The 2026 limits are in force, including Roth catch-up

The effective date has arrived. On January 1, 2026, the retirement limits in IR-2025-111 and Notice 2025-67 stopped being an announcement and became the rules for the new year. Today is January 4. The first payroll of 2026 is the test, not the press release. A deposit you make this month for the 2025 plan year is still a 2025 deposit. Those two sentences are the whole compliance problem of the first week, and they are easy to blur because the money leaves the same operating account.

Sterling Pension Group is a third-party administrator. We are not an actuarial firm. An independent Enrolled Actuary certifies minimum funding, the deductible maximum, and Schedule SB. This briefing is not tax, legal, or actuarial advice. It is a separation of the year that just started from the year that just ended, written while both are sitting on the same desk.

The table that now applies

For 2026 wages and 2026 plan years, the elective deferral limit is $24,500. The ordinary catch-up, for a participant age 50 or older who is not in the special age band, is $8,000. A participant age 60, 61, 62, or 63 uses $11,250 instead of $8,000, not in addition to it. The defined contribution annual-additions limit is $72,000. Catch-up contributions do not count against that $72,000. The compensation cap is $360,000. The defined benefit dollar limit is $290,000 of annual benefit. The IRA limit is $7,500, and the IRA catch-up is $1,100. The IRS keeps the official comparison on the COLA increases page. If a payroll bulletin quotes a different catch-up for ages 60 through 63, the bulletin is wrong. That figure did not increase.

The 2025 table did not vanish. It still governs 2025 deferrals and 2025 pension accruals. Deferrals were $23,500. Ordinary catch-up was $7,500. Ages 60 through 63 were already $11,250. Annual additions were $70,000. The compensation cap was $350,000. The defined benefit dollar limit was $280,000. The IRA limit was $7,000. IR-2024-285 remains the release for that year. A wire sent in January 2026 to fund a 2025 cash balance credit is tested against the 2025 benefit limit and the 2025 compensation cap. The actuary does not get to use $290,000 because the bank cleared the wire after New Year's Day.

Age bands need a fresh look this week, not a copy of last year's payroll code. A participant who turned 50 on January 1 or will turn 50 during 2026 can use the ordinary catch-up on 2026 wages. A participant who turns 60 this year moves from $8,000 to $11,250. A participant who turns 64 this year moves the other way, from $11,250 back to $8,000. The plan's rule for the year in which the birthday falls has to be applied on purpose. "Leave last year's code" will be wrong for someone on the boundary.

Roth catch-up is operational, not theoretical

The second change that became real on January 1 is the character of certain catch-up contributions. If a participant's FICA wages from the employer sponsoring the plan in 2025 were over $150,000, that participant's 2026 catch-up contributions have to be Roth. The regular deferral of up to $24,500 may still be pre-tax if the plan allows pre-tax deferrals. Only the catch-up slice flips. For most affected participants that slice is $8,000. For ages 60 through 63 it is $11,250. The threshold is "over $150,000," so a participant at exactly $150,000 of the relevant wages is not over it.

The wages are FICA wages from the sponsoring employer, not the $360,000 compensation cap, not the highly compensated employee threshold, and not self-employment income in the abstract. A partner or a sole proprietor who has no FICA wages from the sponsor is often outside the rule. An S corporation shareholder whose W-2 wages from the sponsor cleared the line is often inside it. Employees are tested one by one. A spouse on payroll can be in the rule when the owner is not, or the reverse. If the plan has no Roth feature, an affected participant generally cannot make the catch-up at all. A deemed election, if the document and the payroll system support one, can treat the catch-up as Roth without a new form in the middle of the pay period. If none of that was set up in December, the first payroll is already a correction risk. Stop and fix the code before you run a second payroll on the wrong character.

This rule does not convert a cash balance pay credit to Roth. The credit is an employer contribution under a defined benefit plan. It is not a deferral and not a catch-up. The benefit limits page describes the $290,000 figure as a limit on the annual benefit. It says nothing about Roth, because Roth is not the pension's subject. Do not amend the interest crediting rate, and do not reduce a 2026 pay credit, as a response to a 401(k) wage test. Do tell the CPA which employee dollars were Roth. A Roth catch-up is not a pre-tax deferral on the owner's return. An employer pension contribution is still an employer deduction question, inside the certified maximum, on the employer's return.

Two plan years will be open at once

January is when 2025 administration and 2026 operations overlap, and the overlap is normal. Compensation for 2025 can now be finalized. The census can be closed: hours, entry dates, terminations, and owners. The independent Enrolled Actuary can move a preliminary range toward a valuation. The CPA can be told, with more confidence than in October, what the minimum required contribution and the maximum deductible contribution look like. None of that work uses the 2026 table. Label the file "2025 valuation" on the cover so a helpful person does not update the benefit limit to $290,000 in the name of being current.

