What Are 5500 Filings and Who Is Subject to Them?

If you sponsor a retirement plan, chances are you are required to file a Form 5500 each year. And if those filings are being missed, knowingly or unknowingly, the penalties can add up quickly.

Form 5500 is one of the core compliance requirements tied to employer-sponsored retirement plans, yet many business owners do not realize they are responsible for it until a problem surfaces. In some cases, plans go years without proper filings because the employer assumed another advisor, provider, or payroll company was handling it.

In this article, we explain what Form 5500 is, who is required to file it, how the filing rules apply to solo plans, and how Mirador helped one business owner correct a years-long compliance issue before it became significantly more expensive.

What Is Form 5500?

Form 5500 is an annual filing required by the Department of Labor (DOL) and the Internal Revenue Service (IRS) for most employer-sponsored retirement plans and other ERISA-covered benefit plans.

The filing functions similarly to a tax return for the retirement plan itself. It provides regulators with information about the plan’s financial condition, operations, investments, and overall compliance status.

Form 5500 generally includes information such as total plan assets, contributions made during the year, participant distributions, investment performance, plan expenses, and operational details related to the plan itself.

Depending on the type and size of the plan, additional schedules and disclosures may also be required.

Retirement plan compliance is not simply an administrative formality. These filings help demonstrate that the plan is being operated properly and in accordance with federal regulations.

Who Needs to File a Form 5500?

Most employers sponsoring qualified retirement plans are required to file annually. This commonly includes businesses offering 401(k) plans, profit sharing plans, defined benefit plans, and cash balance plans.

Even small businesses and closely held companies may have annual filing obligations.

Solo 401(k) Plans May Be Exempt Until They Reach the Threshold

Solo 401(k) plans with only one participant are generally exempt from filing until plan assets exceed $250,000.

Once that threshold is crossed, the plan sponsor is typically required to begin filing Form 5500-EZ annually.

This is one of the most common areas where business owners unintentionally fall out of compliance. A solo plan may operate for years without filing requirements, then quietly cross the asset threshold without the owner realizing the rules changed.

Why 5500 Filings Are Commonly Missed

Many missed filings are not intentional.

Business owners often assume their payroll company is handling the filing, their financial advisor is responsible for compliance, or an old plan no longer requires reporting. Others believe a solo plan is permanently exempt from filing requirements.

In reality, the responsibility ultimately falls on the plan sponsor.

That is why regular plan reviews and ongoing compliance oversight are important, especially as plan balances grow or business structures evolve.

Penalties for Not Filing Form 5500

Failing to file Form 5500 can result in significant penalties from both the Department of Labor and the IRS.

Penalty amounts are adjusted periodically and can accrue daily for late or missing filings. Currently, penalties can reach up to $2,739 per day from the DOL and $250 per day from the IRS, depending on the type and duration of the violation.

In situations where multiple years were missed, the total exposure can become substantial very quickly.

For business owners, what may begin as a small oversight can eventually turn into a major compliance issue.

Case Study: Unfiled 5500s Discovered During a Plan Review

When a financial advisor referred a high-income client to Mirador to explore a defined benefit plan, our team began with a standard review process.

As part of that process, one of the first questions we ask is:
“We always ask: do you already have a retirement plan in place?”

The client explained that he had established a 401(k) profit sharing plan years earlier. But when we requested the plan documents and reviewed the filing history, we discovered there were no Form 5500 filings on record.

The plan had well over $250,000 in assets, yet no annual filings had been submitted for years.

“When we asked him about the 5500, he said, ‘Form 55-what?’ That was our red flag.”

That immediately raised a significant compliance concern.

How Mirador Helped Correct the Issue

Once the issue was identified, our team moved quickly to evaluate the situation and correct the missing filings.

We confirmed the filing threshold had been exceeded, prepared and submitted the missing Form 5500 filings, and enrolled the client in the Delinquent Filer Voluntary Compliance Program (DFVCP).

By addressing the issue proactively, the client was able to substantially reduce the potential penalties associated with the missed filings.

“Yes, he had to pay fees, but we saved him from a potential $30,000+ hit.”

What Is the Delinquent Filer Voluntary Compliance Program (DFVCP)?

The Delinquent Filer Voluntary Compliance Program (DFVCP) is a correction program offered through the Department of Labor that allows plan sponsors to voluntarily address late Form 5500 filings before being contacted by regulators.

The program is designed to encourage correction and significantly reduce potential penalties compared to what may be assessed during a formal investigation or audit.

For businesses that discover missed filings, acting quickly can make a major financial difference.

Proactive Retirement Plan Compliance Matters

This situation is more common than many business owners realize.

Retirement plan compliance involves more than simply making contributions or setting up a plan document. Sponsors also carry ongoing fiduciary and reporting responsibilities that need to be monitored over time.

At Mirador, every engagement begins with a detailed review of the existing retirement plan structure and compliance history. Whether we are helping design a new defined benefit plan or evaluating an existing 401(k), the goal is to identify issues early and keep the plan operating properly.

That includes reviewing prior Form 5500 filings, plan documents and amendments, contribution structures, participant requirements, and potential compliance gaps that may create future risk.

Don’t Wait for a Penalty Letter

If you sponsor a retirement plan, whether it is a solo 401(k) or a company-wide plan, it is important to make sure your filing obligations are being handled correctly.

Small compliance issues can become expensive problems when they go unnoticed for years.

Mirador helps business owners review retirement plans, identify compliance gaps, and ensure required filings are handled properly before those issues turn into larger financial and operational risks.

Frequently Asked Questions

What is the deadline for filing Form 5500?

For most calendar-year retirement plans, Form 5500 is due on the last day of the seventh month following the end of the plan year. Businesses can typically request an extension if additional time is needed.

Does a solo 401(k) need to file Form 5500?

A solo 401(k) is generally exempt from filing requirements until plan assets exceed $250,000. Once that threshold is crossed, the plan sponsor is typically required to file Form 5500-EZ annually.

What happens if I missed multiple years of Form 5500 filings?

Missing multiple years of filings can create significant penalty exposure. In many cases, businesses may be eligible to correct the issue through the Delinquent Filer Voluntary Compliance Program (DFVCP), which can substantially reduce penalties if addressed proactively.

What is the DFVCP program?

The Delinquent Filer Voluntary Compliance Program is a Department of Labor correction program that allows plan sponsors to voluntarily submit late Form 5500 filings before being contacted by regulators.

