The Rosenbaum Law Firm P.C. Blog

Here’s the straight talk: smaller employers—those with under roughly $50 million in plan assets—are getting left behind when it comes to automatic enrollment in workplace retirement plans. And as long as that gap persists, too many workers will continue missing the retirement train altogether.

What the Numbers Show

Only about 24 percent of small plans had adopted auto-enrollment by the end of 2024, compared to 61 percent of large plans. Among those that did adopt it, 57 percent included auto-escalation, while 69 percent of large plans did the same. In small plans with voluntary enrollment, participation hovered around 52 percent; in those with auto-enrollment, it jumped to 82 percent.

Employees in small-business plans also tend to earn less—about $59,000 in median income compared to $89,000 in larger companies. Lower income correlates with lower savings rates, making automatic plan features all the more critical for leveling the playing field.

What It Means (and Why I Care)

If you’re a small-plan sponsor reading this, let’s call it like it is: failing to include an auto-enrollment feature isn’t just a missed opportunity—it’s a strategic misstep. Smaller companies already face limited HR resources, less formal plan education, and tighter budgets. Those factors make it harder to get employees to sign up voluntarily. Auto-enrollment fixes that.

From a fiduciary standpoint, this also raises questions. If you know that auto-enrollment dramatically increases participation—and the data proves it—then why wouldn’t you adopt it? At some point, ignoring that evidence might not just look negligent; it might be negligent.

Why This Matters to the 401(k) Industry

The lag in adoption among small businesses highlights a fundamental inequality in the 401(k) system. Large employers benefit from economies of scale, recordkeeping sophistication, and consultants who push best practices. Small employers often rely on bundled providers or local advisors who don’t emphasize behavioral plan design. That’s not an excuse—it’s a challenge.

The SECURE 2.0 Act and future legislation are already nudging auto-enrollment toward the default standard. The question isn’t if small employers will need to catch up—it’s when.

Lessons for Plan Sponsors

1. Adopt auto-enrollment now — before regulators or market competition force your hand.

2. Add auto-escalation — small increases over time make a huge difference in long-term balances.

3. Review your match structure — use incentives that reward continued participation.

4. Educate and communicate — even automatic features need explanation to build trust.

5. Measure outcomes — track participation and deferral rates so you can prove the design works.

Final Word

Auto-enrollment isn’t a luxury anymore—it’s table stakes. For small-plan sponsors, it’s the single most effective way to boost participation and improve outcomes without spending a dime more on education campaigns or incentives.

As I often tell clients: if you want to help your employees retire with dignity, stop making them opt in—make them opt out. That one design change can turn a struggling plan into a successful one.

Here’s what’s happening — and what every plan sponsor, consultant, and fiduciary should take to heart.

What the Facts Say

IBM’s 401(k) plan is under fire. A lawsuit alleges that the plan fiduciaries retained proprietary target-date funds (TDFs) and target-risk funds — the “Life Cycle Suite” — that underperformed comparable peer funds by as much as 20–30 percentage points over various vintages. About one-fifth of the plan’s $60 billion in assets — roughly $13.4 billion — were invested in those proprietary funds.

The complaint argues that the benchmarks used were “custom” benchmarks that compared the funds to themselves or to other in-house constructs rather than to true peer funds, making them misleading. Plaintiffs claim those imprudent selections cost participants around $1.9 billion in lost returns.

My Take

Folks — if you’ve been saying “we have a process” and checking boxes, this case demands your full attention. Because when participants lose not because of a market crash but because of the plan’s own construction, the ERISA war horn blows.

Let me say it bluntly: the plan sponsor lived by the mantra “default into the house brand,” while the house brand quietly underperformed every credible outside alternative. If I had been in that boardroom, right about the moment someone asked, “why do we use our own funds rather than the low-cost, high-performing peer alternatives?” I’d have raised my hand and asked, “where’s the fiduciary memo?”

Let’s break down the key red flags:

· Proprietary fund dominance: When a plan’s default lineup leans heavily on its own brand, you must ask if this benefits participants or simply keeps fees in-house.

