The IRS increased retirement plan contribution limits for 2026, creating a timely opportunity for Employers to strengthen their total compensation strategy, support workforce financial wellbeing, and remain competitive in attracting and retaining talent – particularly experienced and latecareer employees. Higher limits allow employees to save more on a taxadvantaged basis, while reinforcing the value of employersponsored retirement plans as a core benefit.
The SBAM Pooled Employer Plan (PEP) is designed for small business owners by providing ongoing due diligence and oversight of service providers. As an SBAM member, you also gain access to SBAM resources, education, and advocacy tied to evolving retirement legislation.
- Reduced fiduciary exposure
- Simplified administration and compliance
- Cost efficiencies through scale
- Access to tax credits
- A competitive, professional retirement benefit without the traditional complexity
For employers evaluating how to support employees’ retirement readiness – especially in light of higher 2026 contribution limits – the SBAM PEP delivers a practical, employerfriendly solution that balances risk, cost, and value.
2026 Contribution Limits At A Glance
- Employee elective deferral limit: $24,500 for 2026 (up from $23,500 in 2025).
- Standard catchup contribution (age 50+): $8,000, allowing total annual contributions of $32,500.
- Enhanced catchup (ages 60–63): $11,250, enabling eligible employees to contribute up to $35,750 in 2026 if the plan permits.
These higher limits are especially meaningful for senior leaders, longtenured employees, and business owners seeking to accelerate retirement savings while maintaining tax efficiency.
Michigan employers play a critical role in retirement outcomes—not just by offering a plan, but by how effectively it is communicated and positioned.
Key employer impacts include:
- Stronger retention and engagement
Retirement benefits consistently rank among the most valued noncash benefits, particularly for experienced employees nearing retirement.
- Improved utilization of employer match
Many employees still fail to contribute enough to receive the full employer match—leaving compensation on the table.
- Taxefficient compensation planning
Higher pretax contribution limits allow employees to reduce current taxable income while improving longterm financial security.
- Support for an aging workforce
Enhanced catchup provisions under SECURE 2.0 allow employers to better support employees in their peak earning years without increasing payroll costs.
Considerations for employees nearing retirement or leaving employment
Employers should ensure leadership, HR, and payroll teams understand and can communicate key rules clearly:
- Employees may only contribute to employersponsored plans while actively employed.
- Accounts with $5,000 or more may generally remain in the plan after separation.
- Former employees can roll assets into an IRA to continue saving, provided they have earned income.
- There is no longer an age cap on contributing to a traditional IRA.
Clear communication during retirement transitions or offboarding reduces confusion and administrative burden.
Practical actions for Michigan employers in 2026
To fully leverage these changes, employers should consider:
- Updating open enrollment and benefits materials to reflect 2026 limits
- Reinforcing the value of the employer match during annual reviews and enrollment periods
- Training managers and HR teams to explain catchup and enhanced catchup options
- Positioning retirement benefits as part of a broader total rewards and retention strategy, not just a compliance requirement
Why the SBAM Pooled Employer Plan (PEP) matters
For many Michigan small and midsized employers, offering a competitive retirement plan can feel complex, costly, or administratively burdensome. The SBAM Pooled Employer Plan (PEP) is designed to remove those barriers by allowing employers to band together under a professionally managed retirement solution.
The SBAM PEP helps employers:
- Offer a highquality, competitive retirement benefit
- Reduce fiduciary and administrative burden
- Access economies of scale typically reserved for larger organizations
- Stay aligned with evolving regulations, including SECURE 2.0 enhancements
Bottom line:
The 2026 contribution limit increases make this an ideal time for Michigan employers to evaluate whether their current retirement offering truly supports their workforce – and their business goals. The SBAM PEP provides a practical, employerfriendly way to deliver meaningful retirement benefits while staying focused on running the business.