Resources

2026 Planning Opportunities for CPAs

1. Roth catch-up becomes real in 2026: a payroll/tax change. Starting in 2026, catch-up contributions for certain higher-paid participants must be made as designated Roth contributions. Two CPA-relevant points are easy to overlook. First, the wage threshold for determining whether the Roth requirement applies is indexed. For 2026, the Roth catch-up FICA wage threshold (based on prior-year wages) is $150,000. Second, although the final regulations generally apply in 2027, plans generally must implement the Roth catch-up contribution requirements now.

2. Higher 2026 limits mean more room for tax strategy. The 2026 cost-of-living adjustments increased several key numbers clients will notice, including:

• 401(k)/403(b) elective deferrals: $24,500
• Age-50+ catch-up (most plans): $8,000
• Age 60-63 “super” catch-up: $11,250
•  415(c) defined contribution annual additions: $72,000

• Termination and notice timing. Termination requires formal written action specifying the termination date, and employees must generally receive notice at least 30 days before that date. Employer match/nonelective contributions still need to be made based on compensation through the termination date.
• A weighted average deferral cap applies in the transition year. When a SIMPLE is replaced mid-year, the employee’s available elective deferral limit under the new safe harbor 401(k) is not simply the full 402(g) limit for the year. Instead, the total deferrals across the SIMPLE and the replacement 401(k) generally cannot exceed a weighted-average limit based on the number of days each plan was in effect, reduced by SIMPLE deferrals already made.
• Safe harbor notice content. The transition-year safe harbor notice must accurately describe the (reduced) deferral limit for that year.
• Rollover considerations in the first two years. If a participant takes a distribution from a terminated SIMPLE IRA within the first two years of participation, rollover options can be constrained unless the rollover is to a replacement plan that meets specific distribution-limitation rules.