Peter Gulia

The Internal Revenue Service has neither published nor released inflation-adjusted amounts for retirement plans for 2026. Based on recent political news suggesting a potential end to the current application of the Antideficiency Act, some hope the IRS release (not the publication in the Internal Revenue Bulletin) happens by November’s end. Consultants that have published unofficial calculations concur that a participant is a § 414(v)(7)-affected individual for 2026 if her 2025 Social Security wages were more than $150,000.

First, consider what provisions the documents governing the plan state. RTFD, Read The Fabulous Documents. But next, consider that a plan’s administrator often interprets a plan’s documents to anticipate provisions that might become retroactively applicable by a remedial amendment. RTFD, Read The Future Documents. Further, some plans’ administrators interpret the current documents, the anticipated documents, or both not strictly for what either text states but rather for what makes sense to fit with the Internal Revenue Code and sensible interpretations of it, including the Treasury department’s legislative and interpretive rules (to the extent a rule is not contrary to law). Yet, one should not discern a plan’s provision by looking only to the tax Code and regulations. A required beginning date and a minimum distribution can vary not only with: whether the plan mandates a distribution sooner than a § 401(a)(9) required beginning date. whether the plan allows or precludes periodic payments; whether the distribution is (or is not) an annuity, or life-expectancy payments; whether the beneficiary is the participant’s surviving spouse or someone else; whether the beneficiary is an eligible designated beneficiary; but also with which optional provisions the plan states or omits (or is deemed to state or omit); and which elections the plan permits or precludes. 26 C.F.R. § 1.401(a)(9)-3(c) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-3#p-1.401(a)(9)-3(c). Remember, that a plan could state a provision without tax-disqualifying the plan does not by itself mean that the plan does have that provision. This is not advice to anyone.

The Joint Committee on Taxation’s “bluebook” explanation of 2021-2022 Acts suggests JCT’s assumption that Congress intended the inflation-adjusted amount for a 60-63 participant is 150% of the inflation-adjusted amount for an age 50 participant. See page 332 (the last two sentences of the “explanation of provision”) and footnote 1505. I attach a pdf of pages 331-332. Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in the 117th Congress [JCS–1–23] (Dec. 2023), available at https://www.jct.gov/publications/2023/jcs-1-23/. The explanation cites no document or other source as support for an assumption Congress intended something other than the statute’s text. A textualist interpreter might say Congress cannot have an intent other than the enacted text. It’s unclear whether the IRS will indulge or refuse JCT’s assumption, or find another way to interpret the statute’s text. JCT explanation of age 60-63 catch-up.pdf

For an age 60-63 catch-up, is 2026’s inflation adjusted amount $12,000 or $11,250? On the day the Bureau of Labor Statistics released September’s Consumer Price Index measures: John Feldt said $12,000. https://benefitslink.com/boards/topic/80106-2026-cola-projection-of-dollar-limits/#comment-354029 Mercer said $12,000. https://www.mercer.com/insights/law-and-policy/mercer-projects-2026-retirement-plan-limits/ But Milliman said $11,250. https://www.milliman.com/en/insight/2026-irs-limits-forecast-final-estimates Can smart BenefitsLink people resolve which is correct? Here’s the adjustment rule [I.R.C. § 414(v)(2)(E)(i)]: (E) Adjusted dollar amount. For purposes of subparagraph (B), the adjusted dollar amount is — (i) in the case of clause (i) of subparagraph (B), the greater of — (I) $10,000, or [and] (II) an amount equal to 150 percent of the dollar amount which would be in effect under such clause for 2024 for eligible participants not described in the parenthetical in such clause[.]

Consider also whether a § 403(b) plan that includes a § 414A automatic-contribution arrangement must provide a QJSA/QPSA regime or alternate ERISA § 205 rights for a participant’s spouse.

Here’s the EBSA interpretation Paul I mentions; see Q&A-14 [page 10]: https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2012-02r.pdf.