· Custom benchmarks: Fancy benchmarks may make you look good on paper — until they don’t. A benchmark only works if it’s a fair reflection of the real market.

· Comparative underperformance: When your target-date fund is returning 57% while peers are earning 74% or 88%, you’ve got a serious fiduciary problem.

· Disclosure, monitoring, and governance: Failing to review alternatives or swap out underperformers is exactly what ERISA litigation thrives on.

Why This Matters for the 401(k) Industry

For plan sponsors and service providers, the IBM case isn’t just another lawsuit — it’s a mirror. Even the biggest, most sophisticated plans aren’t immune from fiduciary missteps. The lesson is clear: process isn’t paperwork. It’s active oversight, genuine benchmarking, and a willingness to challenge your own assumptions.

Too often, large plans build their own fund suites and assume that “internal equals efficient.” But when participants see years of lagging returns, efficiency turns into liability.

Lessons for Plan Sponsors

1. Revisit your default funds. Don’t assume “house” means best.

2. Scrutinize benchmarks. Make sure they reflect a fair comparison.

3. Document decisions. Meeting minutes and due diligence memos are your best defense.

4. Prioritize outcomes. Participants care about results, not branding.

5. Act when evidence demands it. Delaying fund changes only compounds risk.

Final Word

This isn’t just about IBM. It’s about every sponsor who believes their internal process is beyond question. Fiduciary complacency is the quiet killer of participant outcomes.

As I often tell clients: you can’t call yourself participant-focused if your plan lineup consistently underperforms. Fiduciary duty means putting participants first — even when that means questioning your own products.

There’s a metric that every plan provider loves to brag about: enrollment rates. Auto-enrollment has made it so easy that even the most indifferent employee ends up in the plan. Great, right? Well… not so fast.

High enrollment doesn’t mean you have an educated participant base. It doesn’t mean people are saving enough. And it certainly doesn’t mean they understand what they’re invested in. Auto-features create participation, but they don’t create engagement. That’s the dirty little secret no one likes to say out loud.

A participant who defaults at 3% and never touches a thing is not a success story—they’re a cautionary tale. They’re the person who wakes up at 62, opens their statement, and says, “Wait… this is it?” And guess who they blame? Not themselves. You. The plan provider. The sponsor. The “experts.”

Education is the antidote.

When participants understand how the plan works, they save more. They use catch-up. They adjust their investments. They appreciate employer contributions. They stop making emotional decisions when the market dips. Most importantly, they stop calling the HR office every fifteen minutes asking why their balance dropped $47 last week.

Education reduces noise, increases confidence, and builds trust. That’s what real providers deliver.

So yes, celebrate high enrollment—but don’t confuse automatic participation with meaningful engagement. Auto-enrollment is a head start. Education is the finish line.

And plan providers who get that are the ones who keep clients for the long run.

There’s a metric that every plan provider loves to brag about: enrollment rates. Auto-enrollment has made it so easy that even the most indifferent employee ends up in the plan. Great, right? Well… not so fast.

High enrollment doesn’t mean you have an educated participant base. It doesn’t mean people are saving enough. And it certainly doesn’t mean they understand what they’re invested in. Auto-features create participation, but they don’t create engagement. That’s the dirty little secret no one likes to say out loud.

A participant who defaults at 3% and never touches a thing is not a success story—they’re a cautionary tale. They’re the person who wakes up at 62, opens their statement, and says, “Wait… this is it?” And guess who they blame? Not themselves. You. The plan provider. The sponsor. The “experts.”

Education is the antidote.

When participants understand how the plan works, they save more. They use catch-up. They adjust their investments. They appreciate employer contributions. They stop making emotional decisions when the market dips. Most importantly, they stop calling the HR office every fifteen minutes asking why their balance dropped $47 last week.

Education reduces noise, increases confidence, and builds trust. That’s what real providers deliver.

So yes, celebrate high enrollment—but don’t confuse automatic participation with meaningful engagement. Auto-enrollment is a head start. Education is the finish line.

And plan providers who get that are the ones who keep clients for the long run.

