The IRS has announced the retirement plan limitations for 2026.  Limitations which apply to Pension Plans (including Profit Sharing and 401(k) Plans) for the Year 2026 are:

For clients with 401(k) and Profit Sharing Plans, the “maximum annual addition” to any participant for combined plans is $72,000 (increased from $70,000).  Maximum annual additions do not include Catch-up Contributions.

401(K) CONTRIBUTIONS

The Department of Labor regulations provide that employee contributions (salary deferrals) made under 401(k) Plans must be contributed or deposited to the plan on the earliest date that they can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the participant contributions are withheld or received by the employer.  The Safe Harbor available to small plans (Less than 100 participants) is 7 days.  Please review your procedures to make sure you comply with this regulation.

Plan Administrators must provide 404a-5 Participant Level Fee Disclosures to participants when they are allowed to direct investments. The participant fee disclosure information must be given to eligible plan participants, beneficiaries of deceased participants and alternate payees under a QDRO who have account balances under the Plan.  Eligible plan participants include all eligible Employees, whether or not they are actually deferring under a 401(k) plan. 

For clients with 401(k) and Profit Sharing Plans, the “maximum annual addition” to any participant for combined plans is $70,000 (increased from $69,000).  Maximum annual additions do not include Catch-up Contributions.

401(K) CONTRIBUTIONS

The Department of Labor regulations provide that employee contributions (salary deferrals) made under 401(k) Plans must be contributed or deposited to the plan on the earliest date that they can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the participant contributions are withheld or received by the employer.  The Safe Harbor available to small plans (Less than 100 participants) is 7 days.  Please review your procedures to make sure you comply with this regulation.

Plan Administrators must provide 404a-5 Participant Level Fee Disclosures to participants when they are allowed to direct investments. The participant fee disclosure information must be given to eligible plan participants, beneficiaries of deceased participants and alternate payees under a QDRO who have account balances under the Plan.  Eligible plan participants include all eligible Employees, whether or not they are actually deferring under a 401(k) plan.  

For clients with 401(k) and Profit Sharing Plans, the “maximum annual addition” to any participant for combined plans is $69,000 (increased from $66,000).  Maximum annual additions do not include Catch-up Contributions.

401(K) CONTRIBUTIONS

The Department of Labor regulations provide that employee contributions (salary deferrals) made under 401(k) Plans must be contributed or deposited to the plan on the earliest date that they can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which the participant contributions are withheld or received by the employer.  The Safe Harbor available to small plans (Less than 100 participants) is 7 days.  Please review your procedures to make sure you comply with this regulation.

Plan Administrators must provide 404a-5 Participant Level Fee Disclosures to participants when they are allowed to direct investments. The participant fee disclosure information must be given to eligible plan participants, beneficiaries of deceased participants and alternate payees under a QDRO who have account balances under the Plan.  Eligible plan participants include all eligible Employees, whether or not they are actually deferring under a 401(k) plan.  

For clients with 401(k) and Profit Sharing Plans, the “maximum annual addition” to any participant for combined plans is $66,000 (increased from $61,000).  Maximum annual additions do not include Catch-up Contributions.

The IRS publishes a “Cumulative List” of laws, regulations and guidance for each Cycle.  Cycle 3 documents have been reviewed and pre-approved based on the Cumulative List published in IRS Notice 2017-37 dated September 11, 2017.  This list identifies specific matters that the IRS has reviewed to determine if a Qualified Retirement Plan has been properly updated.

With few exceptions, the IRS will not consider Guidance or Statutes enacted after February 1, 2017, Qualification requirements first effective in 2018 or later, or Statutory Provisions that are effective in 2017 for which there was no guidance as of September 11, 2017. 

The 2017 Cumulative List includes items listed in the 2011-2015 Cumulative Lists, or items issued after October 1, 2015.

The IRS reviews each “Basic Plan Document” or BPD.  The BPD must contain the revisions required on the Cumulative List.  An Adoption Agreement is completed for each Plan Sponsor which has a selection of available plan provisions based on the pre-approved BPD.

Specific provisions affective by the 2017 Cumulative List include changes due to U.S. v Windsor.  Qualified Plans are not required to make additional changes due to Obergefell v Hodges recognizing same-sex marriages.

Special rules for Defined Contribution Plans, including 401(k) and Profit Sharing Plans, provide lifetime income by offering as investment options, a series of Target Date funds that include deferred annuities among their assets, even if some of the Target Date funds within the series are available only to older participants.

Final regulations that provide a limited modification of Required Minimum Distribution rules for Qualified Retirement Plans holding qualifying longevity annuity contracts.

Employer securities that are readily tradable on an established securities market.

Relief from anti-cutback rules for Employee Stock Ownership Plan amendments that become subject to diversification requirements to eliminate all in-service distribution options previously used to satisfy the diversification requirements.