Who prepares Form 5500 filings?

Form 5500 filings are often prepared by TPAs, Retirement Plan Consultants, accountants, or other retirement plan professionals. However, the plan sponsor remains ultimately responsible for ensuring the filings are completed accurately and submitted on time.

Is a Safe Harbor 401(k) Plan Right for My Business?

When a business owner decides to offer a 401(k), the goal is often to help employees save for retirement and to provide a benefit that makes the company more competitive in attracting and keeping talent. 401(k) plans come with strict IRS rules, particularly around nondiscrimination testing put in place to make sure plans do not favor highly compensated employees over everyone else.

For many businesses, failing these tests incurs unexpected costs. A Safe Harbor 401(k) plan is one solution to that issue. It is designed to automatically satisfy certain testing requirements, making compliance simpler. But like any retirement plan feature, it comes with tradeoffs.

This article explores what a Safe Harbor 401(k) is, the pros and cons of choosing a Safe Harbor plan, and how to know if it is the right fit for your business.

What Is a Safe Harbor 401(k) Plan?

A Safe Harbor 401(k) plan is a type of retirement plan that requires the employer to make minimum contributions to employees’ accounts. In exchange, the plan is automatically considered to pass IRS nondiscrimination tests.

There are two main types of contributions:

  • A non-elective contribution of at least 3 percent of compensation to all eligible employees, whether or not they contribute.
  • A matching contribution of either 100 percent of employee deferrals up to 3 percent of compensation plus 50 percent of deferrals between 3 and 5 percent, or a straight 100 percent match on the first 4 percent of pay.

All Safe Harbor contributions are immediately vested, which means employees own them as soon as they are deposited.

The Pros of a Safe Harbor 401(k)

Safe Harbor 401(k) plans offer several advantages:

  • Automatic compliance: Employers do not need to worry about failing the ADP or ACP tests. This eliminates the need for corrective distributions to highly compensated employees.
  • Higher contribution potential: Highly compensated employees can contribute the maximum allowed each year without risk of refunds.
  • Simplified administration: With testing satisfied automatically, plan management is less stressful and more predictable.
  • Employee-friendly design: Immediate vesting and guaranteed contributions make the plan more attractive to employees.
  • Flexible structure: Employers can choose between the match or non-elective contribution depending on what fits their budget.

The Cons of a Safe Harbor 401(k)

While Safe Harbor plans solve many compliance headaches, there are downsides to consider:

  • Employer cost commitment: Contributions are mandatory every year, regardless of business performance.
  • Immediate vesting: Because employees are entitled to contributions right away, the plan cannot be used as a retention tool.
  • Limited mid-year flexibility: IRS rules restrict making changes to the plan in the middle of the year.
  • Not always cost-effective: For companies that rarely fail testing, the expense may outweigh the benefits.

Who Should Consider a Safe Harbor 401(k)?

Safe Harbor 401(k) plans are not right for every employer, but they are an excellent fit for:

  • Small to mid-size companies where owners or highly compensated employees want to maximize their own contributions.
  • Companies that fail testing frequently and want to avoid costly corrections.
  • Businesses looking for predictable administration and peace of mind around compliance.
  • Employers competing for talent who want to enhance their benefits package with guaranteed contributions.

Case Study: When a Traditional 401(k) Stops Working

A privately held engineering firm in Southern California had been running a traditional 401(k) plan for several years. The company had:

  • 3 owners, ages 55, 58, and 61
  • 22 employees, a mix of senior engineers and younger project staff
  • Strong, consistent profitability

The owners had a clear set of goals. They wanted to maximize their own retirement contributions in the final decade before retirement, reduce current tax exposure, and maintain a competitive benefits package that supported retention of key staff.

On paper, the existing plan looked fine. It included a discretionary match and profit-sharing. In practice, it created friction every year.

Participation among non-highly compensated employees was inconsistent. Some contributed nothing. Others contributed at very low levels. As a result, the plan repeatedly struggled with ADP and ACP testing.

Each year, the same pattern played out. The owners would defer aggressively early in the year, only to receive corrective distributions after testing was completed. The plan created uncertainty instead of clarity.

After reviewing the data, they considered a shift to a Safe Harbor design. The decision to make the shift came down to control and predictability.

By adding a Safe Harbor non-elective contribution of 3% to all eligible employees, the plan would automatically pass nondiscrimination testing. That single change allowed each owner to contribute the full annual deferral limit without risk of refund.

The cost of the required contribution was meaningful, but it was also measurable and consistent. More importantly, it replaced a pattern of annual disruption with a structure that aligned with their goals.

Going forward, the benefits were easier to understand:

  • Owners could fully fund their own retirement each year without uncertainty
  • The company gained a predictable, budgetable contribution structure
  • Employees received a guaranteed contribution, improving the overall value of the plan
  • Administrative complexity was reduced, with fewer corrections and rework

For this business and its owners, the Safe Harbor design made their retirement plan work the way it was intended to.

Other Plan Design Options to Consider

A Safe Harbor provision is one way to solve for testing and contribution limits, but it is not the only lever available. The right approach depends on what you are trying to accomplish.

Traditional 401(k) with thoughtful design adjustments

A traditional plan can still work well when participation is strong and plan design is aligned with workforce behavior. Adjustments to eligibility, auto-enrollment, or profit-sharing formulas can improve testing outcomes without requiring a fixed employer contribution each year.

Profit-sharing strategies within a 401(k)

Employers can layer in discretionary profit-sharing contributions and use allocation formulas that direct a larger share of contributions to owners or key employees, within IRS guidelines. This approach requires ongoing testing but allows more flexibility in how contributions are allocated.

Cash Balance or Defined Benefit plans

For owners focused on significantly increasing tax-deductible contributions, defined benefit structures, including cash balance plans, operate on a different framework. Contributions are actuarially determined and can be substantially higher than what a 401(k) alone allows. These plans are often used alongside a 401(k), not as a replacement, to create a coordinated strategy.

Combination plan designs

In many cases, the most effective structure is not a single plan, but a coordinated design. A Safe Harbor 401(k) can serve as the foundation, with profit-sharing or a cash balance plan layered on top to increase contribution capacity and improve overall efficiency.

