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Upcoming Reforms: Navigating Changes in 2025 and 2026 for Your Qualified Retirement Plan

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401(k) Contribution Limits In 2024 And 2025 | Bankrate
As we approach the midpoint of the decade, significant changes are on the horizon for qualified retirement plans. The years 2025 and 2026 are poised to bring about substantial reforms, impacting both plan sponsors and participants. In this article, we will delve into the key changes, their implications, and what you can do to prepare your qualified retirement plan for the future.
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Increased Contribution Limits

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One of the most anticipated changes is the increase in contribution limits. Starting from 2025, the annual contribution limit for employees is expected to rise, allowing participants to save more for their retirement. This change is a welcome move, as it enables individuals to accumulate a more substantial nest egg, thereby enhancing their retirement security. Plan sponsors should review their plan documents and communicate these changes to their participants to ensure they take full advantage of the increased limits.
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Expansion of Automatic Enrollment

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Another significant reform is the expansion of automatic enrollment in 2025. This provision aims to increase retirement plan participation, particularly among low- and moderate-income workers. Under this rule, employers will be required to automatically enroll eligible employees in their retirement plan, with the option to opt-out. This change is expected to boost retirement savings rates and promote a more secure financial future for millions of Americans.
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Student Loan Repayment Benefits

In 2026, qualified retirement plans will be allowed to offer student loan repayment benefits as an eligible benefit. This means that employers can make matching contributions to an employee's retirement account based on the employee's student loan payments. This innovative approach aims to help employees tackle their student debt while also building their retirement savings. Plan sponsors should consider adding this benefit to their plan to attract and retain top talent in a competitive job market.
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Roth 401(k) and Roth IRA Changes

The upcoming years will also bring changes to Roth 401(k) and Roth IRA accounts. Starting from 2025, the income limits for contributing to a Roth IRA will increase, allowing more individuals to take advantage of this tax-advantaged savings vehicle. Additionally, the Roth 401(k) catch-up contribution limit will be indexed for inflation, providing older workers with more opportunities to save for retirement.
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Plan Sponsor Action Items

To prepare for these changes, plan sponsors should take the following steps: Review plan documents and amend them as necessary to reflect the increased contribution limits and other reforms. Communicate the changes to plan participants, highlighting the benefits and implications of the new rules. Consider adding student loan repayment benefits to their plan to enhance employee benefits and attract top talent. Monitor regulatory updates and seek professional advice to ensure compliance with the new rules. In conclusion, the changes coming in 2025 and 2026 for qualified retirement plans are significant and far-reaching. By understanding these reforms and taking proactive steps, plan sponsors can help their participants build a more secure financial future. As the retirement landscape continues to evolve, it is essential to stay informed and adapt to the changing regulatory environment. By doing so, you can ensure that your qualified retirement plan remains a valuable benefit for your employees and a key component of your overall benefits strategy.

Stay ahead of the curve and get ready to navigate the upcoming changes in the world of qualified retirement plans. Contact us to learn more about how these reforms will impact your plan and what you can do to prepare.

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