SECURE 2.0 2026: Key 401(k) Changes Every Plan Sponsor Should Be Ready For

1. 401(k) contribution and catch up limits in 2026

For 2026, the IRS increased the 401(k) elective deferral limit to $24,500 and the general age 50 catch up limit to $8,000. That means a participant age 50 or older can contribute up to $32,500 in salary deferrals if your plan allows the full catch up.

SECURE 2.0 also created a special higher catch up window for ages 60 to 63. For 2026, the IRS left this “super” catch up limit at $11,250 for those ages in plans that adopt it. In practice, that allows eligible participants in that age band to defer up to $35,750 in 2026 when the feature is turned on.

2. Roth catch up rules for higher earners; what 2026 really means

A key change under SECURE 2.0 is the requirement for higher-paid employees to make their catch-up contributions on a Roth (after-tax) basis. This rule becomes effective on January 1, 2026. For the 2026 plan year, if an employee's FICA wages from the prior year (2025) exceeded $150,000, any catch-up contributions they make must be designated as Roth contributions. While the final IRS regulations providing detailed operational guidance will not be fully applicable until January 1, 2027, plan sponsors are expected to operate in good faith compliance with the new law throughout 2026. Therefore, 2026 is a critical year for plan sponsors to prepare by confirming their plan allows for Roth contributions, coordinating with payroll and recordkeepers to identify affected employees, and deciding on the implementation of this new rule.

3. New annual paper statement requirement in 2026

• Defined contribution plans must provide at least one paper benefit statement per year starting with plan years that begin after December 31, 2025, which means January 1, 2026 for calendar year plans, unless a participant affirmatively elects electronic delivery.
  
  
• Defined benefit plans must provide a paper statement at least once every three years under the same rule, again subject to an opt out into e delivery.
  
  
• Plans that rely on the existing DOL electronic delivery safe harbors still need to provide a one time initial paper notice for participants who first become eligible after December 31, 2025.
  
  
• Plan sponsors should review how many statements are currently sent, how “default electronic” processes work, and whether vendors are handling the paper requirements automatically.
  
  
• Participant communications and enrollment materials should be updated so employees understand when to expect paper versus electronic statements and how to change their delivery preference.

4. Other SECURE 2.0 features that impact 401(k) plans in 2026

• Beginning in late 2025 and into 2026, plans can allow penalty free distributions of up to the lesser of $2,500 per year or 10% of a participant’s vested account balance to pay premiums for certain long term care insurance contracts, subject to strict “high quality coverage” rules and normal income tax.
  
  
• New penalty free distribution categories, such as emergency personal expense withdrawals and certain domestic abuse withdrawals, are already in effect before 2026 but continue to apply for 2026 operations, which may require plan document and administrative updates if adopted.
  
  
• Student loan match and in plan emergency savings accounts are available starting in 2024 for plans that adopt them, so by 2026 many sponsors will be administering these optional SECURE 2.0 features alongside the newer 2026 changes.
  
  
• The DOL is required to stand up an online “lost and found” database for retirement benefits and will require additional annual reporting on terminated participants with vested balances once regulations are finalized, which plan sponsors should track as part of their 2026 compliance calendar.

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2026 SECURE 2.0 action checklist for 401(k) plan sponsors

• Confirm your 2026 contribution limits and catch up settings with your recordkeeper, including whether the age 60 to 63 “super” catch up is enabled.
  
  
• Work with payroll and your recordkeeper to identify employees over the $150,000 wage threshold and map out how and when Roth catch up contributions will be implemented, keeping the 2027 applicability date in view.
  
  
• Review participant statement processes to ensure at least one paper benefit statement will be mailed each year in 2026 for defined contribution plans unless a valid electronic delivery election applies.
  
  
• Decide whether to add long term care premium distributions, emergency savings accounts, or other optional SECURE 2.0 distribution features and confirm the operational details with your vendors before you amend the plan.
  
  
• Coordinate with ERISA counsel or your 401(k) advisor to make sure all required SECURE and SECURE 2.0 amendments are drafted and signed by the applicable 2026 amendment deadline for your plan type.
  
  
• Use 2026 as a clean checkpoint to refresh your investment committee charter, fiduciary file, and employee education strategy so your plan is not only compliant with SECURE 2.0 but also aligned with your organization’s benefits and talent goals.

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Ready for a SECURE 2.0 checkup on your 401(k)?
Schedule a brief call with Foundation Wealth & Tax Advisors to review your plan, confirm you are on track for the 2026 rules, and identify any gaps before they become problems.

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