How to Decide if a Safe Harbor 401(k) Is Right for You

The best way to decide is to evaluate your goals and your workforce. Ask yourself:

  • Does your plan regularly fail nondiscrimination testing?
  • Do your highly compensated employees want to contribute the maximum?
  • Can your business commit to required contributions each year?

A Third Party Administrator (TPA) like Mirador can model different plan designs, calculate costs, and show how each option impacts both owners and employees.

Choosing The Right Retirement Plan for Your Business

Safe Harbor 401(k) plans are a proven way to eliminate compliance headaches and give employees meaningful contributions. For the right employer, the benefits far outweigh the costs. But every business is different, and plan design should be strategic.

Thinking about adding a Safe Harbor provision to your 401(k)? Mirador can help you compare the options and choose the structure that makes sense for your business.

How Defined Benefit and Cash Balance Plans Can Help Business Owners Reduce Taxes and Build Retirement Wealth

Many business owners eventually reach a point where their company generates steady, reliable cash flow. At that stage, the conversation often shifts from simply growing the business to managing taxes, protecting income, and building long-term wealth.

Retirement plan design can play a significant role in that strategy.

For owners with strong earnings, certain retirement plans make it possible to save large amounts for retirement while also reducing current tax liability.

Turning Business Income Into Retirement Savings

Profitable businesses often produce income that is heavily taxed at both the federal and state levels. Without planning, a significant portion of those earnings may go directly toward taxes each year.

Retirement planning offers another option.

Plans such as Defined Benefit and Cash Balance plans allow business owners to redirect a portion of that income toward retirement savings. These contributions are generally tax-deductible, meaning the money goes into building a future retirement nest egg rather than increasing the current tax bill.

Instead of paying taxes on those dollars today, they are placed into a structured retirement plan designed for long-term growth.

Why High-Income Business Owners Often Use These Plans

Traditional retirement plans like a standard 401(k) have contribution limits that restrict how much an individual can contribute each year.

Defined Benefit and Cash Balance plans operate differently. They are designed to allow much larger annual contributions, particularly for business owners who are closer to retirement or who generate consistent income through their company.

Because of this structure, these plans can create an opportunity for owners to accelerate retirement savings and build substantial retirement balances in a relatively short time frame.

Many businesses also choose to include employees in the plan, allowing the company to provide retirement benefits that support long-term retention and financial security for the team.

The Tax Deduction That Acts Like a Match

One helpful way to think about the tax advantage of these plans is to view the deduction as a type of government-supported contribution toward your retirement savings.

When you contribute to a Defined Benefit or Cash Balance plan, that contribution generally reduces your taxable income. For business owners in higher tax brackets, the tax savings can offset a meaningful portion of the contribution itself.

Depending on the combined federal and state tax bracket, that offset can sometimes reach 40 to 50 percent of the contribution amount.

In practical terms, the tax deduction acts like a partial match toward the retirement savings you are building. Instead of sending those dollars to the IRS or state tax authorities, the money stays within your retirement plan and continues working toward your long-term financial goals.

Retirement Plans as Part of a Larger Strategy

For owners with strong cash flow, retirement plans are often more than just employee benefits. They can become a key component of a broader financial strategy that connects income planning, tax management, and long-term wealth building.

When retirement contributions are coordinated with business income and tax planning, owners can create a structure that supports both current efficiency and future financial security.

Defined Benefit and Cash Balance plans are not the right fit for every company. They tend to work best for businesses with consistent profitability and owners who want to accelerate retirement savings while managing tax exposure.

When the circumstances align, however, these plans can become one of the most powerful tools available for business owners looking to turn business income into long-term retirement wealth.

If you would like to explore how retirement plan design could help reduce taxes and strengthen your long-term financial strategy, reach out to the Mirador team to start the conversation.

The Importance of Timely 401(k) Contributions

For many employers, managing a retirement plan is one of the most important fiduciary responsibilities they take on. Among the most overlooked compliance risks is the timeliness of 401(k) contributions.

It is not just about following the rules. Delays in funding employee deferrals can impact participant outcomes, increase liability, and trigger costly corrections. Whether you are running a newly implemented plan or managing an established one, understanding the timing requirements and how to meet them is essential.

Why Timely Contributions Matter

Delayed contributions are a fiduciary breach

When employees elect to defer part of their wages into a retirement plan, those dollars must be deposited into the plan promptly. Once withheld from pay, these funds are no longer considered company assets. Failing to deposit them quickly violates ERISA (Employee Retirement Income Security Act) rules and can be seen as a misuse of employee money.

Missed deadlines trigger financial consequences

Late contributions often require plan sponsors to correct the error by calculating and depositing “lost earnings” for each participant. In most cases, the employer must also file a Form 5330 and pay a 15 percent excise tax on the late amounts.

These corrections are time-consuming, complex, and reportable to the IRS and Department of Labor.

What the IRS Requires

The 7-business-day rule for small plans

For plans with fewer than 100 participants, the IRS offers a clear safe harbor: if you deposit deferrals within seven business days of payroll, the contributions are deemed timely.

This rule provides clarity for small business owners and payroll teams, but it also sets a firm limit. Missing this window puts the plan out of compliance.

Large plans must act faster

For plans with 100 or more participants, the IRS applies a more subjective standard: contributions must be deposited “as soon as administratively feasible.”

In practice, this often means within two or three business days. The IRS may examine your payroll capabilities to determine what is feasible based on your internal processes. If you can move money quickly, they expect you to.

“If you are able to pay your employees on Friday, you should be able to also take those funds and put them into the 401(k) that same Friday or the following Monday.”

What Happens If You’re Late?

Late contributions do not go unnoticed. Plan sponsors must take the following steps to resolve the issue:

1. Identify affected payrolls

Every missed deadline must be tracked and documented. This is critical for both internal controls and regulatory reporting.

2. Calculate lost earnings

You must calculate the investment gains employees would have earned if their contributions had been deposited on time. These amounts must then be added to their accounts at the employer’s expense.

3. File and pay excise taxes

In most cases, the employer must file Form 5330 and pay a 15 percent excise tax on the late amounts. This is in addition to the lost earnings that must be funded into the plan.

4. Disclose and report

If the error is significant or systemic, the Department of Labor may require additional disclosures. The issue could also be flagged in the plan’s annual audit or Form 5500 filing.