If you’ve been around the 401(k) block as long as I have, you know that the most innocuous-looking sentence in a plan document—the stated matching formula—is often the one that blows up in a plan sponsor’s face. And not with a cute little pop, mind you. I’m talking full-scale compliance detonation. A weapon of mass distraction.

Yes, distraction. Because it distracts employers into thinking it’s “simple,” “predictable,” and—my personal favorite—“set it and forget it.” In reality, the stated match formula is the silent assassin of operational failures, the Trojan horse of corrective contributions, and the leading cause of TPA-sponsored aspirin purchases.

And I’ll say it plainly: I’m not a fan. Not even close.

Why Stated Match Formulas Cause More Harm Than Good

Let’s call it what it is: a trap.

A stated match formula obligates the employer to a precise percentage applied to a precise deferral rate on a precise timetable. That sounds great on paper—until payroll gets it wrong, or HR changes providers, or someone forgets the “true-up,” or a plan amendment occurs at the wrong moment, or the TPA, recordkeeper, and plan sponsor are all working off three different PDFs of the plan document.

One deviation—just one—and suddenly you’re grinding through:

· Voluntary corrections

· QNECs

· Restorations

· IRS “love letters”

· And the dreaded, “How did we miss this for three years?” committee meeting

It’s amazing how much damage one little formula can cause.

Why I Prefer the Discretionary Match

Now let’s look at the alternative: a discretionary match with a corresponding board or employer resolution announcing the match amount each year.

Clean. Elegant. Flexible. Almost poetic in its simplicity.

Here’s why it works:

· It doesn’t force the employer’s hand. No match this year? A smaller match? A bigger match? Completely up to the employer.

· It removes the operational guesswork. Payroll isn’t handcuffed to a fixed percentage; instead, the employer decides the match after seeing how the year plays out.

· It reflects real intent. Employers can adjust based on profits, staffing changes, and business cycles—rather than being bound by a formula drafted five HR directors ago.

· It dramatically reduces errors. You can’t violate a formula that doesn’t exist.

· It simplifies plan administration. Yearly resolutions make everything explicit, current, and documented.

And here’s the kicker: employees still get the match they expect—but without the operational landmines.

The Reality: Flexibility = Fewer Failures

Most plan sponsors don’t realize that their stated match formula is the #1 source of their matching errors. The formula often doesn’t reflect what the employer truly meant to provide—especially when the business environment changes.

A discretionary match lets reality drive decisions, not rigid document language.

It’s the difference between steering a ship with a flexible rudder… versus locking the wheel in place and hoping the wind never changes.

Guess which one auditors prefer?

The Rosenbaum Rule of Matching

If you want fewer corrections, fewer headaches, fewer IRS filings, fewer late-night emails from your payroll manager—ditch the stated match formula.

Use discretionary matches. Document with annual resolutions. Avoid needless fiduciary heartburn.

And if you absolutely insist on using a stated formula? Well… don’t say I didn’t warn you when it becomes your next weapon of mass distraction.

In the world of retirement plans, we’re comfortable with spreadsheets, deferral limits, matching formulas, and the usual fiduciary checklists. But let me tell you: we’re entering a territory where you may not be fully in control—and that territory is powered by artificial intelligence. The article from 401(k) Specialist titled “AI Tech to Spot Fiduciary Risks in Coming Years” is a timely wake-up.

1. What We’re Seeing

· Plan sponsors are increasingly leveraging AI for compliance, fraud detection, and operational monitoring.

· Simultaneously, the new capabilities raise fiduciary questions: Who is responsible when the algorithm errs? How transparent are the systems? What if the tech creates a false sense of security?

· The article warns that fiduciary exposure isn’t limited to traditional errors anymore—it now includes tech-driven blind spots.

2. Why Fiduciaries Can’t Just “Let the Machine Handle It”

Here’s friend-to-friend advice (in true Ary fashion): AI doesn’t relieve you of your fiduciary duty—it redistributes the risk.

· Liability still attaches: If your plan operations rely on AI for monitors, fraud detection, allocations, etc., but you don’t understand how the AI decision-process works or fail to oversee it, you’re still the fiduciary on the hook.

