As we move into 2026, retirement Plan Sponsors—whether employers, plan fiduciaries, or administrators—are facing an evolving landscape. Regulatory changes, shifting participant expectations, technology risks, and macroeconomic challenges are combining to raise the bar for how retirement plans are structured, operated, and communicated. Below are several of the biggest issues sponsors will need to confront.
Regulatory Deadlines and Complexity from SECURE 2.0
One of the most pressing issues for 2026 will be the full effects of SECURE 2.0. Some key provisions take effect in 2026, and Plan Sponsors must be ready:
- Roth catch-up contributions for high-earners: Starting January 1, 2026, catch-up contributions by employees earning above a certain FICA wage threshold must be made on a Roth (after-tax) basis. Ensuring payroll systems, recordkeeping, and participant communications are configured properly for this change will be crucial.
- Restatement of plan documents: Defined contribution prototype Plan Sponsors will need to adopt updated plan documents by end of 2026 (Cycle 4 restatements) to incorporate new legislative/regulatory changes like the increased RMD age, hardship withdrawal rules, rules on long-term part-time employees, etc.
- Operational changes tied to optional SECURE 2.0 features: Things like emergency savings accounts, expanded in-service withdrawal rights, and domestic abuse distribution options offer more flexibility to participants but add administrative burden. Evaluating feasibility and vendor/recordkeeper readiness is important.
Delays or missteps here can lead to compliance risk, fiduciary exposure, or participant dissatisfaction.
Increased Fiduciary, Operational, and Litigation Risk
Plan Sponsors are under growing pressure regarding:
- Fee transparency and benchmarking: Sponsors need to ensure the fees charged (administrative, investment, recordkeeping) are reasonable and well documented. Excessive fees are a common trigger for litigation.
- Vendor oversight, cybersecurity, and data protection: As many sponsors report, cybersecurity breaches are a major concern. With more plan data stored and transferred digitally, ensuring vendor protocols are robust and that there are incident response plans in place is essential.
- Handling overpayments and corrections: SECURE 2.0 reshaped overpayment rules. Sponsors must set consistent policies for identifying, recovering (or not), and documenting overpayments. Doing so in a way that meets fiduciary duties is nontrivial.
Changing Participant Behavior, Expectations, and Demographics
The landscape of what employees want—and need—is shifting. Sponsors will need to respond to:
- Delayed retirements: Many workers are planning to retire later than they initially thought, due to inflation, market volatility, and concerns about savings adequacy. This affects workforce planning, benefit costs, and may increase interest in lifetime income or guaranteed income options within DC plans.
- Desire for more robust retirement income options: There is growing appetite among participants for guarantees or income streams—rather than just lump sums at retirement. Many sponsors are considering in-plan income options but are concerned about complexity, cost, and administrative burdens.
- Financial wellness and personalization: Employees expect more from their benefits: tools to help with budgeting, debt, investment education, and more tailored plan features (e.g. automatic escalation, Roth vs pre-tax options). Ensuring communication is clear—and that employees understand tradeoffs—is increasingly important.
Technology & Cost Pressures
While cost isn’t the only or always the most important concern, it remains relevant—especially as technology and regulatory burdens grow.
- Upgrading systems: Changes like Roth catch-ups, automatic enrollment/escalation, or emergency savings accounts often require changes in payroll systems, recordkeeping platforms, plan documents, and vendor contracts. These upgrades cost time and money.
- Balancing cost vs value: For small and mid-sized employers especially, offering a retirement plan is costly. They may face higher per-participant administrative and investment costs and less bargaining power with vendors. Identifying ways to manage these costs—shared services, pooled employer plans (PEPs), leveraging scale—is likely to be a theme.
- Adoption of AI and automation—but with risk: Tools that use AI to streamline enrollment, participant support, and forecasting are promising. But they also come with data security, bias, transparency, and oversight concerns. Sponsors will need to adopt new tools carefully. Surveys suggest cybersecurity remains the top concern, even ahead of cost.
Competitive Pressures & Talent / Benefit Strategy
Finally, retirement Plan Sponsorship is part of a broader benefits and employer brand strategy.
- Employers increasingly see retirement benefits as differentiators in recruiting and retention. Plans that aren’t competitive may lose out with talent.
- Regulatory and market pressures may push employers to offer richer retirement features, or more “employee-friendly” features (quiet vesting, easier withdrawals, portability) or more flexible contribution options.
- Also, demographic shifts (more part-time, freelance, gig-economy workers) mean sponsorship models may need to adapt to workforce realities (e.g., more employees working fewer hours but expecting access, or multiple employer plans).
2026 will be a pivotal year for retirement Plan Sponsors. Success will require a proactive approach: staying abreast of regulatory deadlines (especially around SECURE 2.0), carefully managing operational and fiduciary risks, aligning offerings with participant expectations, investing in technology (while guarding against its risks), and balancing cost with value. Those who wait until changes are forced upon them may find themselves scrambling; those who anticipate and plan will be in a stronger position operationally, competitively, and reputationally.
