By Debbie Herbert, CPA, Director at Blue & Co.

SECURE Act 2.0 Amendments

Effective dates, provisions that are mandatory vs. voluntary, plan amendments… there are many changes impacting plans as a result of SECURE Act 2.0. Several mandatory provisions are already in effect for plans, including an increase in required minimum distribution age onset, automatic enrollment provisions for certain newly established plans, extension of eligibility for participation to certain long-term part-time workers, and designation of Roth-basis catch-up contributions for certain participants. Plans may also have elected to implement voluntary provisions, such as increased limits for mandatory distributions, self-certification of hardship withdrawals, and expanded catch-up contributions.

For many plans, the deadline for formal amendments is December 31, 2026. Plan administrators should work closely with their plan providers to understand these amendments and the amendment process. While plan advisors and providers may help ensure that your plan document is compliant with provisions of SECURE Act 2.0, proper application of these provisions to the operation and administration of the plan requires close communication within payroll processing and administrative functions.

Retirement Plan Limits for 2026

Annual IRS-established limits affect participant deferral limits and employer contributions. Refer to this article for a summary of the 2026 retirement plan limits.

Fiduciary Oversight

Plan fiduciaries have a key role in plan administration and oversight. Not only are there defined responsibilities as a plan fiduciary, but litigation matters in retirement plans are also on the rise, particularly in areas such as investment monitoring and review, conflicts of interest, and the use of forfeitures. If your plan does not have a well-documented process for fulfilling fiduciary responsibilities and actions, including maintaining minutes of fiduciary committee meetings, now is the time. This recent article by our team provides an example of what such meeting topics may entail.

Along with other fiduciary responsibilities, ensuring the timely filing of the complete Form 5500 (including audited financial statements if required) is essential, as the DOL may assess penalties of up to $2,739 per day for failure to file a complete Form 5500.

DOL Voluntary Fiduciary Correction Program (VFCP)

A self-correction component added to the DOL VFCP in 2025 allows certain delinquent participant contributions and loan errors to be self-corrected. The timing of the correction and the amount of the lost earnings, along with other criteria, determine the allowable correction program. Program guidance, available at www.dol.gov, provides detailed information.

Common Problem Areas

As part of plan oversight, it is wise to periodically revisit internal controls in the plan’s administration. This is especially important as plan provisions change or when there is a change in personnel or service providers.

Proper internal controls are important from a fiduciary perspective and may help reduce the risk of errors resulting from noncompliance with plan provisions, including those in the following common problem areas:

• Timely remittance, which involves adhering to the DOL regulations requiring participant contributions and loan repayments to be segregated from plan sponsor assets and remitted as soon as administratively feasible.
• Proper application of eligibility provisions, which may include tracking eligibility for long-term part-time employees and applying auto-enrollment and auto-escalation increases.
• Use of forfeitures, which includes monitoring forfeiture balances and determining that they are utilized appropriately and in a timely manner. This resource provides a helpful summary of the use of forfeitures and important considerations for plan administrators.
• Applying the correct definition of compensation, which ensures that participant deferrals and employer contributions are based on appropriate compensation as defined in the plan document or adoption agreement.

Noncompliance with plan provisions in any area may result in costly corrections. Corrections often involve a calculation of lost earnings, which may continue to increase if errors are undetected for a length of time. Therefore, effective internal controls may help to ensure that checks and balances are in place to minimize the possibility of errors occurring or remaining undetected.

Stay tuned for the next installment of Benefit Briefs. In the meantime, please reach out to us with any questions – our benefit plan audit services team is happy to assist!

Debbie Herbert, CPA

Director

Phone/fax: 812-405-1733

Email: dherbert@blueandco.com