Common Causes of Late Contributions

Understanding why late contributions happen can help prevent them:

  • Manual payroll processes: Plans that rely on manual file uploads or batch processing are more likely to miss deadlines.
  • Lack of internal controls: Without clear responsibility or oversight, contributions can fall through the cracks.
  • High staff turnover: Changes in HR or payroll roles often result in missed steps or knowledge gaps.
  • Unfamiliarity with rules: Many new plan sponsors are simply unaware of how strict the deadlines are.

These are all preventable with the right systems and support in place.

How to Stay Compliant

Set clear internal procedures

Build a routine around payroll and 401(k) deposits. Assign roles and establish backup procedures so contributions are never delayed due to vacations or staffing changes.

Automate whenever possible

Using automated payroll integration with your 401(k) provider reduces the chance of delay and improves accuracy.

Monitor your timeline

Keep a log of when contributions are withheld and when they are deposited. Regularly audit this timeline to ensure your process is consistent and within the required timeframe.

Partner with a proactive TPA

A good Third-Party Administrator (TPA) will not just manage your compliance after the fact. They will help you establish the right processes up front, monitor for late deposits, and guide you through corrections if needed.

How Mirador Helps

At Mirador, we know that plan sponsors have a lot on their plate. That is why we design retirement plan processes that fit your business, not the other way around.

If a deadline is missed, we help quantify the correction and guide you through the next steps. But more importantly, we work with you proactively to help prevent errors in the first place.

Whether you are managing your first plan or your fiftieth, our team brings deep expertise, steady support, and a commitment to getting it right.

Final Thoughts

Timely 401(k) contributions are not just a compliance checkbox. They are a reflection of your commitment to your employees and your fiduciary responsibility.

Missing a deposit deadline can quickly become a costly and time-consuming problem, but it is one that is entirely avoidable with the right systems and support.

If you are unsure whether your current process meets the timing requirements, let’s talk. Mirador can help you evaluate your current procedures, implement improvements, and stay confidently compliant.

What Happens to a Defined Benefit Plan When You Sell Your Business?

For many business owners, retirement plan design is closely tied to long-term planning for the company. Defined Benefit and Cash Balance plans are often structured with a multi-year strategy in mind, especially for owners who are building retirement savings while their business generates consistent income.

When the time comes to sell the business, a common question arises: what happens to the retirement plan?

Understanding how Defined Benefit plans are handled during a business sale can help owners plan ahead and avoid unnecessary complications during the transaction process.

Planning Ahead for the Owner’s Timeline

One of the most important aspects of retirement plan design is understanding the owner’s long-term goals. Those goals may include continuing to operate the business for many years or preparing for a sale in the near future.

When designing a Defined Benefit plan, it is important to consider how long the owner expects to participate in the plan. Plans that are funded very aggressively can create challenges if the business is sold sooner than expected.

If a plan is heavily front-loaded and the owner exits the business after only a few years, the plan may end up with more assets than needed relative to the promised benefits. Because of this possibility, retirement plan consultants often work closely with owners to understand their exit plans and build a contribution strategy that aligns with those timelines.

Regular communication between the plan advisor and the business owner helps ensure the plan remains aligned with both the company’s performance and the owner’s long-term objectives.

What Typically Happens During a Business Sale

When a company is sold, the buyer generally has their own employee benefit structure. In many cases, the new employer does not continue the seller’s Defined Benefit plan.

As a result, the Defined Benefit plan is commonly terminated as part of the transition process.

Terminating a Defined Benefit plan involves a formal process that ensures all participants receive the retirement benefits they have earned. Once the plan is terminated and benefits are distributed, participants can move their retirement assets into other tax-deferred accounts.

How Retirement Assets Are Handled

When a Defined Benefit plan is terminated, both the business owner and employees receive their accrued retirement benefits.

Those benefits can typically be rolled over into other tax-deferred retirement accounts, such as:

  • An Individual Retirement Account (IRA)
  • An existing or new employer’s 401(k) plan

Rolling the assets into another qualified retirement account allows participants to continue deferring taxes while keeping their retirement savings invested for the future.

For employees, the process is often straightforward. If the new employer maintains a 401(k) plan, participants may be able to roll their assets directly into that plan so their retirement savings remain consolidated in one place.

Why Timing Matters in the Termination Process

While terminating a Defined Benefit plan is a common step during a business sale, the timing of that process can be important.

Starting the termination process with enough lead time before the sale closes helps ensure everything runs smoothly. Defined Benefit plans require specific administrative steps and regulatory procedures during termination. If those steps begin too late in the transaction process, it can create unnecessary complexity for both the seller and the advisors involved in the sale.

By planning ahead and coordinating with retirement plan advisors early, business owners can avoid delays and ensure the plan termination aligns with the timeline of the transaction.

Integrating Retirement Planning With Exit Strategy

Retirement plans and business exit planning often intersect. For owners who have spent years contributing to Defined Benefit or Cash Balance plans, the final stages of the business lifecycle require thoughtful coordination between retirement planning, tax strategy, and the sale process itself.

With proper planning, Defined Benefit plans can still deliver the retirement savings benefits they were designed to provide, even when the company changes ownership.

If you are preparing to sell your business or want to understand how your retirement plan fits into your long-term exit strategy, the Mirador team can help guide you through the planning process.

2026 401(k) Contribution Limits: What Employees and Employers Should Know

Retirement plan contribution limits change periodically, and 2026 introduces several updates that employees and employers should understand.

One of the most notable changes comes from the continued implementation of the SECURE 2.0 legislation, which introduces new catch-up contribution opportunities for individuals approaching retirement age.

For employees saving through a 401(k), these updates expand the amount that can be contributed each year and provide additional opportunities to accelerate retirement savings in the final years before retirement.

The 2026 401(k) Deferral Limit

The employee deferral limit is the amount an individual can contribute to their 401(k) directly from their paycheck.

For 2026, the standard employee contribution limit has increased to:

$24,500 per year

This limit applies to traditional and Roth 401(k) employee salary deferrals. Contributions are typically made gradually through payroll deductions throughout the year.

For most employees, this means choosing a percentage of each paycheck that will automatically be directed into their retirement account.

Catch-Up Contributions for Individuals Age 50 and Older

Employees who are age 50 or older can make additional contributions beyond the standard deferral limit.

For 2026, the catch-up contribution amount is:

$8,000

This allows individuals closer to retirement to increase their annual retirement savings beyond the base limit.