Final regulations giving guidance on permitted mid-year reduction or suspensions of Safe Harbor non-elective contributions in certain circumstances for amendments adopted after May 18, 2009 and revise requirements for permitted mid-year reductions or suspension of Safe Harbor Match for plan years beginning on or after January 1, 2015.

• Mid-year changes to Safe Harbor 401k Plans under certain circumstances
• Proposed regulations on QMACs and QNECs
• Protecting Americans From Tax Hikes Act of 2015 to permit rollovers from a Qualified Plan to a SIMPLE IRA.
• American Taxpayer Relief Act of 2012 provides rollovers from a plan account to the plan’s designated Roth account can include rollover of an otherwise non-distributable amount.
• Guidance on all in-plan Roth rollovers.
• QJSA and QPSA rules that apply when a deferred annuity contract is purchased under a Profit Sharing Plan.
• Treatment of Missing Participants
• Forfeitures can now be used at the Employer’s discretion.

Interim Amendments are required to keep a pre-approved plan up to date between document submission periods during applicable remedial amendment Cycles.  Disqualifying defects may result due to a change in law or regulations, or issuance of other published guidance.  Disqualifying provisions includes the absence of a plan provision required by, or if applicable, integral to the applicable qualification change.

An Amendment that addresses a disqualifying provision is an Interim Amendment.  The Remedial Amendment Period is extended to apply to an amendment to an existing plan if the amendment was timely adopted and in good faith with the intent of maintaining the qualified status of the Plan.

The extension of the Remedial Amendment Period also applies when the provider or employer determines, reasonably and in good faith, that the plan did not require an Interim Amendment.  The IRS does not review or approve Interim Amendments. 

The Pension Protection Act Interim Amendment provisions were incorporated into the Cycle 3 documents to the extent allowed by IRS.  Certain provisions have not been incorporated into the Cycle 3 document, so Interim Amendments will be attached to the Cycle 3 document.

Interim Amendments will include

• Final Hardship Distribution Regulations
• SECURE Act
• Miners Act
• CARES Act
• New Automatic Contribution provisions for ACA, EACA or QACA Plans
• Allowance of Partial Lump Sum Distributions
• Definition of Disabled for purposes of distributions, vesting, and determining disability.
• Limits on deferrals on bonus pay

Please contact us to discuss how any of these revisions may affect your current document.

In the same manner, your Business should have a plan for sudden illness or emergencies.  This would include fire, flood, hurricanes or even a pandemic.  Your business should have some type of Policies and Procedures Manual that would include your Emergency Plan.  This should be updated on a regular basis. 

In particular, if a key employee is leaving your company, you would want to have detailed information about their responsibilities.  If the employees gives sufficient notice, ask them to write down key information.  If possible, have them train their successor. 

Some of the items and information you will need to get before their departure include:

• Keys/key cards
• Access and Passwords to bank accounts, payroll or inventory programs, and other important computer systems
• Access and Passwords to health insurance, 401k plans and other benefits
• Computers, laptops and company owned cell phones

If your Business has a Plan in place, your Disaster will be easier to manage.  Make note of anything that is pertinent to your employees and industry.

For 401(k) Plans which also have Profit Sharing provisions, the maximum allocation for each participant will be $58,000 (increased from $57,000). This includes 401(k) deferral, matching and forfeitures allocated. The catch-up contribution is over and above for a maximum of $64,500 for those aged 50 or older.

Participants in a SIMPLE IRA will be able to contribute up to $13,500, and, if age 50 or older, an additional $3,000 in catch-up contributions. These amounts are unchanged from the 2020 limits.

IRA contribution limits will be unchanged. The maximum deductible IRA contribution will be $6,000, and, if age 50 or older, an additional $1,000 in catch-up contributions. These amounts are unchanged from the 2020 limits.

The Social Security Taxable Wage Base will increase to $142,800.

Some of these provisions require that the Plan Document be amended to allow them. For example, in order to take advantage of the Birth or Adoption withdrawal, your retirement Plan Document must be amended. Birth or Adoption Withdrawals can also be taken from IRAs.

Birth or Adoption Withdrawals of up to $5,000 may be taken within 1 year of the birth or adoption. These withdrawals are not subject to the 10% penalty for early withdrawal, and can be repaid to the plan or IRA without regard to the 60-day requirement to repay or rollover the money. This provision was effective for distributions made after December 31, 2019.

It has been recognized that employees are living longer and working longer. As a result, the age to start RMDs has been increased from 70 ½ to 72. In addition, individuals age 70 ½ and older are now allowed to make contributions to their IRAs, as long as they have earned income and meet the other criteria for IRA contributions.

Many 401(k) Plans currently require employees to complete 1 year of service to be eligible to enter the Plan. For plan years starting after December 31, 2020, employees may also qualify after working 3 consecutive years in which they work at least 500 hours. Since this 3 consecutive year rule is effective in 2021, employees who meet this criteria will enter the plan in 2024.