Beyond law, listen, carefully, to Paul I’s observations about civility and practical sense. And about an ethics code that results from membership in a voluntary association, here’s one bit: “. . . . The Actuary shall not refuse to consult or cooperate with the prospective new or additional actuary based upon unresolved compensation issues with the Principal unless such refusal is in accordance with a pre-existing agreement with the Principal. . . . .” American Academy of Actuaries, Code of Professional Conduct, Precept 10, Annotation 10-5 https://actuary.org/wp-content/uploads/2014/01/code_of_conduct.8_1.pdf.

Consider that whether a person is a fiduciary because the person might have provided investment advice is a mixed question of law and fact a court decides. A court need not consider any Labor or Treasury department interpretation of the statute. Yet, a court may consider any source, governmental or secondary. A court may consider anything an agency published, including a rule or other interpretation no longer in effect. A court must not defer to any agency interpretation; rather, the court interprets the statute.

If the plan provides participant-directed investment for all participants: Why does the plan sponsor not want brokerage accounts available, as a participant-directed choice, for all participants?

Your description of the facts suggests you might lack a written engagement with a pension plan’s sponsor or administrator, and further might lack a written engagement with the plans’ service provider. Recognizing those and other complexities, lawyer-up. About those of the pension plans that are ERISA-governed, consider Standards of performance of actuarial services, 20 C.F.R. § 901.20 https://www.ecfr.gov/current/title-20/section-901.20. Get your lawyer’s advice about whether the State law that applies to each engagement provides your retaining lien on (i) your certificates and reports not yet paid for, and (ii) those of a client’s records in your possession. If State law provides you some retaining lien, consider the extent to which Federal law supersedes State law, restraining your rights by a duty to return a client’s records. For example, 20 C.F.R. § 901.20(j)(1). Consider distinctions between a client’s records and the actuary’s work product. This is not advice to anyone. BenefitsLink neighbors, what do you think about withdrawing a Schedule SB because it was not paid for?

While tax law might not set a restraint on the number of distributions, a plan’s provisions or a service agreement might. Among other potential restraints, consider whether a service agreement provides a fee on each distribution processed, and whether the plan’s administrator charges the fee against the distributee’s account.

Unlike some recent years’ tax laws for which CCH/Wolters Kluwer decided against publishing a “Law, Explanation & Analysis” book, they published this on the “One Big Beautiful Bill Act”. In it, I see nothing about a remedial-amendment grace. A “written plan” for an employer’s dependent care assistance program might have expressed a limit not as a dollar amount but rather by reference to Internal Revenue Code § 129(a)(2)(A). If so, there might be no need to edit the written plan. But if some change is needed, how long does it take? Two-tenths of an hour? (One to write the amendment or edit the restatement, and another one-tenth to email it to the client.) If a service provider does § 129 plan documents for dozens, hundreds, or thousands of clients, might one use software to send the change quickly? Further, some employers treat a written explanation given to employees as also the “written plan” § 129 calls for. If an employer’s plan will provide or allow $7,500 for 2026, the employer will want to tell its employees that good news. Some communicated this in open-enrollment materials.

Consider that written plan’s provision might govern the plan, even if the provision is not needed for the plan to meet conditions for § 403(b)’s tax treatment. And if a plan is stated using an IRS-preapproved document, a user might have adopted a provision that a plan’s sponsor might otherwise not have intended. If the written plan does not state a “once in, always in” or other restraint against a change, a plan sponsor might consider whether a change would fit with a more-likely-than-not or substantial-authority interpretation of relevant tax law. Or, many plan sponsors might follow the Treasury’s interpretation [hyperlinks below], even if one considers it unpersuasive. 26 C.F.R. § 1.403(b)-5(b)(4)(iii)(B) https://www.ecfr.gov/current/title-26/part-1/section-1.403(b)-5#p-1.403(b)-5(b)(4)(iii)(B); Relief from the Once-In Always-In Condition for Excluding Part-Time Employees from Making Elective Deferrals under a § 403(b) Plan, Notice 2018–95, 2018-52 I.R.B. 1058 (Dec. 24, 2018) https://www.irs.gov/pub/irs-irbs/irb18-52.pdf. I say nothing about what is a correct or incorrect, or persuasive or unpersuasive, interpretation of the Internal Revenue Code. This is not advice to anyone.