The deduction for that 2025 contribution still follows the employer's filing deadline, including extensions. Partnerships and S corporations are generally due March 15, 2026, or September 15, 2026 if extended. Sole proprietors are generally due April 15, 2026, or October 15, 2026 if extended. The contribution has to be in the plan's trust by the deadline you actually use. Minimum funding for the 2025 year is generally due September 15, 2026, whether or not you extend, and some plans owe quarterlies sooner. The deadline calendar earns its keep only if those rows stay separate. Publication 560 is the common public reference for the CPA conversation. It is not a substitute for the actuary's letter.

Meanwhile the 2026 cash balance year, if the plan is ongoing, has already begun. Pay credits accrue under the 2026 formula, on 2026 compensation, under the $360,000 cap and the $290,000 benefit limit. A soft January does not pause the interest credit on last year's hypothetical balance. The interest credit is a plan term. Investment results in the trust are a separate fact. If the trust lost money in the fourth quarter, the employer may have to contribute more to keep the funded status the actuary measures, even though the owner's business felt fine. If the business feels soft and the trust was fine, the opposite can be true. Do not net those stories in your head and skip a deposit. Ask which story the valuation is actually telling.

Form 5500 for the 2025 year is not due this week. For a calendar-year plan it is generally due July 31, 2026, with an extension to October 15, 2026. The IRS Form 5500 corner and the Department of Labor's filing page describe that return. Putting it on a January checklist as if it were due with fourth-quarter payroll creates noise. Leaving it off the annual calendar creates a penalty later. One line, with the real date, is enough.

What the first payroll should show

Pull the first 2026 payroll register before more pay dates accumulate. The deferral for a participant who is trying to max the year should be on a path that reaches $24,500, not $23,500 and not an uncapped percentage that will overshoot in March. Catch-up should be coded only for participants who are eligible, at $8,000 or $11,250, and it should be Roth where the 2025 FICA wage test requires Roth. A participant under the wage line should not be forced into Roth unless the plan was deliberately amended to require that of everyone. A participant over the line should not be given a pre-tax catch-up because the old code was convenient.

Employer money should not be "trued up" to the new $72,000 annual-additions limit in the same journal entry as a 2025 profit-sharing deposit. Those are different years. A combo makes the confusion easier, because the owner thinks of one retirement program. The trust accounting does not. The 401(k) recordkeeper and the pension trustee may be different institutions. Send each of them the amount that belongs to that plan and that year. Administration is largely the refusal to let those amounts share a line.

If you intended a safe harbor match for 2026 and the notice window was missed in early December, do not run the match as if notice had been given. Ask the provider what the plan actually is this year. A nonelective path may still exist later. It is not the same formula, and it is not free. Running the wrong employer contribution for a month creates a correction. Corrections in January are cheaper than corrections in October, and both are more expensive than reading the adoption agreement.

PBGC coverage did not change because the year changed. A plan that was covered in 2025 is not exempt because the benefit limit rose by $10,000. A plan that was exempt is not covered because Roth catch-up turned on. Premiums, if owed, follow the PBGC's own instructions. The question of whether you owe them is still the plan-specific question on the coverage page. If last year's file never answered it, January is a better time than the week a premium was due.

Owners who max the 401(k) quickly, especially those who take compensation in a few large payrolls, will hit $24,500 early. That is allowed. It is not a signal to invent additional deferrals, and it is not the same event as reaching the $72,000 annual-additions limit, which also counts employer money. When you do hit the deferral limit, the next conversation is whether a pension layer belongs under the benefit limit, not whether the payroll company can "just put the rest in." That conversation needs age, compensation, and a census. It does not need to be finished this week. It does need to be kept off the 2025 valuation you are trying to close. The limits should be quoted with the year beside them every time you write them down.

Any figure someone offers as "what you can put in" for 2026, other than the statutory deferral, catch-up, and annual-additions ceilings, is an illustrative contribution until an Enrolled Actuary certifies a range for your plan. Label it that way in the email to your CPA. A labeled illustration can start a conversation. An unlabeled one will be copied into an estimate.

What to do in the next two weeks

Reconcile the first payroll to the 2026 deferral and catch-up figures, including the Roth character where 2025 FICA wages were over $150,000. If the code is wrong, stop and correct it before the next pay date. Do not wait for the W-2 process to reveal it.

In a separate note to the CPA and the actuary, identify any January deposit that belongs to 2025, and state that it is being measured under the 2025 limits. Ask for the timing of the 2025 minimum and the 2025 deductible maximum so the extension decision is based on a range rather than on the new headline numbers. If a 2026 design is what you actually need, start it on the 2026 table with the census attached. Two weeks from today is January 18. By then, an owner who pays themselves unevenly may already have maxed the 2026 deferral. The pension question, if it is coming, should be a plan question and not a payroll patch.