For example:

  • Standard contribution limit: $24,500
  • Age 50+ catch-up contribution: $8,000

Total potential contribution: $32,500 for eligible participants.

Catch-up contributions are designed to help workers who may need additional time to build their retirement savings before leaving the workforce.

A New Catch-Up Provision for Ages 60–63

One of the most interesting updates for 2026 is a special catch-up contribution opportunity for individuals between the ages of 60 and 63.

Under this new rule, employees in that age range can contribute:

$11,250 in catch-up contributions

This is higher than the standard catch-up contribution available to individuals age 50 and older.

The provision is specifically designed to give workers a stronger opportunity to increase retirement savings during the final years leading up to retirement.

However, the rule applies only within a specific age window.

Important Timing Detail

The enhanced catch-up amount applies only while the participant is between ages 60 and 63.

Once an individual turns 64, they revert to the standard catch-up contribution rules.

Because of this limited window, employees approaching those ages may want to review their contribution strategy to determine whether they want to take advantage of the higher catch-up opportunity.

Why These Changes Exist

The enhanced catch-up contribution was introduced as part of the SECURE 2.0 Act, which included a number of updates intended to strengthen retirement savings opportunities for American workers.

Lawmakers recognized that many individuals increase their retirement savings in the years immediately before retirement. The new contribution window for ages 60 through 63 reflects that pattern and allows workers to contribute more during that period.

How Most Employees Fund Their 401(k)

While the annual limits may appear large, most employees do not contribute the full amount through a single deposit.

Instead, retirement savings typically occur through consistent payroll contributions over time.

Employees often choose to defer a percentage of their paycheck, such as:

  • 3%
  • 5%
  • 10%

These contributions accumulate gradually throughout the year.

This approach makes retirement savings more manageable and allows employees to steadily build their account balances without needing to make large lump-sum contributions.

Business owners sometimes have additional flexibility when it comes to funding retirement contributions, but for most employees, automatic payroll deferrals are the primary method of saving.

Why Employers Should Understand These Limits

Even though these limits primarily apply to employee contributions, employers benefit from understanding how they work.

Employers play a central role in helping employees:

  • Understand their retirement plan options
  • Structure payroll deferral elections
  • Take advantage of available contribution limits
  • Maximize employer matching contributions when available

Clear communication about contribution limits and catch-up provisions can also support employee engagement and participation in the retirement plan.

Planning Ahead for 2026 Contributions

With contribution limits continuing to evolve, employees and employers should review retirement plan strategies each year.

Understanding the updated limits for 2026, including the new catch-up opportunity for individuals between ages 60 and 63, can help participants make informed decisions about how much they want to contribute and how to structure those contributions throughout the year.

Consistent contributions, even in smaller percentages of each paycheck, can make a meaningful difference in long-term retirement outcomes. If you have questions about 401(k) contribution limits or want help designing a retirement plan strategy that fits your business, reach out to the Mirador team to start the conversation.

Why Updating Your TPA Is Essential for Your Retirement Plan

Running a business means constant change. You may hire new employees, restructure ownership, or even purchase another company. What many business owners do not realize is that these changes directly affect how your retirement plan is managed. That is why keeping your Third-Party Administrator (TPA) updated is so important.

How Business Changes Affect Your Retirement Plan

Your retirement plan does not exist in a vacuum. Decisions you make throughout the year can shift how the plan operates and how it is tested for compliance. A few examples include:

  • Hiring new employees or partners
  • Buying or selling a business
  • Restructuring ownership shares
  • Experiencing major revenue changes

Each of these updates can influence compliance testing and plan design. Without accurate information, your plan could fall out of compliance, leading to costly corrections or penalties.

The Role of the Annual Compliance Questionnaire

To make the update process simple, we send out an Annual Compliance Questionnaire (ACQ). It is a straightforward way to check in with you once a year and gather any business updates that could affect your plan.

The ACQ covers key details such as:

  • Who owns the business
  • Whether you have purchased or are planning to purchase another company
  • New hires, especially seasonal or large hiring surges
  • Revenue highs or lows

Even if you are not sure whether something matters, sharing it with your TPA ensures your plan is properly aligned.

Controlled Groups and Compliance Testing

Some of the most significant compliance challenges come from changes in business ownership. If you acquire another business, you may inadvertently create what is known as a controlled group or an affiliated service group. These situations require special attention in how retirement plans are tested and administered.

Your TPA uses the information you provide to run accurate non-discrimination testing each year. This testing ensures your plan is fair, compliant, and structured in line with IRS requirements.

Why Timely Updates Build Stronger Plans

At its core, keeping your TPA updated is about partnership. We cannot anticipate the changes in your business unless you share them with us. The more we know, the better we can design and manage your retirement plan so it works for you, not against you.

The Bottom Line

Updating your TPA regularly is one of the simplest ways to protect your retirement plan. Tools like the Annual Compliance Questionnaire make it easy, but the responsibility to provide updates lies with business owners. By keeping your TPA in the loop, you ensure your plan stays compliant, effective, and aligned with your long-term goals.

Roth Catch-Up Contributions in 2026

A conversation about what business owners and high earners should know.

Every so often, a new retirement rule arrives that quietly changes the way contributions flow into a 401k plan.

SECURE 2.0 has brought one of those moments.

Beginning in 2026, a new requirement affects certain catch-up contributions for higher earners. For many business owners and long-time savers who regularly maximize their retirement plans, this change will become part of the rhythm of year-end planning.

In a recent conversation, Mirador’s Rachel Rosner and Alison Quesada talked through what this new rule means in practice, how it touches payroll and plan administration, and how thoughtful preparation can make the transition smooth.

The discussion felt very familiar to anyone who has spent years guiding clients through retirement planning. A rule changes, the industry adapts, and the goal remains the same: helping people continue building meaningful retirement savings.

A New Roth Catch-Up Requirement for High Earners

The change centers on catch-up contributions for participants over age 50.

Many retirement savers already know this pattern well. Once someone reaches age 50, the IRS allows an additional “catch-up” contribution beyond the standard deferral limit. For business owners and highly compensated professionals, that extra room often becomes an important part of long-term retirement planning.

Under SECURE 2.0, beginning in 2026, participants whose wages exceed $145,000 must make those catch-up contributions as Roth deferrals.

Rachel explained the shift simply during the conversation.