· Black-box concerns: If the system flags “anomaly” and you act (or fail to act) based on that, you need to ask: What rules is the AI using? How is it trained? What are false-positive/negative rates? A machine could miss an error or generate a bogus alert, and you’d still have to explain to the board why you ignored—or blindly followed—it.

· Vendor oversight is magnified: Your service providers may bring AI tools, but these do not excuse your oversight. Are they acting ministerially or discretionarily? Are you clear on the scope? If not, you’re exposed.

· Cyber/security risk escalated: AI features open new vectors: data-driven fraud, deep-fake impersonations, algorithm manipulation. A plan that hasn’t adapted its cybersecurity or vendor auditing processes will likely be the plan that ends up in the headlines.

3. What the Rosenbaum Fiduciary Checklist Looks Like (For AI Era)

Because yes, I have a list.

· Inventory all AI-enabled systems: Which parts of your plan operations use AI? Fraud detection? Participant communication? Investment monitoring? Know the “what” and “how.”

· Understand the logic & limitations: Get vendor documentation. Ask for audit trails. Are there human checks after algorithmic decisions? What is the “fail-safe”?

· Clarify roles and responsibilities: Who is the decision-maker when AI raises an alert? The vendor? The recordkeeper? You? Make sure your plan document, vendor agreement, and committee charter reflect this.

· Review cybersecurity and data governance: AI is only as good (and as safe) as the data and systems behind it. Review encryption, access controls, vendor controls, incident-response plans, and deep-fake risk protocols.

· Training and documentation: Your fiduciary committee needs to understand how AI fits in. Document decisions where you followed or rejected AI-generated outputs. Demonstrate oversight.

· Insurance and coverage review: Does your fiduciary liability insurance cover technology-enabled fraud or algorithmic failure? If not, revisit coverage.

· Plan design/operation check-up: Ensure that your reliance on technology isn’t replacing sound operational fundamentals. AI is not a substitute for clean plan design, solid vendor management, participant education, or good governance.

4. Final Word

Let me be blunt: if you think AI is just a “nice to have,” you’re one step behind. If you think, “Well, our vendor handles all that,” you might be dangerously complacent. In the AI era of fiduciary oversight, you remain the captain of the ship. The machine is a tool—but you still navigate.

So yes, embrace the smart tools. Use them to spot risks that humans might miss. But don’t outsource your fiduciary brain. Because when something goes sideways—and it will—the board isn’t asking the algorithm to explain itself. They’re asking you.

If you’d like, I can pull together an AI-readiness memo for your fiduciary committee (Ary style) that outlines the risks, the controls, and stops your plan from being a headline.

So here’s what I’ve been watching—because if you’re a fiduciary, you don’t just watch these numbers, you study them. According to the latest Plan Sponsor Council of America (PSCA) survey, employee participation in workplace 401(k) plans has climbed—even amid economic unease. That’s good. Really good. But if you’re in the trenches of plan design and sponsor oversight? I say: let’s treat this like a checkered flag at the finish line, not a parade.

1. The Headlines

Here’s what the survey shows:

· Participation rate ticked up to 87.4% of eligible employees contributing in 2024 (up from 86.9% in 2023).

· Average employee deferral: 7.7% of pay (down from 7.8% in 2023).

· Employer contributions averaged 4.8% of pay, a slight drop from 4.9%.

· Total average savings (employee + employer): ~12.5% of pay.

· The features are expanding: automatic enrollment now used by 64% of plans; 95.6% of plans offer Roth 401(k); 73% have adopted “super catch-up” (ages 60-63).

2. What This Means in Rosenbaum-Speak

Let me translate “the numbers are up” into what it means for you, the fiduciary, the plan sponsor, the compliance person holding the coffee mug at 8 a.m.

Good news:

· You’re winning the participation battle. Jump from 86.9% to 87.4% might seem incremental, but in the world of DC plan participation that’s meaningful.

· The uptake of auto-features and SECURE 2.0 provisions (like super-catch-up, Roth employer contributions, feasibility of emergency/withdrawal features) shows sponsors are using design levers.

· More participants means broader coverage, better normalization of deferrals, and stronger culture of saving. That’s the kind of outcome a sponsor wants when litigation risk is lurking.

