2026 Retirement Plan Regulatory Update

The 2026 Regulatory Update summarizes significant legal, regulatory, legislative, and investment developments affecting retirement plan sponsors and fiduciaries. It covers ERISA litigation, Department of Labor guidance, IRS requirements, proposed federal legislation, and the growing use of private-market investments and guaranteed-income products in defined contribution plans.

Key developments include:

• Fiduciary process and investment monitoring: Recent court decisions continue to emphasize that fiduciaries are generally evaluated on the prudence of their decision-making and monitoring process, not simply on an investment’s subsequent performance. Committees should use comparable benchmarks, conduct regular reviews, document their analysis, and follow governing documents such as the investment policy statement.

• Department of Labor investment-selection standards: A proposed DOL rule identifies six considerations for selecting designated investment alternatives: performance, fees, liquidity, valuation, performance benchmarks, and complexity. The proposal would provide a process-based safe harbor when fiduciaries follow the prescribed evaluation framework.

• Use of plan forfeitures: The DOL has argued that using forfeitures to reduce employer contributions, when permitted by the plan document, is generally a settlor decision rather than a fiduciary decision. The agency supported employers in three related appellate cases.
• EBSA enforcement priorities: EBSA plans to focus on significant harm and serious misconduct, avoid establishing policy through enforcement, require leadership review of major actions, and complete investigations within stated timeframes whenever possible.

• SECURE 2.0 plan amendments: Most plans must adopt required SECURE 2.0 amendments by December 31, 2026. Governmental plans generally have until December 31, 2029. Plan documents should reflect mandatory provisions and any optional provisions the sponsor has implemented.

• 403(b) Cycle 2 restatements: Employers using pre-approved 403(b) plan documents must generally complete the Cycle 2 restatement by December 31, 2026, even if the plan has not made substantive design changes.
  Long-term care distributions: Beginning in 2026, SECURE 2.0 permits certain penalty-free retirement plan distributions for qualified long-term care insurance premiums. The distributions remain taxable, require supporting documentation, and are subject to specific limits and reporting rules.

• Pending retirement legislation: Current proposals address collective investment trusts in 403(b) plans, direct charitable distributions from employer plans, the federal Saver’s Match, and simplified Form 5500 filing requirements. These items remain proposals or future provisions unless otherwise stated.

• Private markets and guaranteed income: Private equity, private credit, real estate, and embedded annuity products are increasingly being designed for defined contribution plans, often through collective investment trusts, target-date funds, or managed accounts. These products can introduce additional concerns involving liquidity, valuation, fees, benchmarking, complexity, and conflicts of interest.

• Practical takeaway for plan sponsors: More complex investment choices require a higher standard of diligence. Independent advice, defensible benchmarks, careful fee review, and a repeatable, well-documented selection and monitoring process remain important fiduciary protections.

Multnomah Group is a registered investment adviser registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.