I have not seen a situation like the one Lou S. describes. But that’s because plans I work with use a recordkeeper’s nondiscretionary computer-based procedure to approve or deny a claim for a participant loan. A participant’s request either is in good order with the rules the plan’s administrator instructed the recordkeeper to apply, or is NIGO and denied. There would be no human discretion, and the computer would lack information about a future leave. (The loan-application form has the claimant state every fact and every promise needed to follow the plan’s loan provision and procedure, and state everything under penalties of perjury.) If I were the human deciding for a plan’s administrator (and assuming I had caused the plan’s sponsor to revise the plan’s governing documents and written procedures to my satisfaction before I hypothetically consented to serve), I would not deny an otherwise sufficient claim for a participant loan merely because the participant will soon be on an approved leave if the administrator lacks knowledge that (i) the participant does not intend to repay the loan, or (ii) the participant won’t return to work soon enough, or her pay won’t be enough, to reamortize and repay the loan as the I.R.C. § 72(p) rule calls for. I recognize that claims procedures I’m used to can take on extra difficulties when a plan’s administrator (often impractical to separate from the employer) has too much information about the participant. This is not advice to anyone.

That a leave might delay repayments does not excuse the borrower from her obligation. [Treasury] 26 C.F.R. § 1.72(p)-1/Q&A-9 https://www.ecfr.gov/current/title-26/section-1.72(p)-1. Does the plan secure a participant loan with the participant’s account balance? [Labor] 29 C.F.R. § 2550.408b-1 https://www.ecfr.gov/current/title-29/section-2550.408b-1.

In the catch-up rule published on September 16, a search on “limitation year” retrieves eight uses in three bits of text. These describe Treasury’s interpretations about how to coordinate § 401(a)(30), § 402(g), § 414(v), and § 415(c), with differences between or among the plan’s plan-accounting year, the limitation year, and a participant’s tax year. https://www.govinfo.gov/content/pkg/FR-2025-09-16/pdf/2025-17865.pdf

Even if a plan amendment would “provide for a significant reduction in the rate of future benefit accrual”, an individual-account (defined-contribution) I.R.C. § 403(b) retirement plan likely is not an applicable pension plan (because an individual-account 403(b) plan usually is not subject to an I.R.C. § 412 funding standard). If so, ERISA § 204(h) does not require that subsection’s notice. Ordinarily, “a summary description of such modification or change [a material modification or a change of information described in ERISA § 102(b)] shall be furnished not later than 210 days after the end of the plan year in which the change [the plan amendment] is adopted[.]” ERISA § 104(b)(1). If the documents governing the plan provide for a communication, ordinarily a plan fiduciary should obey the documents. See ERISA § 404(a)(1)(D). Whether ERISA § 404(a)(1) duties of loyalty and prudence calls for a communication and when it ought to be provided are questions each plan fiduciary ought to consider. This is not advice to anyone.

Here’s the Treasury’s interpretation: “An employee has a severance from employment when the employee ceases to be an employee of the employer maintaining the plan.” 26 C.F.R. § 1.401(k)-1(d)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(k)-1#p-1.401(k)-1(d)(2). As always, Read The Fabulous Document to discern whether the plan’s provision is narrower. Also, if the participant is covered by the employer’s health plan, the retirement plan’s administrator might consider logical consistency with the health plan. Does the health plan treat the worker as still employed and so regularly covered? Or did the health plan’s administrator send a COBRA continuation notice because the worker no longer is employed? This is not advice to anyone.

Thank you for helping me. Yup, my too-quick typing missed $24,500 as the limit before adding catch-ups. Using I.R.C. § 457(b)(3)(A), an individual may defer up to $49,000 under a § 457(b) plan. That could result in combined retirement savings of $88,500.

