Several updates affecting Employee Benefit Plans (EBPs) take effect in 2026, including changes under SECURE 2.0 and updated contribution limits. Plan sponsors should understand these changes early to support compliance, operational readiness, and informed decision-making.
Below is a summary of the most relevant updates to consider as you plan for the year ahead.
1. Increased Contribution Limits
For 2026, the annual contribution limit for employees participating in employer-sponsored retirement savings plans, including 401(k), 403(b), and government 457 plans, increases to $24,500, up from $23,500 for 2025.
2. IRA Contributions and Catch-Up Contributions
The annual IRA contribution limit increases to $7,500, up from $7,000 for 2025. The IRA catch-up contribution limit for individuals aged 50 and over was amended under the SECURE Act to include an annual cost-of-living adjustment, increasing it to $1,100 for 2026, up from $1,000 for 2025.
3. Catch-Up Contributions for 2026
For participants age 50 and older in most 401(k), 403(b), and governmental 457 plans, the catch-up contribution limit increases to $8,000 for 2026, up from $7,500 for 2025. Individuals ages 60 through 63 may make an additional “super catch-up” contribution of $11,250 instead of the $8,000 standard catch-up amount. This enhanced catch-up contribution is an optional provision that plan sponsors may choose to adopt.
4. Mandatory Roth Treatment for Certain Catch-Up Contributions
Effective January 1, 2026, IRS final regulations issued under SECURE 2.0 on September 16, 2025 require that catch-up contributions made by employees age 50 or older be treated as designated Roth (after-tax) contributions if the employee’s prior-year FICA (Social Security) wages with the same employer exceeded the indexed $150,000 threshold for 2025. This mandatory Roth catch-up requirement applies only to 401(k), 403(b), and governmental 457(b) plans and does not apply to SEP or SIMPLE IRA arrangements.
The $150,000 threshold is based on Form W‑2, Box 3, not the plan’s compensation definition. Because the statute ties the rule to a specific wage measure, plan definitions do not affect the determination.
5. Annual Additions Limit
For 2026, the IRC Section 415(c) annual additions limit for defined contribution plans is $72,000, or 100% of the participant’s compensation, if lower. Contributions to certain retirement plans, including 401(k) plans, profit-sharing plans, money purchase plans, and Employee Stock Ownership Plans (ESOPs), count toward this limit.
“Annual additions” include elective deferrals (pre-tax and Roth), employer matching and profit‑sharing contributions, after-tax employee contributions, and allocated forfeitures. They do not include catch-up contributions (IRC Section 414(v)), rollovers, or loan repayments. Age‑50+ catch-up contributions, including the SECURE 2.0 “super catch-up,” may be made in addition to the $72,000 limit.
6.Plan Amendment Deadline
Under IRS Notice 2024-02, all non-governmental qualified retirement plans must adopt required SECURE 2.0 plan amendments no later than December 31, 2026. IRA-based plans, such as SEPs and SIMPLE IRAs, have until December 31, 2027. This deadline applies regardless of whether a plan operates on a calendar-year or fiscal-year basis.
Operational vs. Document Compliance: An Important Distinction
While the paperwork for plan amendments is due at the end of 2026, plans must be operated as if the amendments are already in effect.
One of the most significant shifts is the Roth catch-up mandate, which requires certain high earners to make catch-up contributions as Roth starting January 1, 2026. To support timely compliance, we recommend that plan sponsors begin coordinating with their third‑party administrators (TPAs) and other service providers in early 2026. This allows sufficient time to review required changes, address operational considerations, and prepare for the December 2026 amendment deadline.
How Grassi Can Help
Grassi’s Employee Benefit Plan and Tax advisors help leadership teams navigate plan changes across compliance, administration and planning. From operational readiness to strategic considerations, we support employee benefit plans that are efficient and aligned with broader financial objectives.
Connect with a Grassi advisor to discuss how these changes may impact your plan.