“Anyone earning more than $145,000 needs to put any catch-up contributions as Roth deferrals, meaning their taxes are taken out before it hits their 401k account.”

For savers who regularly reach the annual limits, the core contribution strategy continues to function as expected. The adjustment lies in how the catch-up portion is taxed.

Taxes are applied when the contribution is made, and the money grows inside the Roth source within the retirement account.

Why This Rule Touches More Than Just Retirement Plans

Retirement plans never exist in isolation. They interact with payroll systems, tax reporting, accounting practices, and year-end planning decisions.

That broader ecosystem is why this particular rule requires attention.

Rachel pointed out that several moving parts come into play once the Roth catch-up rule arrives.

“It’s going to provide some complexity for payroll and for accountants. There are a lot of pieces at play.”

Payroll systems must track the earnings threshold. Contribution types must be coded correctly. Plans must maintain separate Roth contribution sources.

Each element works together to ensure the catch-up contributions land in the correct bucket.

For business owners and executives who already manage multiple financial priorities, these small operational details matter. A smooth process during the year prevents administrative cleanup later.

Why Mirador Is Tracking This Early

At Mirador, the approach to changes like this tends to start well before a deadline.

The team looks ahead at plan data, identifies participants who are likely to be affected, and keeps those names on a quiet internal watch list.

Rachel described how that preparation works.

“When we receive the 2025 census data, we’re keeping tabs on participants who are over age 50 and typically max out their deferrals. We note the high earners so we can check in during 2026.”

That early awareness allows for helpful reminders at the moments when people actually make decisions about their contributions.

Toward the end of the year, when deferrals begin approaching their limits, Mirador reaches out again.

The conversation tends to sound familiar:

“Remember the Roth catch-up rule we discussed earlier this year? Let’s make sure your deferrals are set up correctly.”

Those small touchpoints often make the difference between a simple adjustment and a complicated correction later.

Fixing Issues Earlier Is Always Easier

Administrative corrections are part of the retirement plan world. They happen when contributions land in the wrong category or when plan rules change.

Rachel mentioned a practical reality many plan administrators understand well.

“Fixing it in 2026 is going to be a lot easier than fixing it in 2027.”

Addressing contribution settings during the year allows payroll systems and plan records to stay aligned. The closer adjustments occur to the original transaction, the easier the process becomes.

That is why Mirador prefers to keep conversations about changes like this ongoing rather than waiting until a filing deadline approaches.

Plan Design Still Matters

Alison added another point that occasionally surprises plan sponsors.

For Roth catch-up contributions to work, the retirement plan itself must include a Roth feature.

Many plans already offer Roth contributions as a standard option. Some older plans were built around traditional pre-tax contributions and may require an amendment.

Alison summarized the consideration clearly during the discussion.

“We need to make sure the plan allows for Roth contributions. Anyone impacted by this rule will need that catch-up money to go into a separate Roth source.”

That step often becomes part of a routine plan review.

Plan sponsors talk with their retirement service provider, confirm the plan structure, and make adjustments where necessary so the new rule functions smoothly.

Why Mirador Includes Roth by Default

When Mirador designs a 401k plan, Roth capability is included automatically.

Rachel explained the thinking behind that choice.

“We set up all of our 401k plans to include Roth automatically. It makes things easier from a compliance and administrative standpoint.”

Offering both contribution types gives participants flexibility. Some savers prefer pre-tax contributions, others value the tax treatment of Roth contributions, and many use a combination of the two as their careers evolve.

With the Roth catch-up requirement approaching, having that structure already in place allows plans to accommodate the new rule with minimal disruption.

What Business Owners and High Earners Can Expect

For most participants, the experience in 2026 will feel familiar.

Contributions will continue through payroll deductions. Annual limits will still guide how much can be saved each year. Retirement accounts will continue building long-term value.

The catch-up portion of contributions for certain high earners will simply follow the Roth path.

That adjustment becomes one more example of how retirement planning evolves alongside new legislation.

For Mirador clients, the preparation begins well before those contributions occur. The team reviews participant data, confirms plan features, and checks in at the moments when adjustments are easiest to make.

Looking Ahead

SECURE 2.0 has introduced several updates that will continue rolling through retirement plans over the next few years.

The Roth catch-up requirement stands among the first changes that business owners and highly compensated employees will experience directly.

With thoughtful preparation, clear communication, and a plan design that anticipates these shifts, the transition becomes part of the normal cycle of retirement planning.

For those who have spent years building their savings through disciplined contributions, the path forward remains familiar.

The goal continues to be the same one Mirador has always focused on: steady progress toward a retirement that reflects the work and success of the people who built it.

Retirement Planning Terms Explained

Retirement planning conversations tend to include a handful of industry terms that come up again and again. For business owners and employees alike, understanding the basics behind these concepts helps make retirement decisions clearer and more confident.

Below are several of the most common terms you may hear when discussing retirement plans.

What is a 401k?

A 401k is an employer-sponsored retirement plan that allows employees to save for retirement through payroll deductions.

Participants choose how much of their paycheck to contribute, and those contributions are invested for long-term growth. Many employers also add contributions through matching or profit-sharing.

A 401k plan can be structured in several ways depending on the goals of the business and the workforce.

What is a Roth contribution?

A Roth contribution is a type of retirement contribution where taxes are paid upfront.

The money goes into the retirement account after income taxes have been applied. The advantage appears later, when qualified withdrawals in retirement are generally tax-free.

Many modern 401k plans allow participants to choose between traditional pre-tax contributions, Roth contributions, or a combination of both.

What is a Safe Harbor 401k?

A Safe Harbor 401k is a type of 401k plan designed to simplify annual compliance testing.

In a traditional 401k plan, the IRS requires annual nondiscrimination testing to ensure the plan benefits employees across income levels. Safe Harbor plans include required employer contributions that automatically satisfy those testing rules.

For many business owners, Safe Harbor plans create more predictable contribution limits and allow owners to maximize their own retirement savings each year.

What is a catch-up contribution?

A catch-up contribution allows participants age 50 and older to contribute additional money to their retirement plan beyond the standard annual limit.

This extra contribution helps individuals accelerate their retirement savings during the later stages of their careers.

Many business owners and long-time savers rely on catch-up contributions as an important part of their retirement strategy.

What is a Defined Benefit Plan?

A Defined Benefit plan is a retirement plan that promises a specific benefit at retirement, often calculated using salary history, years of service, or age.