For a § 403(b) participant who’s 61, has 15 years of service with a qualified organization, and sufficiently little past contributions, is $39,500 [$24,000 + $12,000 (age-based catch-up) + $3,000 (I.R.C. § 402(g)(7))] her elective-deferral limit?

The final rule was published September 16. The rule would become effective November 17. Whatever the Treasury might have said now has been said (or omitted). https://www.govinfo.gov/content/pkg/FR-2025-09-16/pdf/2025-17865.pdf There are differences between the proposed and final rules. The rule applies “with respect to contributions in taxable years beginning after December 31, 2026. However, see §§ 1.401(k)–1(f)(5)(iii), 1.414(v)–1(i)(2), and 1.414(v)–2(e)(2) and the Applicability Dates section later in [the final rulemaking’s] preamble for additional details regarding applicability dates.” “Prior to the applicability date of the final regulations, a reasonable, good[-]faith interpretation standard applies with respect to the statutory provisions reflected in the final regulations.” Some administrators might find it simpler to start the “practices and procedures” the final rule calls for with January 1, 2026.

Even when a State’s law is ERISA-preempted, and even if unnecessary to meet the statutes’ prohibited-transaction exemptions, about participant loans some plans’ sponsors and administrators might look to local banking practices, including those affected or influenced by a State’s law, as some indirect information about what might be done by a bank “in the business of making comparable loans[.]” See 29 C.F.R. § 2550.408b-1 https://www.ecfr.gov/current/title-29/section-2550.408b-1. For a loan a participant uses to buy her principal residence, a maximum repayment period could be as short as five years or as long as 30 years, but the notes above suggest a consensus around 10-15-20 years.

If a charitable organization’s § 403(b) plan is not a governmental plan or a church plan, I would not (without getting more facts) suggest the organization attempt to treat a plan that includes a § 414A automatic-contribution arrangement as a non-ERISA plan. That’s because I think a court could decide that an organization “established” a plan by deciding essential terms of an automatic-contribution arrangement, or “maintained” a plan by administering an automatic-contribution arrangement’s provisions. austin3515, many of my notes in BenefitsLink discussions avoid stating a conclusion. That’s for more than a few reasons, including: A warning that what I write here is not advice might be ineffective. Even if I expect that a regular BenefitsLink neighbor would not assert any kind of reliance, I still worry about what other readers might perceive. My malpractice insurer suggests cautions about what a lawyer puts in social media. I want my insurance applications to be truthful. I likely haven’t done complete research. It’s work to check all courts’ decisions. Even if I’m completely confident about a point of law, I don’t want something I’ve written to be quoted against my client, even incorrectly. (I’ve had that sad experience with litigation.) I am counsel to law firms other than mine, and avoid publicly expressing a view that might call into question a firm’s advice to their client. I am a coauthor in multi-author books, and avoid publicly expressing a view that might differ with, or embarrass, a coauthor. Likewise, I avoid anything that might embarrass or otherwise burden a publisher I work with. That includes topics and points on which I’m not the publisher’s author or editor. I try to help smart practitioners who can do their own reasoning. But I don’t want to give a too-easy answer to someone who doesn’t think for oneself. And many questions of employee-benefits law don’t have a settled answer. Law is a prediction of what a court would decide; we often don’t know. None of this is advice to anyone.

