The SECURE 2.0 Act introduced several important changes that affect employee benefit plans (EBPs), with many provisions taking effect in 2026. For employers and plan sponsors, now is the time to review employee benefit plans to confirm compliance well ahead of required deadlines. Failing to prepare could result in penalties, fines, or operational issues.
Below is a breakdown of the most relevant 2026 employee benefit plan updates and what they mean for employers and plan sponsors.
1. Updated annual additions limit
The SECURE 2.0 Act updates the Internal Revenue Code Section 415(c) annual additions limit, which includes:
- Employee elective deferrals
- Employer matching contributions
- Profit-sharing contributions
- After-tax employee contributions
For 2026, the annual additions limit increases to $72,000 or 100 percent of compensation, whichever is less. Plan sponsors should ensure their systems reflect this updated limit.
2. Higher contribution limits for 401(k) and 403(b) plans
Contribution limits for employee deferrals have also increased under SECURE 2.0.
- 2026 contribution limit: $24,500
- Applies to 401(k) and 403(b) plans
- Represents a $1,000 increase from 2025
This change allows employees to save more for retirement while increasing the need for accurate payroll and plan administration.
3. Changes to catch-up contributions
Catch-up contributions for individuals age 50 and older have increased:
- 2026 catch-up limit: $8,000, up from $7,500
- Special rule for ages 60 to 63 allows up to $11,250 in contributions
These enhanced limits provide additional flexibility for employees approaching retirement who want to accelerate savings.
4. Updated IRA contribution and catch-up limits
IRA contribution limits have also changed:
- 2026 IRA contribution limit: $7,500
- Up from $7,000 in 2025
Catch-up contribution limits for IRAs are now indexed for inflation:
- 2026 catch-up limit: $1,100
- Up from $1,000 in 2025
Employers should be aware of these changes when communicating retirement
planning resources to employees.
5. New treatment of catch-up contributions for high earners
Beginning January 1, 2026, a key compliance change impacts higher-income employees:
- Catch-up contributions for employees earning more than $150,000 in the
prior year must be treated as after-tax Roth contributions. - Applies to 401(k), 403(b), and governmental 457(b) plans.
Employees participating in SEP IRAs or SIMPLE IRAs are not subject to this requirement and may continue making pretax contributions.
Plan sponsors should coordinate with payroll providers and plan administrators to implement this rule correctly.
6. Compliance deadlines for plan sponsors
According to an IRS notice, all employee benefit plans must comply with SECURE 2.0 provisions by December 31, 2026.
This deadline applies to all plans, regardless of whether they follow a calendar or fiscal year.
Important considerations include:
- Plan document updates must be completed by the deadline
- Operational compliance should already be in place
- Payroll systems and administrative processes may require updates
Starting early can help reduce the risk of errors and last-minute compliance issues.
What these changes mean for employers and plan participants
These updates are designed to help employees increase retirement savings, especially those who start saving later in their careers. At the same time, employers face additional responsibilities, including:
- Updating plan documents and administrative processes
- Ensuring payroll systems reflect new contribution limits
- Managing tax treatment changes for higher-income employees
A proactive approach allows plan sponsors to stay compliant while supporting employees’ financial goals.
Take action before the 2026 deadline
Now is the time to review your employee benefit plans, confirm compliance with SECURE 2.0 requirements, and implement any necessary updates. Early preparation helps avoid penalties and operational disruptions.
BeachFleischman’s Employee Benefit Plan specialists can help you navigate SECURE 2.0 changes, update plan documentation, and maintain compliance with evolving regulations.
Contact our team today to discuss your plan and ensure you are prepared for 2026 and beyond.
Frequently Asked Questions
What is the SECURE 2.0 Act, and how does it affect employee benefit
plans?
The SECURE 2.0 Act is federal legislation that expands retirement savings opportunities and introduces new compliance requirements for employee benefit plans, many of which take effect in 2026.
What are the 2026 401(k) contribution limits?
For 2026, the employee deferral limit is $24,500, with additional catch-up contributions available for eligible participants.
How much can employees contribute to catch-up contributions in 2026?
Employees aged 50 and older can contribute $8,000, while those between ages 60 and 63 may contribute up to $11,250.
What changes apply to high-income earners?
Employees earning more than $150,000 must make catch-up contributions as
after-tax Roth contributions starting in 2026.
What is the deadline for complying with SECURE 2.0 changes?
Employers must ensure their plans are compliant by December 31, 2026, and that operational changes are implemented in advance of that date.
What should plan sponsors do now?
Plan sponsors should review plan documents, update payroll systems, coordinate with service providers, and communicate changes to employees to ensure compliance.
©2026