By Edward “Ed” V. O’Neal, Senior Vice President and Manager, Retirement Plans
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We’ve now hit the time of year where we can clearly see the end of 2025 in our view. This is also the time of year that many individuals and business owners start focusing more on 2026 objectives and may discover that recent regulations scheduled to become effective in 2026 could have significant impact on their retirement savings and financial planning goals.
The last few years have seen some of the most robust and impactful retirement legislation in more than a decade. In particular, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 1.0 (enacted in 2019), SECURE Act 2.0 (enacted in 2022), and the recent One Big Beautiful Bill Act (OBBBA) introduced provisions focused on expanding retirement plan coverage for employees, enhancing retirement savings and providing more certainty for individual financial planning strategies.
Although the provisions introduced in each of these regulations have various effective dates, there are some key provisions that will have full-year availability in 2026, including:
Provisions Impacting Individuals
- OBBBA has expanded both 529 savings plan use for K-12, as well as workplace credentials. K-12 qualified expenses have been extended from primarily covering tuition costs to now also including expenses associated with curriculum materials, books, instructional materials, online education, tutoring services and educational therapies (for students with disabilities). Additionally, the K-12 contribution limit has increased from $10,000 to $20,000 for 2026, and now post-secondary workplace credentials (certifications, licenses, etc.) are also considered qualified expenses. These changes and enhancements continue to expand the range of 529 benefits available for tax-free purposes beyond typical college expenses.
- OBBBA also provided some needed clarity and stability for individual tax planning strategies by giving permanency to key income tax rates and brackets, standard deductions, estate tax limits, and introducing new charitable giving deduction rules.
Provisions Impacting Retirement Plan Sponsors
- Historically, plan participants age 50 and over have had the option to designate catch-up contributions to 401(k) plans as pretax or Roth (based on the language of the 401(k) document). SECURE Act 2.0 now mandates that employees with wages over $150,000 will be required to make any catch-up contribution as a Roth contribution. This will require business owners with an existing 401(k) plan that does not currently permit Roth contributions to amend their plan to include a Roth feature if they intend to allow high-earning employees to take advantage of catch-up contributions.
- SECURE Act 2.0 was officially enacted at the end of 2022, and the provisions within the legislation have been phased in over a period of years with effective dates in 2023, 2024, 2025, 2026 and all the way out to 2033. Although many plan sponsors have already implemented provisions from SECURE Act 2.0, the formal deadline for amending plan documents to include the SECURE Act 2.0 changes is December 31, 2026.
While there is still more clarification and guidance needed from the Department of Labor regarding some of the provisions in the recent retirement legislation, it’s clear that 2026 will continue to bring significant changes impacting both individuals and retirement plan sponsors. Consider speaking with your financial advisor for an overview of recent legislation. Be sure to consult with your legal and tax advisor to review the impact of these upcoming changes to your personal tax situation and consult with your retirement plan provider to review any impact on your employer’s retirement plan.
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.