I’m unaware of any court decision that sets a precedent on your question. The Treasury department’s proposed rule to interpret Internal Revenue Code § 414A proposes no guidance. Even if it did, no court would defer to an executive agency’s interpretation. Further, an interpretation of ERISA § 3 is beyond Treasury’s authority. To discern whether something is an ERISA-governed plan, one looks to whether that something is “established” or “maintained” by an employer. ERISA § 3(1)–(3), 29 U.S.C. § 1002(1)–(3). Even with a “completely voluntary” salary-reduction arrangement (with no nudge), some lawyers suggest it is not feasible to administer contracts according to the conditions for the Federal income tax treatment of Internal Revenue Code § 403(b) without involving the employer in a way that results in a plan established or maintained by the employer within ERISA’s meaning. Even if a court might be persuaded that 29 C.F.R. § 2510.3-2(f) is a correct interpretation of the statute, could an employer decide and administer an automatic-contribution arrangement’s provisions but still meet the interpretation’s “completely voluntary” and “hands off” conditions? There is more than one way to meet Internal Revenue Code § 414A(a)(2)’s tax-qualification condition. Who decides whether a first year’s default deferral is 3%, 4%, 5%, 6%, 7%, 8%, 9%, or 10% of compensation? Does that decision “establish” a plan? Who decides which investment is the arrangement’s qualified default investment alternative? Is it possible to select a QDIA without making a discretionary interpretation of the Labor’s 404c-5 rule referred to in I.R.C. § 414A(b)(4)? Whatever are these and other provisions, who puts them in writing? Does that act “establish” a plan? How does an employer administer § 414A(b)(3)(A)(ii)’s auto-increase without “maintaining” a plan? How does an employer decide the content of, and decide how to deliver, the many required notices without administering or “maintaining” the plan? I’m aware of a strand that points in another direction. A court decision held that an employer that does no more than obey California’s law for its CalSavers IRA program, including its implied-election provision, does not establish or maintain a plan. California public law sets the provisions. “CalSavers is not an ERISA plan because it is established and maintained by the State, not employers[.]” Howard Jarvis Taxpayers Ass’n v. California Secure Choice Ret. Sav. Program, 997 F.3d 848 (9th Cir. May 6, 2021). (A Ninth Circuit opinion is a precedent only for Federal district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.) Lawyers and courts might distinguish a nongovernmental employer’s § 403(b) plan because there are some automatic-contribution provisions that cannot be set and administered by looking only to annuity contracts and custodial accounts, rather than an employer’s decisions. An employer might prefer to presume that an automatic-contribution arrangement is an ERISA-governed plan. Without ERISA supersedure generally and § 514(e)’s preemption of States’ wage-payment laws, some States’ laws require an affirmative written instruction to deduct an amount from a worker’s pay. And under some States’ laws, a violation of a wage-payment law can be not merely a civil violation but also a crime. Also, an arrangement’s default deferral that is invalid under State law might call into question whether the arrangement meets I.R.C. § 414A’s tax-qualification condition. This is not advice to anyone.

I estimate the amount remains $105,000 for 2026. (Organized by Internal Revenue Code section; original amount; rounding increment, and rounding down or nearest; and text of the adjustment provision, with highlighting on the base-period year.) I.R.C. § 45E(f)(2)(C)(iii)(II) [Small employer pension plan startup costs]; $100,000; $5,000, rounded down; “the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2007’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.” But in November 2024 the IRS stated: “Pursuant to section 45E(f)(2)(C)(iii), for a taxable year beginning in a calendar year after 2023, this limitation is equal to the initial limitation of $100,000, multiplied by the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2007’ for ‘calendar year 2016’ in section 1(f)(3)(A)(ii). Because the specification of a 2007 base period to be used for computing an adjustment that is first made for 2024 appears to be an error that has been identified as the subject of future legislative correction, the IRS will calculate and apply the limitation in section 45E(f)(2)(C) by substituting ‘calendar year 2022’ for ‘calendar year 2007’ in section 45E(f)(2)(C)(iii). Using that substitution, the limitation for 2024 was [and for 2025 is] $105,000. IRS Notice 2024-80, 2024–47 I.R.B. 1120 (Nov. 18, 2024), https://www.irs.gov/pub/irs-irbs/irb24-47.pdf (emphasis added). from “How to inflation-adjust amounts not designed in Tom Poje’s spreadsheet” https://benefitslink.com/boards/topic/80456-how-to-inflation-adjust-amounts-not-designed-in-tom-poje%E2%80%99s-spreadsheet/#comment-354056.