These plans are commonly referred to as pensions. The employer contributes funds into the plan over time in order to deliver that future benefit.

Defined benefit plans remain a powerful retirement tool for business owners who want to make larger tax-deductible contributions than a 401k alone typically allows.

What is a Cash Balance Plan?

A Cash Balance Plan is a modern type of defined benefit plan.

While it still operates under pension rules, the benefit is presented in a format that resembles an account balance. Each year the account receives contribution credits and interest credits, which grow over time.

Cash balance plans are frequently paired with 401k plans to allow business owners and high earners to build retirement savings more quickly while maintaining predictable contribution structures.

What is a Third-Party Administrator (TPA)?

A Third-Party Administrator, often called a TPA, is the firm responsible for the technical design and compliance administration of a retirement plan.

TPAs handle tasks such as annual testing, plan documents, contribution calculations, and regulatory filings. They work alongside recordkeepers, payroll providers, and financial advisors to keep retirement plans operating smoothly.

At Mirador, retirement plan design and administration are the core of what we do, allowing business owners and advisors to focus on the bigger picture while the technical details are handled with care.

What is a Plan Sponsor?

A plan sponsor is the employer that establishes and maintains the retirement plan for its employees.

The sponsor is responsible for selecting the plan structure, choosing service providers, and ensuring the plan operates according to IRS and Department of Labor regulations.

Many plan sponsors work closely with retirement consultants and TPAs to ensure their plans continue to serve both the business and its employees well over time.

Retirement planning tends to become clearer once these foundational terms are familiar. Each type of plan and contribution strategy plays a role in building long-term financial security.

As retirement rules continue to evolve, understanding these core concepts helps business owners and employees make thoughtful decisions about the plans that support their future.

If you want to make sure your plan is prepared and operating smoothly under the new Roth catch-up rules, reach out to the Mirador team to start the conversation.

Safe Harbor vs. Profit Sharing vs. Defined Benefit

What It All Means for Small Business Owners

If you run a small business, especially with fewer than 50 employees, you have probably heard terms like Safe Harbor, Profit Sharing, Defined Benefit, Cash Balance, non-discrimination testing, and gateway testing. At some point, the natural reaction is to wonder why all of this is even necessary.

The answer is both simple and important. Retirement plans are regulated because they receive powerful tax advantages. In exchange for those tax benefits, the law requires that plans operate fairly and equitably for employees, not just owners. That structure is not designed to create friction. It is meant to protect everyone’s benefits, rights, and long-term savings.

Let’s break this down clearly.

Why Retirement Plans Have Rules in the First Place

When you sponsor a 401(k) or retirement plan, the government provides tax advantages to both you and your employees. Contributions are tax-deferred, growth is tax-deferred, and employers may deduct contributions.

Because of those benefits, federal law requires that plans are communicated to eligible employees, provide equitable opportunities to participate, avoid favoring only owners or highly compensated employees, and follow annual testing requirements.

You cannot create a plan that primarily benefits you as the owner while excluding or disadvantaging employees. The law prevents that outcome, which is why testing exists.

What Is a Safe Harbor 401(k)?

A Safe Harbor 401(k) is a type of plan that includes a mandatory employer contribution designed to help the plan pass annual non-discrimination testing automatically.

There are two common structures. One is a matching contribution, and the other is a 3 percent non-elective contribution. The 3% non-elective means the employer contributes 3 percent of compensation to eligible employees regardless of whether they defer their own pay.

Safe Harbor plans come with defined characteristics. The employer contribution is required each year, contributions must be immediately 100% vested, and plan changes must follow specific timing and notice requirements. In exchange for these requirements, the plan avoids certain annual discrimination tests.

Safe Harbor creates predictability and stability. It allows owners to defer up to the annual IRS maximum without worrying about refunds due to failed testing.

Under SECURE 2.0, some notice requirements have been relaxed, but the structure remains rule-driven. Any changes must be made prospectively. You cannot decide mid-year to remove Safe Harbor retroactively.

For many small businesses, Safe Harbor creates clarity and consistency.

What Is Profit Sharing?

Profit Sharing is an employer contribution that is entirely discretionary. Each year, the employer decides whether to contribute, how much to contribute, and how to allocate those contributions within legal limits.

Unlike Safe Harbor, Profit Sharing is not required annually. If cash flow is tight, contributions can be skipped.

These contributions are often subject to a vesting schedule, meaning employees earn ownership over time. From a design perspective, Profit Sharing provides flexibility and allows for creative allocation formulas, including cross-tested or new comparability designs that can favor owners within legal boundaries.

Profit Sharing is frequently paired with Safe Harbor to increase overall contribution levels while maintaining flexibility.

What Is a Defined Benefit or Cash Balance Plan?

Defined Benefit plans, including Cash Balance plans, operate differently from 401(k) plans.

A 401(k) is a Defined Contribution plan, where contributions are defined and the final benefit depends on investment performance. A Defined Benefit plan, on the other hand, promises a specific benefit at retirement. Contributions are calculated by an actuary to fund that obligation.

Cash Balance plans are a form of Defined Benefit plan that present the benefit as a hypothetical account balance, although they remain Defined Benefit plans legally.

These plans require actuarial calculations and annual testing. Contributions are often significantly higher than 401(k) limits and are particularly useful for older, high-income business owners.

Defined Benefit and Cash Balance plans use pooled funding at the plan level, and the actuary ensures compliance through complex coverage and funding tests. These plans are often paired with a 401(k) and Profit Sharing plan in what is commonly called a combo plan.

Why Combine Safe Harbor, Profit Sharing, and Cash Balance?

When structured properly, these components work together.

The Safe Harbor portion provides required baseline contributions and stability for testing. Profit Sharing adds flexibility and allows for strategic allocation of contributions. The Cash Balance or Defined Benefit plan creates the opportunity for significantly larger deductible contributions, which is especially valuable for owners nearing retirement.

The actuary performs what is often called combo testing, ensuring the Defined Contribution and Defined Benefit components align under coverage and gateway testing rules. This process is often described as a balancing act behind the scenes.

From an employee perspective, they see their 401(k) deferrals along with employer contributions through Safe Harbor and Profit Sharing. From an owner’s perspective, the structure can create higher contribution capacity, strong tax deductions, and accelerated retirement savings.

