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In this issue of Tax Talk, we highlight several important upcoming compliance deadlines as well as the latest information on Roth employer-sponsored retirement plan contributions and the new catch-up contribution rules.
| Upcoming Compliance Deadlines | |
| July 15 | Deadline for the second 2026 minimum funding quarterly installment payment for defined benefit plans that had a funding shortfall in 2025. Summary of material modifications is due to participants unless it was included in a timely updated summary plan description. Form 5330, which reports excise taxes related to employee benefit plans, is due to the IRS. Form 5500 is due to the Department of Labor for plans with a December 31 plan year-end. The Form 5500 filing may be delayed if Form 5558 (the Application for Extension of Time to File Certain Employee Plan Returns) is filed with the IRS by this date. Deadline to supply annual benefit statements to participants in individual-account plans not offering participant-directed investments. |
| August 14 | Deadline for participant-directed defined contribution plans to provide participants with the quarterly benefit/disclosure statement and statement of plan fees and expenses that were charged to individual plan-accounts during Q2. |
| September 15 | Deadline for money purchase pension, target-benefit, and defined benefit plans to make required contributions to their plan trust and for S corporations and partnership plan sponsors that filed a corporate tax extension to make 2025 employer profit-sharing and matching contributions. Minimum funding deadline for the 2025 plan year for pension plans that do not have a funding shortfall for 2026. Form 5500 due to the DOL’s Employee Benefits Security Administration from plans eligible for an automatic extension linked to a corporate tax extension. Summary annual reports are due to participants from plans with a December 31 year-end. |
Roth Contributions and the New Catch-Up Rules
Roth contributions have become an increasingly important feature of employer-sponsored retirement plans as participants seek greater flexibility in managing future tax liabilities. Plan sponsors should understand how Roth contributions work and be aware of recent regulatory changes that may affect plan administration.
Understanding the Tax Treatment
Traditional pre-tax contributions reduce an employee’s taxable income in the year they are made, with taxes generally deferred until distributions are taken in retirement. Roth contributions are made with after-tax dollars, but qualified withdrawals are generally tax-free if IRS requirements are met. Offering both options allows participants to diversify the tax treatment of their retirement savings.
The New Roth Catch-Up Requirement
SECURE 2.0 introduced an important change for retirement plans that permit catch-up contributions. Effective January 1, 2026, participants age 50 or older whose prior-year wages from the sponsoring employer exceed the applicable IRS threshold ($150,000, indexed for inflation) must make catch-up contributions on a Roth (after-tax) basis. As a result, plans that wish to continue offering catch-up contributions to these higher-paid employees must include a Roth contribution feature. Plan sponsors should work closely with their recordkeeper, payroll provider, and third-party administrator to ensure payroll systems, plan documents, and participant communications comply with the new requirements.
The Plan Sponsor’s Role
Plan sponsors should avoid providing individualized tax advice but play an important role in helping participants understand the retirement savings options available through the plan. Educational materials should explain the differences between pre-tax and Roth contributions, applicable IRS contribution limits, and the value of tax diversification. Sponsors should also periodically review plan operations to ensure Roth contributions are administered accurately and in accordance with IRS guidance.
Looking Ahead
As interest in tax-efficient retirement planning continues to grow, clear participant education and sound plan administration can help employees make informed retirement savings decisions. Participants should consult their own tax or financial advisor regarding their individual tax circumstances.
We Are Here to Help
As retirement plan rules continue to evolve, staying informed is essential. Whether you have questions about Roth contributions, SECURE 2.0 implementation, or other retirement plan compliance matters, PCA is here to help. Please do not hesitate to contact us today.