Why Plan Design Matters More Than Ever in 2026
A custom-fit retirement plan can shift more benefit to the right people, reduce sponsor risk, and keep the plan compliant. Here is how to think about design choices.
Most plan sponsors I talk with set up their retirement plan years ago and have never revisited the design. The business has grown, the workforce has changed, and SECURE 2.0 has reshaped what is possible, but the plan document still reflects assumptions from a different era.
What “plan design” actually means
Plan design is the set of rules in your plan document: who is eligible, how contributions are calculated, how vesting works, what testing methodology is used, and how distributions are handled. Each lever has a downstream effect on cost, on testing, and on which employees actually benefit.
Three questions worth asking this year
- Are owners and key employees getting full value from the plan? A new comparability or cash balance design can shift significantly more benefit to a target group while still passing nondiscrimination testing.
- Is your safe harbor still the right one? The 2026 contribution limits and the SECURE 2.0 long-term part-time rules have changed the math.
- Is your plan capturing the auto-features it should? Auto-enrollment and auto-escalation now improve outcomes and improve testing results.
If any of these prompt a “we have not looked at that,” it is probably time for a design review.