What Advisors Need to Know for 2026: Plan Design, Compliance, and Investment Trends

From the landmark SECURE Acts to the rapid rollout of state mandates and the evolution of AI-powered, digital-first savings experiences, the last decade in the retirement industry has been anything but static. And that pace isn’t slowing down in 2026.

To kick off the year, Vestwell hosted a webinar focused on plan design readiness and investment innovation for 2026. Across compliance updates, plan design shifts, and evolving investment strategies, one theme stood out: the advisors who translate change into practical, client-ready guidance are the ones who will differentiate in the year ahead.

This Q&A recap captures some of the practical insights shared by the retirement plan specialists from Vestwell and Franklin Templeton during the session so you can stay prepared and lead with confidence throughout 2026.

Plan Design & Compliance

1) What plan design changes should my clients be thinking about in 2026?

Several SECURE 2.0 plan design elements discussed during the webinar are actively impacting your clients in 2026, including:

1. Automatic enrollment and escalation – Many plans are experiencing their first required escalation increases this year.
2. Roth catch-up – With Roth catch-up requirements now in effect for certain higher earners, employers should be sure Roth functionality is fully operational.
3. Documentation and operational alignment – 2026 is a key year to confirm plan documents match how plans have been operating under SECURE 2.0.

As Kevin Gaston, Head of Strategic Retirement Consulting at Vestwell, noted, “We are in year four of figuring out how best to operationalize a lot of those changes,” making 2026 a critical year to seamlessly align plan design, operations, and saver communication.

Advisor takeaway: Employers are navigating a steady stream of change, and advisors can add the most value by translating regulation into clear, actionable plan design decisions.

2) What should I know about SIMPLE IRA to 401(k) mid-year conversions?

Mid-year SIMPLE IRA to 401(k) conversions are becoming more common under SECURE 2.0, as employers look for greater flexibility around eligibility, contributions, and plan features. However, these conversions come with clear requirements:

• The new plan must be a Safe Harbor 401(k)
• Termination notices must be issued promptly
• There can be no gap in plan coverage

“If your SIMPLE plan ends on March 31st, your 401(k) plan needs to start on April 1st. There can be no gap between plans. We saw a lot of those instances in 2025, and I think we're going to continue to just see those transitions this year,” explained Stephanie Smith, VP of Plan Design and Documents at Vestwell.

She also highlighted a nuance advisors may want to consider: using a QACA safe harbor, which allows a two-year vesting schedule for required employer contributions, instead of immediate vesting under SIMPLE IRAs.

Advisor takeaway: Transitioning a plan from a SIMPLE IRA to a 401(k) can unlock flexibility, but timing, notices, and design are essential.

3) What is the ‘mega backdoor Roth’ and why doesn’t it work for every plan?

Though mega backdoor Roth strategies often sound appealing, panelists agree they aren’t a fit for every plan.

Mega backdoor Roth relies on after-tax employee contributions, which are subject to ACP testing, an annual test that makes sure employer matching and after-tax contributions aren’t disproportionately favoring Highly Compensated Employees (HCEs). In smaller plans, ordinary employees often don’t contribute enough after-tax dollars to support owners or executives using the feature.

Stephanie and Kevin explained that while the strategy can work well in large plans with broad participation, smaller plans may fail testing, which can lead to costly corrective contributions.

Advisor takeaway: Mega backdoor Roth is powerful in theory, but may be impractical in many small and mid-sized plans. Evaluate demographics and participation before positioning the mega backdoor Roth as a solution for clients.

Investment Innovation

4) What investment trends are shaping 2026 conversations?

Investment conversations in 2026 are being influenced by a mix of continued employee stress, expanding coverage, and rising expectations for better outcomes.

During the webinar, panelists highlighted several forces advisors may already be seeing in client conversations:

• Financial pressure on both employers and employees – Cost pressures are influencing how employers evaluate benefits and how employees engage with their plans, elevating the advisor’s role in balancing affordability with strong savings outcomes.
• Accelerating plan adoption and saver growth – The combined impact of the SECURE Acts and state auto-IRA programs is showing up through coverage expansion, creating new growth opportunities for advisors.
• Greater focus on engagement and outcomes – Employers are looking to investments as an avenue to support participation, confidence, and long-term readiness, and are turning to advisors for guidance.

Mike Dullahan, Director of Retirement Sales Execution at Franklin Templeton, described 2026 as a “transition year,” noting that while stress is still present, there’s also a growing willingness among employers and employees to work together to improve retirement outcomes.

Advisor takeaway: Investment discussions in 2026 should connect market trends to saver behavior, engagement, and readiness.

5) Are target date funds still the default, or is QDIA evolving?

Target date funds (TDFs) remain the foundation for most plans, but QDIA strategies are evolving to introduce more personalization over time.

Rather than replacing target date funds entirely, many employers are exploring dynamic or dual QDIA approaches. This typically involves a TDF as the default early in an employee’s career, then introduces a managed account or multifactor approach later, often around age 50.

Mike Dullahan explained that this structure allows plans to preserve simplicity early on while offering more tailored guidance as savers near retirement and decisions become more complex.

Advisor takeaway: QDIA evolution isn’t about abandoning TDFs. It’s about layering in personalization when it matters most.

6) What about stable value? Is it worth revisiting in 2026?

After several years of unusual market conditions, stable value is re-entering the spotlight in 2026.

Following the rate increases over the last few years, money market funds outperformed stable value, something that historically hasn’t happened for a long time. As interest rate dynamics shift back toward more typical patterns, that relationship is reversing, making it a natural time to revisit capital preservation options.

“That trade is over,” Mike Dullahan said, describing the move as a “return to normalcy.” The panel encouraged advisors to:

• Treat capital preservation as a strategic allocation, not a tactical afterthought.
• Re-evaluate whether money market or stable value remains the right fit.
• Give capital preservation the same level of review as growth-oriented options.

Advisor takeaway: Stable value deserves renewed attention in 2026, especially for employees nearing retirement and seeking consistency.

Want to catch the full conversation? Watch the on-demand webinar to hear directly from Vestwell and Franklin Templeton retirement plan specialists on how advisors can stay ahead of plan design, compliance, and investment shifts in 2026.

Scale With Vestwell in 2026

In 2026, your clients need the right information, support, and expertise to stay ahead of constant change. Whether they are navigating SECURE 2.0 requirements, evolving plan designs, or expectations around personalization, Vestwell helps you turn complexity into clear, client-ready solutions with confidence.

Book a call with Vestwell to see how we can support your growth in 2026.