Retirement plan administration continues to evolve, and plan sponsors must stay ahead of regulatory deadlines, operational challenges, and fiduciary responsibilities. From required plan restatements to Roth catch-up contributions for high earners, and navigating overpayment recovery rules, the current landscape demands both strategic planning and technical precision.
This article outlines key administrative priorities for defined contribution plan sponsors, including prototype plan restatements, SECURE 2.0 implementation, and best practices for managing overpayments and Roth contributions.
Cycle 4 restatements: What you need to know
Defined contribution prototype plans are now in the Cycle 4 restatement period. Plan sponsors must adopt updated plan documents by December 31, 2026. These restatements incorporate a range of legislative and regulatory changes, including:
- Increase in the required minimum distribution (RMD) age to 73
- Elimination of the six-month suspension following hardship withdrawals
- Long-term part-time employee eligibility rules
- CARES Act provisions related to waived RMDs during the COVID-19 pandemic
While the deadline may seem distant, plan sponsors should begin coordinating with document providers and legal counsel to ensure timely adoption. Sponsors of 403(b) prototype plans should also be aware that their restatement deadline aligns with Cycle 4.
Optional amendments and administrative complexity
SECURE 2.0 introduced several optional plan features, such as emergency savings accounts, domestic abuse distributions, and expanded in-service withdrawal options. While these features offer flexibility and potential value to participants, they also introduce administrative complexity.
Before adopting any optional provisions, sponsors should consult recordkeepers and payroll providers to assess feasibility. Some features, like emergency savings accounts, may require significant system changes and ongoing monitoring. Others, such as disaster-related distributions, may be easier to implement but still require careful documentation.
Managing overpayments: A new framework
SECURE 2.0 also reshaped the rules around overpayment recovery. Plan administrators now have greater discretion in deciding whether to recoup overpayments, but that discretion comes with fiduciary responsibilities.
Key provisions include:
- Three-year limitation on recovering overpayments unless fraud is involved
- Prohibition on recovering overpayments from beneficiaries
- Restrictions on interest charges, litigation threats, and third-party collection agencies
Plan sponsors should establish a consistent process for identifying and addressing overpayments. At a minimum, this should include an initial outreach to affected participants and documentation of the decision-making process. Even if recovery is ultimately waived, fiduciaries must demonstrate that they considered the issue in good faith.
Roth catch-up contributions for high earners: Preparing for compliance
One of the most significant operational changes on the horizon is the requirement that high earners make catch-up contributions on a Roth basis. This rule, introduced by SECURE 2.0, takes effect on January 1, 2026.
To comply, plan sponsors must:
- Identify participants with prior-year FICA wages over $145,000 (indexed annually)
- Coordinate with payroll systems to track eligibility and contribution limits
- Implement deemed Roth elections for catch-up contributions, with opt-out options
This rule presents particular challenges for employers with multiple subsidiaries or common paymaster arrangements. Proposed regulations indicate that for purposes of determining which participants are subject to the rule, aggregation of compensation across related employers may not be required, but final regulations are still pending. Sponsors should begin internal discussions now to assess data availability and system readiness.
Super catch-ups and Roth employer contributions
SECURE 2.0 also introduced “super catch-up” contributions for participants aged 60 to 63 and the option for participants to elect Roth treatment for employer contributions. While these features are optional, they may appeal to certain employee populations and enhance plan competitiveness.
However, both features require careful coordination with recordkeepers and payroll providers. Sponsors should weigh the administrative burden against the potential benefits before adopting these provisions.
Compliance starts today
Retirement plan administration is increasingly complex, but with the right roadmap, plan sponsors can navigate these changes effectively. By staying informed, engaging service providers early, and documenting fiduciary decisions, sponsors can ensure compliance while delivering meaningful benefits to participants.