Retirement Consulting and 401ks (Bus)

Jonathan Mack, CRPS^®, AIF^® & Peter McManus, AIF^®, CPFA^®

July 15, 2026

Retirement Plan Consulting · June 2026

Sponsoring a retirement plan is one of the most valuable benefits you can offer your employees, and one of the most regulated. Here are the fundamentals every plan sponsor should understand, from fiduciary duty to fee oversight.

A well-run 401(k) does two things at once: it helps your employees build toward a secure retirement, and it strengthens your ability to attract and keep the people your business depends on. But sponsoring a plan also makes you a fiduciary, with real legal responsibilities attached. The encouraging part is that none of it has to fall on you alone. Below is a plain-language look at what sponsoring a 401(k) involves in 2026, and where the right consulting partner can carry the load alongside you.

2026 CONTRIBUTION LIMITS

$24,500 EMPLOYEE DEFERRAL	$72,000 TOTAL PLAN LIMIT	$7,500 AGE 50+ CATCH-UP	$11,250 SUPER CATCH-UP · 60–63

$24,500

EMPLOYEE DEFERRAL

$72,000

TOTAL PLAN LIMIT

$7,500

AGE 50+ CATCH-UP

$11,250

SUPER CATCH-UP · 60–63

New for 2026 under SECURE 2.0: employees whose prior year wages with your company exceeded $150,000 generally must make any catch-up contributions on a Roth basis, if your plan offers catch-up contributions.

PLAN BASICS

What a 401(k) actually is

A 401(k) is a tax-deferred retirement savings vehicle that allows employees to set aside a portion of their compensation pretax, for retirement. Employers may contribute through matching or profit-sharing arrangements, and all the plan assets are held in trust, separate from company assets.

Tax-deferred retirement savings vehicle for employees
Employer may offer matching or profit-sharing contributions
Pretax (Traditional) and/or Roth (after-tax) options available
Vesting schedules apply to employer contributions
Assets held in trust, separate from employer assets

TAX ADVANTAGES

A benefit that works for both sides of the table

One of the strongest reasons to sponsor a 401(k) is the tax benefit it creates for your employees and for the business. Employer contributions are generally deductible, and new plans may qualify for meaningful startup tax credits.

FOR EMPLOYEES

Pretax deferrals reduce current taxable income
Tax-deferred potential growth — no tax until withdrawal
Roth option (after tax contributions) potential growth tax-free, with tax-free qualified withdrawals

FOR EMPLOYERS

Matching contributions are tax-deductible
Plan administration costs may be tax-deductible
Startup tax credit: 50% of costs up to $5,000/year for three years
Additional credit up to $1,000 per employee for contributions
Available to businesses with 100 or fewer employees

FIDUCIARY DUTIES

Where sponsoring a plan becomes a responsibility

As a plan sponsor, you are a named fiduciary under ERISA. That means you are legally required to act solely in the interest of plan participants and beneficiaries, not the company. These duties apply to investment selection, fee oversight, and plan administration.

This is the part sponsors most often underestimate. Fiduciaries who fail to meet their obligations can be held personally liable for losses to the plan. Maintaining a fiduciary audit file is one of the most important protective steps a plan sponsor can take.

Core responsibilities

Act solely in the interest of plan participants and beneficiaries
Prudently select and monitor investments
Always follow plan documents
Diversify plan investment options
Pay only reasonable plan expenses
Maintain a fiduciary audit file

This is precisely where a consultant earns their place at the table. We share the fiduciary role with you and help document a prudent, repeatable process at every step — so the file tells a clear story if it is ever reviewed.

COMPLIANCE REQUIREMENTS

The annual obligations you can't afford to miss

Ongoing compliance is non-negotiable for plan sponsors. Missing deadlines or failing required testing can trigger IRS penalties or DOL audits. SECURE 2.0 introduced several changes including the new Super Catch-Up provision for participants ages 60–63 that your plan documents must reflect.

Annual Form 5500 filing
Non-Discrimination Testing (ADP/ACP) each plan year
ERISA fidelity bond covering at least 10% of plan assets
Required Minimum Distributions beginning at age 73
Plan document updated for legislative changes
SECURE 2.0 Super Catch-Up (ages 60–63) now in effect

PLAN DESIGN OPTIONS

Design choices that lift participation and ease your burden

Thoughtful plan design can improve participation rates, reduce testing requirements, and make your plan more competitive as an employee benefit. These features are worth evaluating each year as your workforce and goals evolve.

Safe Harbor

Eliminates ADP/ACP testing requirements.

Auto-Enrollment

Increases participation across employee demographics.

Auto-Escalation

Gradually raises deferral rates over time.

Roth 401(k)

Provides tax-free income in retirement.

Profit-Sharing

Adds flexibility for employer contributions.

Loans & Hardship

Withdrawal and loan provisions can be built in.

VENDOR & FEE MANAGEMENT

Fees are where fiduciary scrutiny lands hardest

Fee oversight is one of the most scrutinized areas of fiduciary responsibility. Excessive or undisclosed fees have been the basis for significant participant lawsuits in recent years. Plan sponsors are expected to benchmark fees regularly and document their process.

Benchmark recordkeeper fees annually for reasonableness
Keep revenue sharing transparent and documented
Request fee disclosures under ERISA 408(b)(2)
Review share classes to ensure lowest-cost options are used
Document all vendor selection and monitoring decisions

We don’t stop at servicing your plan — we build a relationship and help you get the most out of it.

HOW WE HELP

You don't have to manage all of this alone

There's no one-size-fits-all retirement plan. Our Retirement Plan Consulting team is dedicated to helping you choose, monitor, and manage your business plan, designing one that meets your objectives while helping your employees pursue their long-term goals. Because we're independent, our recommendations are aligned with your interests, not anyone else's product shelf.

Plan design and provider selection tailored to your objectives
Shared fiduciary support and a documented, prudent process
Investment policy statement guidance, with ongoing quarterly monitoring and review
A customized employee education program built around financial wellness

And we don't stop at the plan itself. Your participants have the opportunity to extend the relationship. We can pair them with our wealth management, financial planning, and investment management teams, so the people who power your business get help building their own futures, too.

Have questions about your company's retirement plan?

Whether you're launching a new plan or re-evaluating one you already offer, we're happy to walk through your options and where we can share the load. Schedule a complimentary consultation with our Retirement Plan Consulting team.

CONTACT YOUR ADVISOR →

This material is provided for plan sponsor informational use only and does not constitute investment, tax, or legal advice. Please consult a qualified advisor regarding your specific situation. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. © 2026 Bartholomew & Company, Inc.