Advisories November 17, 2025

Employee Benefits & Executive Compensation Advisory | Do You Need to Send an Annual Notice to Plan Participants?

Executive Summary
Minute Read

If so, you may need to do so by December 1, 2025. Our Employee Benefits & Executive Compensation Group reviews the multiple year-end notices that defined contribution plans must issue to participants.

  • 2025 retirement plan limits
  • Notice content and deadlines
  • Practice pointers

If So, You May Need to Do So by December 1, 2025*

Plan sponsors of defined contribution qualified plans may need to issue one or more annual notices to participants before the end of each plan year. Failure to issue a required annual notice can have significant consequences. For example, if a plan sponsor forgets to issue the annual 401(k) safe harbor notice, the plan could lose its safe harbor status and be forced to limit (or refund) contributions by highly compensated employees.

This advisory serves as a reminder of the multiple year-end notices that defined contribution plans must issue to participants. These notices must be distributed within a reasonable period of time, typically 30 days, before the start of the plan year. 

Important News: IRS Announces 2026 Retirement Plan Limits

The IRS recently announced the dollar limits for qualified retirement plans (and generally for 403(b) and 457(b) plans) for 2026. 

The following is a list of some important limits affecting retirement plans in 2026:

  • The annual limit on elective deferrals to Section 401(k) plans, Section 403(b) annuity contracts, and eligible Section 457 plans is increased to $24,500 from $23,500.
  • The annual limit for catch-up contributions for individuals age 50–59 and age 64 and older to Section 401(k) plans, Section 403(b) annuity contracts, and eligible Section 457 plans sponsored by governmental entities is increased to $8,000 from $7,500. For participants age 60–63, the maximum limit remains at $11,250 if the plan permits this higher limit.
  • The limit for determining which employees may only make catch-up contributions on a Roth basis has increased to $150,000 (calculated using 2025 FICA wages). 
  • The limit on total compensation used in computing contributions and benefits under Section 401(a)(17) is increased to $360,000 from $350,000. 
  • The dollar limit on aggregate annual additions to defined contribution plans is increased to $72,000 from $70,000 plus any catch-up contributions, if available.
  • The dollar limit on annual benefits in a defined benefit plan under Section 415(b) (before adjustment for age and form) is increased to $290,000 from $280,000.
  • The earnings threshold for determining who qualifies as a highly compensated employee is unchanged at $160,000. 
  • The Social Security taxable wage base been increased to $183,600 from $176,100. 

Common Notice Deadlines

The following table provides a list of the content and deadlines for the most common notices that plan sponsors may need to distribute. It includes:

  • Traditional Safe Harbor 401(k) Notice
  • Qualified Automatic Contribution Arrangements (QACA) Notice for a Safe Harbor 401(k) 
  • Eligible Automatic Contribution Arrangement (EACA) Notice
  • Qualified Default Investment Alternative (QDIA) Notice
  • Non-Safe-Harbor Automatic Contribution Arrangement Notice
  • Annual participant fee disclosures 
Notice Summary of Content When/to Whom Potential Consequence for Failing to Timely Deliver Notice
Traditional Safe Harbor 401(k) Notice (Code Section 401(k)(12))
  • Description of safe harbor matching contribution formula.
  • Other available employer contributions.
  • Type and amount of compensation that can be deferred.
  • How and when to make a cash or deferred election (including administrative requirements).
  • Withdrawal and vesting provisions.
  • How to obtain additional information such as an SPD.
  • Right to amend employer contributions mid-year.
  • For plans that satisfy the safe harbor through nonelective contributions, a formal notice is no longer required.
 Disclosure is required to all eligible employees. The notice is deemed to have been given timely if it is provided 30 to 90 days before the beginning of the plan year (exceptions for new plan and newly eligible employees).
  • Possible qualification defect. 
  • Possible loss of safe harbor status
Qualified Automatic Contribution Arrangements (QACA) Notice for a Safe Harbor 401(k) (Code Section 401(k)(13))
  • The same items described in the traditional safe harbor 401(k) notice above.
  • The level of elective contributions that will be made if the employee does not make an affirmative election.
  • The employee’s right to not have elective contributions made or to change the amounts.
  • How contributions will be invested, including how contributions will be invested in the absence of an investment election by the employee.
 Disclosure is required to all eligible employees. The notice is deemed to have been given timely if it is provided 30 to 90 days before the beginning of the plan year (exceptions for new plan and newly eligible employees).
  • Possible qualification defect.
  • Possible loss of safe harbor status. 
  • If the QACA arrangement uses a QDIA, under DOL Regulation 2560.502c-4, a civil penalty of $2,167 may be assessed per recipient who has not made an affirmative investment election.
Eligible Automatic Contribution Arrangement (EACA) Notice (Code Section 414(w))
  • The same items described in the traditional safe harbor 401(k) notice above (to the extent applicable).
  • The same items described in the QACA Notice for a Safe Harbor 401(k) above.
  • The employee’s right to make a permissive withdrawal and the procedures for electing such a withdrawal.
 Disclosure is required to all eligible employees. The notice is deemed to have been given timely if it is provided 30 to 90 days before the beginning of the plan year (exceptions for new plan and newly eligible employees).
  • Possible loss of ability to return contributions to participants.
  • Possible qualification defect.
Qualified Default Investment Alternative (QDIA) Notice (ERISA Section 404(c)(5))
  • A description of the conditions under which assets will be invested in a QDIA.
  • An explanation of the right of participants to direct the investment of assets in their individual accounts.
  • A description of the QDIA, including a description of the fees, investment objectives, and risk and return characteristics.
 Annual notice must be provided to each individual who has not made an affirmative deferral election under the plan at least 30 days before each plan year. Potential loss of 404(c) fiduciary protection for default investments until corrected.
Non-Safe-Harbor Automatic Contribution 
Arrangement Notice (ERISA Sections 404(c)(5), 514(e))
 
