251217BGCA_PSUpdate_Dec25

We wish you a wonderful holiday season and a Happy New Year! Thank you for your continued partnership and dedication to your retirement plan participants. We hope you find the below insights helpful as you plan for the coming months.

Mandatory Roth Catch-Up Contributions

Coming January 1, 2026!

Starting January 1, 2026, catch-up eligible participants who earned over $150,000 in FICA wages in 2025 must make any catch-up contributions as Roth after-tax contributions. Milliman recently updated our Administrative Guide to reflect the IRS guidance in the final regulations. The key change is that the final regulations allow flexibility for Plan Sponsors and payroll vendors about when to stop pre-tax deferrals for impacted highly paid individuals (HPIs). To prepare participant communications, we will need your responses regarding timing for the regular deferral limit and how you will handle elections after that limit is met.

How We Will Help You Support Impacted Participants

2026 IRS Annual Contribution Limits

For 2026, the IRS increased most 401(k)/403(b)/457(b) plan contribution limits. Participants can save up to $24,500. This IRS limit includes pre-tax and Roth after-tax contributions. Participants who will be age 50 or older in 2026 can make additional catch-up contributions up to $8,000 for a total contribution limit of $32,500.

The IRS overall limit for defined contribution plans is $72,000. The overall limit includes employee pre-tax and/or Roth after-tax contributions up to $24,500 and after-tax contributions, plus any employer contributions. Catch-up contributions are not included.

For more information, refer to our Client Action Bulletin.

2026 Participant Education Curriculum

Improve Your Plan Health Score

Our goal in 2026 is to help participants be better positioned to handle day to day finances and have a wealth-building mindset for the future. Over the next year, Milliman will send regular administrative reminders and personalized messages to boost participant engagement, promote smart retirement decisions and improve overall plan health.

Compliance Corner

For calendar-year plans, our Compliance team will send the annual questionnaire and verification of census information in early January. The information in this request is used for annual reporting, non-discrimination testing and contribution allocations. Please take action and return the requested information as soon as possible, but no later than January 31, 2026. The sooner we receive this information, the sooner your projects will be available for review.

If your plan requires ADP/ACP testing, a 10% excise penalty tax applies for most plans if refunds are not completed by March 15, 2026. We cannot guarantee completion of this testing and timely refunds if information is not received by January 31 and reconciled by February 14. If you have questions or need assistance, please contact your Compliance Analyst.

New for 2026 — Mandatory Roth Catch-Up Contributions

This year will be the first time HPIs will be required to make catch-up contributions. Regardless of your plan year-end, we will need information from you identifying the HPIs who will be subject to the new rules. Soon, you will receive a request for a file with employees who will meet the definition of an HPI in 2026. Generally, this definition covers any employee who earned over $150,000 (indexed for future years) of FICA wages in the prior year.

NOTE: The HPI definition is different from the highly compensated employee (HCE) definition and is determined based on FICA wages. If you have employees covered under a combination of controlled group entities or have compensation exempt from FICA, we recommend that you work with your ERISA attorney to determine who is subject to this new rule.

We understand you will need to process the final payroll of 2025 before you can provide this information. However, the sooner we receive this file, the sooner we can identify HPIs in our system. We are asking for this information earlier than our normal year-end census so we can better assist you and your impacted participants.

Client Action Broadcast

On December 9, Milliman hosted a Client Action Broadcast Webinar: Navigating millimanbenefits.com: Getting the Most From Your Enhanced Platform. We hope the topic and conversation were informative and helpful. If you missed it, you can view the session here.

Our next Client Action Broadcast Webinar will be on January 28: From Compliance to Confidence: Mastering 2026 Retirement & Benefits Plan Rules. Watch for an email invitation coming soon!

Account Security

With the increased risk of personal information exposure, strict guidelines for validating participant identity are needed. For active employees, Milliman relies on your payroll data to update personal information. We recommend referring terminated employees directly to Milliman if they need to access their account and update their personal information. We have established processes and procedures to validate the identity of terminated participants.

As a reminder, Milliman relies on your payroll data to update information for active employees. Having a secure process in place helps ensure any updated personal information (address, personal email address and phone number) is coming from the legitimate employee. Review your process with team members who have access to your payroll interface.

Robust Resources To Improve Financial Health