Compliance Corner: Q4 2025 – Year-End Checklist & 2026 Planning Updates
Year End Checklist
Looking forward to 2026 we want to thank our valued clients and partners for another great year. With a number of important operational changes occurring in 2026, including the new mandatory Roth catch-up rules, we encourage our Plan Sponsors to review their plan provisions and payroll operations for compliance.
If you have not done so already, now is the time to confirm that all legal notices to participants have gone out (including 401(k) safe harbor, QDIA/automatic enrollment notices, and fee disclosures). If you experienced a change in ownership/contact information, acquired a new subsidiary, or have questions about some of the new SECURE 2.0 features available to plans, your H&S Plan Consultant can assist.
Year end is also the time to confirm with your payroll provider that the new IRS limits for 2026 are properly setup prior to employee deferrals in the 2026 plan year.
2026 IRS Limits
The IRS has updated the retirement plan contribution limits for 2026. Please be sure to make any corresponding updates to your payroll system. The compensation limit should also be applied to any employer contributions being calculated by the payroll system (see the example below).
Compensation Cap Example:
2026 Match: 100% up to 4%
2026 Comp Limit: $360,000
2026 Maximum Match: $14,40
| Limit Description | 2025 | 2026 |
|---|---|---|
| Salary Deferral Limit (401(k) & 403(b)) | $23,500 | $24,500 |
| Catch-Up Contribution Limit (Age 50+) | $7,500 | $8,000 |
| Super Catch-Up Contribution Limit (Age 60–63) | $11,250 | $11,250 |
| Defined Contribution Plan Annual Limit | $70,000 | $72,000 |
| Total Contribution Limit (Age 50+ / Age 60–63) | $77,500 / $81,250 | $80,000 / $83,250 |
| Annual Compensation Cap | $350,000 | $360,000 |
| Highly Compensated Employee (HCE) Threshold | $160,000 | $160,000 |
| Mandatory Roth Catch-Up Threshold (Prior-Year FICA Wages) | N/A | $150,000+ |
2025 Census Data for Calendar Year Plans
In the early part of January, we will send you a request for your final 2025 company census data. Please be sure to return this data, the annual questionnaire, W-2s, W-3, and ERISA Bond through our Plan Sponsor Link website at your earliest convenience.
Timely and accurate census data is essential for us to complete your 2025 plan administration. If you have questions regarding the census data collection, what we need, and how you can fulfill your obligations as plan sponsor, please do not hesitate to contact us.
Mandatory Roth Catch-Up Reminder
Perhaps the most significant change for the 2026 plan year is the requirement that participants who earned more than $150,000 in FICA wages in 2025 make any catch-up contributions on a Roth basis. This requirement also applies to the super catch-up limit.
The IRS delayed implementation of these new requirements for a two-year period to allow for payroll and recordkeeping system changes but starting January 1, 2026, these new rules are in place. In the Final Regulation the IRS clarified that the limit is applied based on the participant’s prior year W-2 Box 3 FICA wages and not Box 5 Medicare wages.
NOTE: The initial threshold for the Roth catch-up rules to apply was $145,000 when Congress enacted these new rules at the end of 2022. The IRS Final Regulation for Roth catch-up was issued September 16, 2025, and adjusted this limit to $150,000. This limit is indexed for inflation and will change from year to year.
To assist Plan Sponsors with the new Roth catch-up rules we previously sent out a deemed Roth policy election and Notice of Deemed Roth Election for Plan Sponsors to provide participants likely subject to the new Roth catch-up rules. If you have not received a copy of these documents please contact your assigned H&S Plan Consultant to make sure you have this documentation in place.
Under a deemed Roth election, when an affected participant’s elective deferrals reach the regular 402(g) limit, any subsequent catch-up contributions are automatically treated as Roth contributions unless the participant affirmatively elects otherwise. This approach simplifies payroll and recordkeeping, ensures compliance with the new Roth catch-up mandate, and preserves access to IRS-approved correction methods (such as W-2 correction or in-plan Roth rollovers) if errors occur.
However, to use the deemed Roth option Plan Sponsors must adopt a written policy and provide affected participants notice of the deemed Roth rules to comply with the requirement that a participant receive an effective opportunity to opt out or change their election. Adopting the deemed Roth election will make it easier to administer participant catch-up contributions in 2026 and will preserve all available methods to correct any errors that may occur.
We want to thank our Plan Sponsors and Partners and let you know that we look forward to working together in 2026. Happy New Year!
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice.
Written by: Sam Dart, on behalf of Hunnex & Shoemaker’s