By Holly Fields, CPA, Senior Manager at Blue & Co.
The SECURE 2.0 Act was signed in December 2022 and builds on the original SECURE Act to improve retirement savings options and accessibility for employees. The SECURE 2.0 Act introduced significant changes to retirement plans that have phased in beginning in 2023. Until this year, plan sponsors have implemented provisions without formal plan amendments. Not-for-profit organizations now need to ensure their retirement plan operations and documentation are fully aligned.
It is the fiduciary responsibility of both the not-for-profit organization’s board of directors and management to be in compliance with the Act.
Why 2026 Is a Turning Point
While many SECURE 2.0 provisions became effective between 2023 and 2025, organizations were granted time to implement changes without formally updating plan documents. This transition period is ending. Organizations must operate in compliance and adopt formal plan amendments that reflect SECURE 2.0 requirements no later than December 31, 2026.
A not-for-profit organization that has implemented these changes into its plan operations but has not updated its plan documents – or vice versa – faces heightened audit risk and potential penalties.
The Most Important SECURE 2.0 Changes Impacting 2026
- Beginning in 2026, employees age 50+ earning more than $150,000 in prior-year FICA wages (Box Three of Form W-2) must make catch-up contributions on a Roth (after-tax) basis. Organizations’ payroll systems should be reviewed to ensure they are set up to identify eligible employees based on the prior year’s wages. In addition, the plan must allow Roth contributions.
- SECURE 2.0 increases catch-up contribution limits for employees aged 60-63, allowing contributions up to $11,250 (indexed over time). This provision allows those closer to retirement age additional savings opportunities. Similar to above, the payroll system should be reviewed to confirm that these additional contributions are appropriately allowed.
- SECURE 2.0 significantly expands access by reducing eligibility requirements for part-time employees. Under this provision, an employee age 21+ must be allowed to defer their own money to a plan. Employer contributions are optional. To qualify under this provision, an employee is eligible to participate in the plan if they work at least 500 hours in two consecutive 12-month periods.
- For plans established after December 29, 2022, with more than 10 employees, automatic enrollment with an escalation provision became mandatory in 2025. The initial deferral rate must be between three percent and 10 percent. In addition, the deferral rate must increase by one percent each year until it reaches a minimum of 10 percent (capped at 15 percent).
Optional provisions of SECURE 2.0 include:
- Employer contributions made on a Roth basis
- Matching qualified student loan payments
- Various distribution options, including emergency expenses, domestic abuse, terminal illness, qualified disaster, and qualified long-term care
- Involuntary force-out limits increase from $5,000 to $7,000
SECURE 2.0 brings a major reboot to retirement plans. In 2026, management and the Board of Directors should work together to ensure their retirement plan is operates in compliance with the provisions of the Act and that updated plan documents support the Organization’s intentions.
Preparing Your Plan for 2026
SECURE 2.0 has introduced significant changes to retirement plan administration, and compliance requires more than operational implementation alone. If you have questions about how these provisions impact your organization, contact your Blue & Co. advisor. Our team can help review your plan and coordinate with Blue Benefits Consulting to ensure your retirement plan operations and documentation are aligned with current requirements.