But the caveats:

· The average deferral rate is flat to slightly down. So more people are participating, but they’re saving less (on average) than perhaps we’d hope for.

· Employer contributions being down—even if only slightly—raise questions: Are match formulas lagging? Are cost pressures nudging the employer to “tighten up”?

· Participation rates are only part of the story. Coverage quality, deferral rate adequacy, investment lineup, communication, operation—all of those still matter. And they’re the places where sponsors still trip.

3. Strategic Implications (For Your Committee, Your TPA, Your Recordkeeper)

Here are the practical action items I always push when I see this kind of data:

· Run the deferral-rate trend: Participation is high, but deferral rates are modest. What plan design changes (auto-increase, default target percentage, tiered match) can lift the average from 7.7% toward the 10%-plus range you really want for retirement readiness?

· Check employer contribution design: Given contributions averaged 4.8% of pay, make sure your match or profit-sharing design is competitive, sustainable, and aligns with your talent-attraction/retention strategy. If you’re seeing match erosion, ask why.

· Review auto-features & default settings: 64% adoption of auto enrollment is solid—but what are the default deferral rates? What portion of auto-escalations are in place? Are you among the sponsors doing this? Because the numbers say the sponsorship of design matters.

· Audit operation of new SECURE 2.0 features: With things like super catch-up, Roth employer contributions, emergency withdrawals, disaster withdrawals gaining traction, ensure your systems, disclosures, vendor contracts, and operational practices are aligned. These features open up new benefits — but also new error-spaces.

· Communication to participants equals culture: With more people participating, it’s a huge opportunity: target the “average deferrer” and move them into “above average” mindsets. Use the fact of rising participation as proof: “Your peers are doing this, you should too.”

4. Final Word

Yes, I’ll raise my mug and toast: this data is encouraging for the defined contribution world. But in Ary Rosenbaum terms, you don’t relax—you recalibrate. High participation without strong operational design and robust savings behavior is like a runner crossing the 20-mile mark strong but realizing they skipped water stations.

So whether you’re sitting in the audit committee room, the HR director’s office, or the TPA war room this week, remember: use this uptick in participation as the springboard, not the conclusion. Your mission remains: more savings, better design, fewer errors—and a plan that doesn’t just exist, but delivers.

Greetings—this is Ary Rosenbaum picking up the referee’s whistle to review a recent win for fiduciaries and what it signals for plan-sponsors, TPAs, and compliance teams.

1. What Happened

A federal judge dismissed a lawsuit against Peco Foods Inc. that challenged the company’s practice of using forfeited 401(k) account balances to satisfy employer contribution obligations. The claim: departing participants’ forfeitures were not being used in the “correct” order or for the “right” expense categories. The judge said no violation of the plan document or ERISA fiduciary duties was shown.

2. Why This Matters

In my “Rosenbaum voice” pragmatism: forfeiture-reallocation litigation is a live and growing threat for defined contribution plans. Yet, this case underscores a few key takeaways:

· Plan Document Is King – What the document says governs the outcome. The judge emphasized that fiduciary liability did not automatically arise just because someone questioned how forfeitures were used.

· No Categorical Liability – Even under §404(a) of Employee Retirement Income Security Act of 1974 (ERISA), you’re not liable simply for exercising discretion in forfeiture use. The specifics matter.

· Operational Risk Still There – While this is a win for the defendant, the reasoning leaves open that other plans with less clarity in their documents or more ambiguous execution might still get hit.

3. Three Questions Plan Sponsors, Fiduciaries & Advisors Should Ask

Because yes, this is your “to-do” list (in true Rosenbaum style):

· Does my plan document clearly articulate how forfeitures are allocated? If language is vague (“may apply,” “at the employer’s discretion,” “as determined by the committee”), you’re inviting interpretation risk.

· How is “administrative expense” defined and treated in practice? The Peco decision leans on how the plan defined (or didn’t define) expense categories and whether the fiduciaries followed that order.

· Do our operations match the document? It doesn’t help to have crisp language if your practice diverges. Contractors, record-keepers, audits: all must be aligned.

