than three) starting in 2025 to participate.
Why this matters: This change means employers should evaluate their eligibility tracking and enrollment processes to ensure part-time staff who meet the new criteria are offered plan participation.
6. Penatly-Free Withdrawal Options and Employee Flexibility
SECURE 2.0 also provides new withdrawal options that may affect participant behavior.
Section 115 of SECURE 2.0 (withdrawals for certain emergency expenses) “Permits an individual to receive a distribution from an applicable eligible retirement plan of up to $1,000 without application of the 10% additional tax if the distribution meets the requirements to be an emergency personal expense distribution. An individual generally may, during the 3-year period beginning on the day after receipt of an emergency personal expense distribution, recontribute the distribution to an applicable eligible retirement plan in which the individual is a beneficiary and to which a rollover may be made.”
Why this matters: Employers and plan sponsors should work with their recordkeepers to update participant communications and plan documents describing these options.
What Employers Should Do Now
By proactively addressing these 2026 SECURE 2.0 changes, employers can help ensure compliance while enhancing the value of retirement benefits for their workforce. To stay compliant and support plan participants:
- Review and update your plan documents to ensure Roth contribution options and mandatory Roth catch-up treatment are included.
- Confirm payroll system readiness for income threshold identification and contribution handling.
- Update employee communications to clearly explain new limits, Roth requirements, and eligibility changes.
- Evaluate plan design changes – such as automatic enrollment or expansions – that benefit recruitment and retention.
- Consider consulting your retirement plan advisor on implementation timelines and compliance best practices.
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