When designed thoughtfully, the result supports both employee benefits and owner objectives.

What Is Non-Discrimination Testing and Why Should You Care?

Testing ensures that plans do not disproportionately benefit highly compensated employees over others.

This includes tests such as ADP and ACP testing, top-heavy testing, coverage testing, and gateway testing in combo plans. Safe Harbor plans help avoid some of these requirements.

Without Safe Harbor, owners may face contribution limits or refunds if the plan fails testing. These rules protect fairness and preserve the tax-qualified status of the plan. Losing that status would remove the tax advantages that make these plans valuable.

Even if testing feels administrative, it plays a foundational role.

What Does This Mean for Small Businesses Under 50 Employees?

Smaller businesses often have advantages when it comes to retirement plan design. With fewer employees, testing can be easier to manage, and plans can be more customized. Owners may also be able to achieve higher contribution levels.

At the same time, flexibility remains important. Understanding the differences between Safe Harbor and discretionary Profit Sharing, Defined Contribution and Defined Benefit plans, vesting schedules, and annual testing requirements has a direct impact on cash flow, employee expectations, and long-term planning.

You do not need to master the technical calculations, but you do need to understand how these pieces fit into your business.

A Practical Way to Think About It

If your priority is simplicity and predictable compliance, Safe Harbor may be appropriate. If you want flexibility from year to year, Profit Sharing adds optionality. If your goal is to maximize deductible contributions and accelerate retirement savings, a Cash Balance or Defined Benefit plan may be worth exploring.

The right structure depends on several factors, including owner age, income levels, employee demographics, cash flow stability, and long-term goals.

There is no universal answer. There is thoughtful design.

At Mirador, the focus is on explaining these concepts clearly and helping business owners align plan design with their financial and operational goals. Retirement planning becomes more effective when it is built with intention, clarity, and long-term perspective.

Frequently Asked Questions

What is the difference between Safe Harbor and Profit Sharing?

Safe Harbor is a mandatory employer contribution structure that helps a 401(k) plan automatically satisfy certain non-discrimination tests. Profit Sharing is discretionary and can vary year to year.

Do I have to offer Safe Harbor every year?

If your plan is designed as a Safe Harbor plan, the required contribution must be made annually. Changes must be made prospectively and in accordance with plan amendment rules.

Is Profit Sharing required?

No. Profit Sharing contributions are optional and can be skipped in years when cash flow is tight.

What is a Cash Balance plan?

A Cash Balance plan is a type of Defined Benefit plan that allows significantly higher contributions than a traditional 401(k), especially beneficial for higher-income or older business owners.

Why do retirement plans require testing?

Testing ensures fairness between owners and employees and protects the tax-qualified status of the plan.

Can I combine a 401(k) and a Cash Balance plan?

Yes. Many small businesses use a combination of Safe Harbor 401(k), Profit Sharing, and Cash Balance to maximize contributions while satisfying legal requirements.

Is this worth it for a business with fewer than 50 employees?

Often, yes. Smaller groups can create highly efficient plan designs. The right structure depends on demographics and goals.

If you are hearing these terms regularly and wondering how they apply to your business, that is a good place to start. Clarity creates confidence. Thoughtful design creates long-term impact.

Retirement Plan Design in a Multi-Generational Workforce: What Employers Need to Know

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A Workforce Spanning Four Generations

Today’s workforce is unique: Baby Boomers are delaying retirement, Gen X is approaching it, Millennials are in their peak career-building years, and Gen Z is just beginning. For employers, this generational spread creates both challenges and opportunities when it comes to retirement benefits.

Retirement plan design is no longer about a single formula. It’s about creating flexible, tax-savvy strategies that meet employees where they are, while ensuring owners and highly compensated employees maximize savings and stay compliant.

Gen X: Catching Up and Closing the Gap

The average Gen Xer is around 55 years old, which means retirement is no longer abstract, it’s on the horizon. This group often faces the dual pressure of paying for college-aged children while trying to maximize retirement savings.

Plan features that matter most for Gen X:

  • Catch-up contributions for employees 50+ to accelerate savings.
  • Defined benefit or cash balance plans that allow higher deductible contributions than 401(k)s alone.
  • Options for stable value or fixed income allocations to protect hard-earned savings from volatility.

For employers, offering robust DB/DC combinations creates a powerful incentive for this group to stay engaged and loyal.

Millennials: Balancing Growth and Security

Millennials are now the largest generation in the workforce, often juggling mortgages, young families, and career growth. While they may not save at the same rate as older peers, plan design can encourage them to build long-term wealth.

Plan features that resonate with Millennials:

  • Employer matching on 401(k) contributions reinforces the value of starting early.
  • Profit-sharing contributions reward loyalty and align employee outcomes with business success.
  • Access to financial education tools improves confidence in investing decisions.

This generation values transparency and fairness, making nondiscrimination testing and equitable benefit structures not only compliance requirements but cultural essentials.

Gen Z: Transparency and Tech-Forward Access

The youngest members of the workforce may not yet prioritize retirement, but they do prioritize information and flexibility. For Gen Z, it’s less about the size of the contribution today and more about the clarity of the system.

Plan features that matter most for Gen Z:

  • Transparency into investment allocations, with dashboards that show where their money is going.
  • Mobile-first tools that allow them to manage contributions in real time.
  • Flexibility to adjust allocations as their financial literacy grows.

Employers who position retirement plans as part of a larger benefits package that supports long-term security will stand out when attracting and retaining Gen Z talent.

The Balancing Act for Business Owners

For high-earning business owners and leadership teams, the challenge is balancing the diverse needs of a multi-generational workforce with their own goals: maximizing tax savings, building personal retirement wealth, and remaining compliant with IRS regulations.

This is where strategic plan design becomes critical. For example, nondiscrimination testing ensures that highly compensated employees don’t benefit disproportionately compared to rank-and-file employees. (For more on compliance, see our article on Controlled Groups and Affiliated Service Groups). The right DB/DC structure aligns everyone’s interests, owners save more, employees feel supported, and the company stays compliant.

The Mirador Perspective

At Mirador, we believe retirement planning is about more than meeting contribution limits. It’s about designing plans that reflect the realities of today’s workforce while giving business owners the tax savings and flexibility they deserve.

Ready to see how the right plan can help you save on taxes, maximize retirement savings, and attract top talent across generations? Reach out to our team to start the conversation.