4. Final Takeaway

For plan sponsors: this decision is encouraging, but not a free pass. In the 401(k)/403(b) space, forfeiture-allocation suits remain among the “hot topics” of fiduciary exposure. The Peco outcome points to the defensive strength of:

· A well-worded plan document

· Clear, consistent operational practice

· Documentation showing fiduciary decision-making aligned with the instrument

Treat forfeitures not just as accounting line-items, but as compliance potential. Make sure your plan docs reflect your operations, your vendor contracts reflect your practice, and your audit/committee materials show you reviewed this.

As I sit back, figuratively dusting off my “That 401(k) Conference” binder and sipping lukewarm coffee—the true fuel of every ERISA late-night writing session—here’s how I, Ary Rosenbaum, see the latest IRS release of the 2026 retirement plan limits: another year, another set of numbers that look simple on paper but carry real consequences for fiduciaries who don’t stay ahead of the curve.

1. The Big 2026 Changes

Here are the highlights you’ll be fielding questions about:

· 401(k)/403(b)/457(b) Elective Deferral Limit: $24,500

· Age-50+ Catch-Up: $8,000

· SECURE 2.0 “Super Catch-Up” (ages 60-63): $11,250

· Defined Contribution Annual Additions Limit: $72,000

· Compensation Limit: $360,000

· IRA/Roth IRA Contribution Limit: $7,500

· IRA Catch-Up: $1,100

· HCE Threshold: $160,000

· Key Employee Threshold: $235,000

· Starter 401(k) Deferral Limit: $6,000

These numbers aren’t just arithmetic—they’re compliance obligations waiting to trip up an unsuspecting plan sponsor.

2. Why These Numbers Matter

In true Ary fashion: the IRS doesn’t just change limits for fun—every adjustment creates a ripple of responsibilities.

· Plan Documents Need Updating: SPDs, plan instruments, and operational manuals must reflect the 2026 limits. Failure to update means operational defects.

· Payroll Coordination: This is where most plans stumble. If payroll doesn’t load the new limits properly, you’re looking at excess deferrals, corrective distributions, and a very unhappy audit team.

· Participant Communication: Every year, participants ask the same question—“How much can I put in?” Give them clear guidance, especially the 60-63 crowd who now get that super catch-up.

· Testing Implications: With new HCE and Key thresholds, nondiscrimination testing outcomes may shift. Early modeling will help avoid next year’s panic.

· Plan Design Strategy: These new limits are a natural point to revisit design—safe harbor, match formulas, eligibility windows, contribution structures, Starter 401(k) considerations, all of it.

3. Ary’s Fiduciary “To-Do” List

· Review plan documents and SPDs for necessary limit updates.

· Confirm payroll and recordkeeper systems are configured for January 1, 2026.

· Prepare participant communications and highlight catch-up and super catch-up opportunities.

· Run early nondiscrimination projections using the updated thresholds.

· Confirm whether your plan will actively support the 60-63 super catch-up, and prepare targeted messaging.

· Calendar the amendment deadline so you don’t find yourself racing in November.

· Brief the investment/plan committee on how the updated limits may affect participation and testing.

4. Final Thoughts

This is the yearly dance: the IRS gives us numbers, and we translate them into operational reality. But here’s the thing—handling these changes smoothly is one of the easiest ways a plan sponsor can demonstrate competence, care, and fiduciary diligence.

Every year I say the same thing: don’t let your plan be the one that forgets to update payroll. Excess deferrals and testing failures aren’t glamorous mistakes, but they’re the ones that sting.

Plan sponsors who get ahead of these adjustments show participants that they’re attentive, prepared, and committed to running the plan the right way. In an industry built on trust, that matters.

Greetings — Ary Rosenbaum here, gear-shifting through the ERISA/401(k) lane, rubber on the pavement, ready to take you for a ride into what’s ahead for 2026 retirement-plan contribution limits. Think of this as your pit-stop briefing before the Grand Prix. Grab your helmet. (Yes, we’ll drop a Rocky quote or two.)