  • The same items described in the QDIA notice above.
  • The level of elective contributions that will be made if the employee does not make an affirmative election.
  • The employee’s right to not have elective contributions made, or to change the amounts.
 Disclosure is required to all eligible employees. Notice must be provided within a “reasonable time” before each plan year (e.g., at least 30 days). Under DOL Regulation 2560.502c-4, a civil penalty of $2,167 per required recipient may be assessed if the notice is not provided.
Annual Fee Disclosures (ERISA Section 404)
  • Tabular disclosure showing performance over 1-, 3-, and 10-year periods.
  • Summary of investment fees.
  • Information on how to change investments.
 At least once every 14 months to each participant or beneficiary who can direct investment of an account.  Possible breach of fiduciary duty.

Practice Pointers

  • Many plans permit catch-up contributions for employees who will reach at least age 50 during the year. Effective January 1, 2026, catch-up contributions for certain employees can only be made on a Roth basis. The rule applies to anyone who earned $150,000 or more from their employer (on a FICA basis) in 2025. This limit was recently increased by the IRS, so it is higher than the $145,000 that has been widely reported. Plan sponsors might consider communicating this limit to affected employees.
  • In addition to the year-end notices described above, there are several additional notices that must be provided from time to time. These include Summaries of Material Modifications (SMMs), Summary Annual Reports (SARs), and notices regarding changes to investment funds and certain other information in the Annual Fee Disclosure.
  • Plan sponsors can generally combine multiple notices in a single notice. However, since different notices have different distribution requirements, generally a combined notice should be distributed to the broadest applicable recipient group.
  • These and other notices may also require distribution during the plan year to newly eligible participants or rehired participants.
  • Sponsors of defined contribution plans may also have other notices they must provide participants, such as diversification notices (ERISA Section 101(m), Code Section 401(a)(35)) and quarterly or annual participant statements (ERISA Section 105(a)).
  • With the requirement that newly created plans contain auto-enrollment and escalation features, for the applicable plans, it is worth reviewing the processes and procedures that are in place to ensure that these notices are timely sent to newly enrolled or hired employees.
  • Discuss the features of your cybersecurity provider’s services, including where data is stored, what safeguards are in place to prevent an erroneous distribution, whether they offer any guarantees if an error occurs, and what communications are being shared with participants.
  • The annual notices discussed in this advisory may present an opportunity to enhance the enforceability of plan provisions such as internal time limits on claims, beneficiary designation procedures, venue selection provisions, and mandatory arbitration provisions. Plan sponsors may want to consider enhancing the notices to achieve additional objectives beyond regulatory compliance.

Please do not hesitate to contact your Alston & Bird attorney if you have any questions about notice obligations or if we can assist you in providing proper notices for your qualified retirement plan.

*This deadline applies to calendar-year plans. Non-calendar-year plans have similar requirements, though their deadlines may be different. 

If you have any questions, or would like additional information, please contact one of the attorneys on our Employee Benefits & Executive Compensation team.

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Meet the Authors
Kyle R. Woods
Partner
Phone: +1 404 881 7525
Email: kyle.woods@alston.com
Dakota Sneed
Associate
Phone: +1 404 881 7668
Email: dakota.sneed@alston.com
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