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2026 brings a meaningful set of retirement planning opportunities for CPAs and their clients. From higher contribution limits to new payroll requirements and a mid-year exit ramp for employers stuck in a SIMPLE IRA, the changes this year reward proactive planning. Here’s a breakdown of what CPAs should be watching—and acting on—right now.
1. Roth Catch-Up Contributions: A Payroll and Tax Change That Starts Now
Beginning in 2026, catch-up contributions made by certain higher-paid plan participants must be designated as Roth contributions. While this rule has been anticipated for some time, two details are easy to overlook.
First, the wage threshold used to determine whether the Roth requirement applies is indexed. For 2026, the FICA wage threshold—based on prior-year wages—is $150,000.
Second, although final regulations are generally set to apply in 2027, plans are largely required to implement Roth catch-up contribution requirements now. CPAs supporting clients with payroll and plan administration should verify that their clients’ systems and processes are already in compliance.
2. Higher 2026 Contribution Limits Create More Room for Tax Strategy
The 2026 cost-of-living adjustments increased several key retirement plan figures. Here are the updated limits your clients should know:
These increases open the door for meaningful tax planning conversations. Clients may need guidance on whether to increase deferrals, how to structure employer contributions, and whether their current plan design—particularly when weighing a SIMPLE IRA against a safe harbor 401(k)—still fits the business.
3. Mid-Year SIMPLE IRA Replacement: A New Path Forward
Historically, employers were required to maintain a SIMPLE IRA for the full calendar year. SECURE 2.0 changed that. Employers can now terminate a SIMPLE IRA mid-year and replace it with a safe harbor 401(k)—and the IRS has published detailed Q&A guidance on the mechanics.
CPAs can add significant value by helping clients navigate the following transition considerations:
Termination and Notice Timing A formal written termination action is required, specifying the termination date. Employees must generally receive written notice at least 30 days before that date. Employer match and nonelective contributions must still be made based on compensation earned through the termination date.
Weighted Average Deferral Cap In the transition year, an employee’s available elective deferral limit under the new safe harbor 401(k) is not simply the full 402(g) annual limit. Instead, total deferrals across both the SIMPLE and the replacement 401(k) cannot exceed a weighted-average limit based on the number of days each plan was in effect, reduced by any SIMPLE deferrals already made.
Safe Harbor Notice Requirements The transition-year safe harbor notice must accurately reflect the reduced deferral limit that applies for that year—this is a detail that’s easy to get wrong without careful attention.
Rollover Constraints in the First Two Years If a participant takes a distribution from a terminated SIMPLE IRA within their first two years of participation, rollover options may be restricted—unless the rollover is directed to a replacement plan that meets specific distribution-limitation rules.
Navigating these changes requires coordination between your clients’ plan design, payroll systems, and tax strategy. PlanPerfect specializes in corporate retirement plan solutions that help businesses and their advisors stay ahead of exactly these kinds of regulatory shifts. [Contact us to discuss how we can support your clients in 2026.]
Content contributed by Jesse St. Cyr, Partner, Poyner Spruill LLP. Jesse is a member of the Employee Benefits and Executive Compensation practice and represents clients before the IRS and DOL. He is recognized by Chambers USA as a leading lawyer for Business (Employee Benefits & Executive Compensation).