1. What’s Changing: The Big Bumper of Numbers

We’ve all been watching the inflation ticker and, yes, the engine is revving for new limits in 2026. Based on projections:

· The annual deferral limit for 401(k) and similar qualified plans is expected to climb from $23,500 in 2025 to approximately $24,500 in 2026.

· The “catch-up” contribution for participants age 50+ is projected to increase from $7,500 to about $8,000 in 2026.

· For those age 60-63, the new “super catch-up” could reach around $12,000 in 2026.

· The total contribution limit (employee + employer) for defined contribution plans is projected to move from around $70,000 in 2025 to $72,000–$73,000 in 2026.

· Also starting in 2026, high-earning participants (those with wages above the threshold, roughly $145,000 based on prior years) will face a new rule: catch-up contributions must be Roth (after-tax) instead of pre-tax.

2. Why It Matters in the “Rosenbaum Lane”

If you’re running a plan, advising plan sponsors, or you’re the highly compensated executive who thinks you’re “letting the machine idle” — it’s time to shift gears.

· More room to grow: With higher limits, there’s more tax-advantaged savings potential — but also more complexity. Higher numbers don’t mean “set it and forget it.”

· The race for older drivers: If you’re in the 50+ lane (especially 60-63), the super catch-up is your turbo-boost. But with turbo comes monitoring — making sure your plan document allows it and your payroll system can handle it.

· High earners beware: If you’re over the wage threshold, your catch-ups shift into the Roth lane. That means no more immediate tax deferral, but the chance for tax-free growth. It changes your fuel strategy.

· Sponsor/document risk: For plan sponsors, the infrastructure must adjust — payroll systems, plan amendments, participant communications. Most plans will need to be amended by December 31, 2026, to accommodate the new Roth catch-up requirement.

As I always say: “Time is undefeated.” (Cue Rocky’s bell.) You don’t want to show up for the closed-pit stop at the last minute.

3. Key Actions for 2026 Prep

Here’s your pre-race checklist, Ary-style:

1. Check your deferral limits: Assume $24,500 for under-50s unless IRS finalizes something higher.

2. Communicate with eligible participants: Especially those 50+, 60-63, and high wage earners — let them know the bigger limit and the Roth shift.

3. Coordinate with payroll and recordkeepers: Make sure systems can segregate catch-up contributions, identify high-wage participants, and enforce the Roth requirement.

4. Plan document amendment: Verify that your document accommodates “super” and Roth catch-ups, and plan for amendment by the 2026 deadline.

5. Revise projections and modeling: High-end savers should model the impact of Roth vs. pre-tax for catch-up contributions — tax scenarios matter.

6. Educate sponsors and HCEs: Higher deferrals don’t mean automatic compliance; testing and design still matter.

7. Monitor the final IRS announcement: Official numbers usually come in the fall — be ready to implement quickly.

4. Some Cautions (Because I’ve Seen the Wrecks)

· Don’t assume full employer match: Just because limits go up doesn’t mean the employer match does.

· Roth isn’t always best: For some, especially in high-income years, paying tax now may not be ideal.

· Avoid TPA errors: Mis-applying the new catch-up rules can cause major administrative headaches.

· Plan amendments matter: If your document doesn’t permit the new catch-ups, you’ll be stuck in the pit lane.

· Watch look-back wages: The threshold is based on prior-year wages; misclassify, and you’ll spin out on penalties.

5. Final Take (Ary’s Mic Drop)

If you’re playing retirement-plan strategy like a kid in a bumper car, you’re doing it wrong. Think instead like a seasoned driver in the Indy 500: you’ve got to monitor your gauges, know the turn ahead, anticipate speed changes, and avoid the wall.

2026 is offering a slightly longer straightaway — higher deferral limits, bigger catch-ups, but also new curves: the Roth requirement for high earners and the plan amendment turn. You’ll want to shift now, not wait for the final lap.

So, draft your memos, update your plan language, flag your high earners, talk to your advisors, and — most importantly — tell your participants. The potential’s real, but you have to activate it.

Remember: “It’s not how hard you hit — it’s how hard you can get hit and keep moving forward.” When the retirement plan limits move, you want to be in prime condition, gloves off, ready to dance.