Q3 2025 Legislative Update: Preparing for the Roth Catch-Up Rule and Other Key Changes

From new compliance deadlines to shifting fiduciary guidance, the regulatory landscape for retirement plan sponsors continues to evolve. In our latest Legislative Update, Retirement Plan Consultants Jim Chapman and Chris Schuppe unpack the most important legislative and legal developments shaping employer-sponsored retirement plans as we head into 2026.

If you’re charged with overseeing a company retirement plan, this quarter’s briefing covers three major topics you need to know about:

• The upcoming Roth Catch-Up rule and what to do before it takes effect
• The Department of Labor’s subtle but significant policy shift on private investments ‍
• The latest litigation trends around plan forfeitures—and how to stay protected
  

Highlights and Takeaways

► The new Roth Catch-Up rule takes effect January 1, 2026.

Plan sponsors must ensure their plans and payroll systems are ready for required Roth catch-up contributions. Confirm your plan allows Roth contributions, coordinate early with payroll providers, and treat 2026 as the true compliance date, despite the DOL’s one-year “grace period.”

► The DOL reopens the door to private investments.

Recent guidance removes prior language discouraging alternative assets in 401(k) plans, potentially allowing private equity exposure—especially within target date funds. While large plans may be the first to explore these options, fiduciaries must conduct enhanced due diligence on valuation, liquidity, and fees.

► Forfeiture litigation is on the rise.

Dozens of class actions challenge employers’ use of forfeitures to offset future contributions, a long-permitted practice. Confirm your plan document explicitly allows all three uses (offset contributions, pay expenses, or redistribute to participants) and that operations align accordingly.