Insight New Year’s Reminders & Resolutions for Defined Contribution Plan Sponsors

I hope everyone’s New Year is off to a good start. As we enter 2026, a few brief reminders of important issues affecting defined contributions plans (such as 401(k) plans) that require plan sponsor employers’ attention:

• SECURE 2.0 continues to dominate the landscape. Issues of primary concern warranting attention include:
  • Ensuring compliance with the catch-up as Roth law that became effective January 1, 2026. The guidance issued thus far anticipates errors, and provides for corrections. This issue should be closely monitored and addressed timely and appropriately.
  • Preparing for the adoption of a complex and lengthy plan amendment by the end of 2026. The draft amendment should be closely reviewed by legal counsel. To assist in a streamlined amendment review and adoption process, maintaining a “tracker” describing decision-making by the plan sponsor in terms of adopting optional provisions, implementing and recognizing mandatory provisions, and the various effective dates of implementations will be helpful. Such tracking should remain in process and up to date. It will make amendment preparation much easier and quicker.
  • Compliance with requirements effective in 2026, such as the paper statement law. Regardless of this new law (which seems to be taking us back a step in some ways), by and large, the old ERISA electronic delivery rules still remain in effect in connection with most participant disclosures (of which there are several – fee disclosures, safe harbor, QDIA, SPDs, auto enrollment, etc.). Getting a hold of an email address will not satisfy those regulations, as many seem to believe. It is critical in many cases that those notices say what they are supposed to and delivered in an appropriate compliant manner.
  • Communicating to participants informally, and/or by way of required summary of material modifications, some of the new SECURE 2.0 features and requirements; for example, new distribution options and increased catch-up opportunities for those age 60-63.
• Continued monitoring of class action litigation developments against fiduciaries, and engaging in (and documenting) a strong fiduciary process. In particular, there has been much activity in the forfeiture case realm. Relative to the forfeiture cases, revisiting of plan language to ensure it best positions a plan sponsor, as well as confirming that actual operations conform to the forfeiture plan terms will help mitigate any fallout your plan may experience.
• Attention to Form 5500 filing requirements, and participation in “DFVC” as warranted. Often, continued filing goes by the wayside in connection with M&A activity or when a plan is terminated or merged. The missing or late filing penalties are potentially significant. DFVC provides relief; however, eligibility is not indefinite. Notably, there have been some recent updates to DFVC. Additionally, in general, draft Form 5500s should be reviewed prior to filing to ensure the representations made are accurate and complete.
• Consideration of developing products and features relative to offering lifetime income and alternative investments. Additional guidance on these issues is expected, as is product development and offerings by vendors. Thoughtful consideration and evaluation by plan fiduciaries of the many aspects of these matters will be critical.
• Monitoring of plan activities to identify and correct qualification failures. Qualification failures occur routinely. Recent guidance has made some corrections easier. Plan sponsors are encouraged to identify and correct before the IRS identifies the problem, which then could lead to additional monetary penalties on top of the costs of correction. In this regard, plan amendments in general (mandatory and discretionary) should be carefully considered prior to adoption.
• 403(b) plan document restatements must be accomplished this year for most. Careful review to ensure appropriate carry over of plan terms and provisions will be important.
• Conducting, reviewing, and documenting annual nondiscrimination testing. Failure to properly address this critical issue does not receive the attention it deserves. For example, a plan that fails “top heavy” testing year in and year out and takes no action (perhaps because they did not read the reports even if testing was completed), may suffer very costly fixes that could have been mitigated.

This is by no means an exhaustive list; rather, a reminder regarding some already existing and developing issues that warrant particular attention. Please let us know how we may help to keep you on top of these issues.

This blog is provided by Hawley Troxell Ennis & Hawley LLP for educational and information purposes only. It is intended to notify our clients and friends of certain events or issues. It is not intended to be, nor should it be, used as a substitute for legal advice regarding specific factual circumstances. © Hawley Troxell Ennis & Hawley LLP all rights reserved.

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