Kelsey’s (K)orner: The Tax Credit That (Almost) Works

While the staff statement is undeniably important for PEPs, the biggest takeaway may be what it didn’t say. In May 2026, the Securities and Exchange Commission (SEC) issued a staff statement on pooled employer plans (PEPs), which was widely welcomed for resolving two important securities law questions. First, the SEC staff announced that an ERISA-covered PEP would be allowed to rely on the “single trust” exclusion to avoid registration as an investment company. Second, the staff confirmed that collective investment trusts (CITs) may use the existing Rule 180 exemption when issuing interests to qualifying PEPs that include self-employed individuals. While the statement is undeniably important for PEPs, the biggest takeaway from the staff statement may be what it didn’t say about the multitude of other multiple employer plans (MEPs). A Quick Refresher: Not Every MEP Is a PEP The retirement industry loves a good acronym, and sometimes they are confused (or confusing). MEPs and PEPs are sometimes used interchangeably, but they are not synonymous — all PEPs are MEPs, but not all MEPs are PEPs. Before the SECURE Act, MEPs generally fell into two categories: “closed MEPs,” which are plans sponsored by employers that have commonality, such as members of corporations that share ownership but don’t meet the controlled group rules; and “open MEPs”, which cover employers without commonality, such as professional employer organization (PEO) plans. The SECURE Act introduced a third (somewhat overlapping) MEP structure: the pooled employer plan. PEPs are MEPs that meet specific requirements under ERISA, such as being operated by a registered pooled plan provider. So, a closed MEP may be a PEP or not, just as an open MEP may be a PEP or not. While there has been an increasing number of PEPs in the market, there are still a significant number of MEPs — of both the open and closed varieties. Of the over 2,000 Form 5500s that included a MEP Schedule for 2024, only 234 indicated they were PEPs. Historically, whether a plan qualified as a PEP or another type of MEP had relatively little significance from a securities law perspective. Following the SEC staff statement, that distinction has become much more important. What the SEC Actually Said The staff statement addresses two separate securities law issues. First, the staff addressed Section 3(c)(11) of the Investment Company Act, which excludes certain plans from the definition of an investment company. As the SEC explained, the statute was written to exclude plans maintained through a single trust by a single employer, a union, or a group of employers so closely related as to being regarded as a single employer. A MEP (particularly an open MEP), by definition, does not seem to fit that framework. Although it has a single trust, it covers multiple unrelated employers. Citing Congressional intent to treat PEPs as single-employer plans for purposes of ERISA and the tax code, the SEC staff stated they would not object if an ERISA-covered PEP relies on the Section 3(c)(11) exclusion, provided the plan satisfies the applicable statutory requirements. The staff also addressed Rule 180 under the Securities Act. Rule 180 impacts the ability of CITs to be exempt from Securities Act registration. Generally, CITs do not register as a security because they rely on an exclusion for CITs consisting solely of assets of certain benefit plans. However, under the statute, a CIT cannot rely on the exemption if it accepts assets from a plan covering self-employed individuals (read: any sole proprietor or partner in a partnership). The SEC, however, issued Rule 180, which exempts CITs that accept assets from plans covering self-employed individuals, but only if that rule’s requirements are met. Among the requirements: the plan can cover only employees of a single employer or interrelated partnerships. Here again, a MEP (particularly an open MEP), by definition, does not seem to fit that framework. And again, citing the Congressional intent to treat PEPs as a single employer plan, the SEC staff stated it would not object if a CIT relies on Rule 180 when issuing interests to an ERISA-covered PEP that includes self-employed individuals. Both of these conclusions provide the practical guidance that CIT issuers and PEP providers have been seeking. But equally notable is what the statement does not say. What About Other Multiple Employer Plans? The SEC did not refer to “multiple employer plans” in the staff statement; it consistently referred to “pooled employer plans.” Naturally, then, questions arose as to whether the SEC intended these conclusions to apply only to PEPs or to MEPs generally. Informal discussions with SEC staff indicate the answer is the former—the relief in the staff statement is limited to PEPs. In the staff statement, the SEC repeatedly cited Congress’s treatment of PEPs under the SECURE Act when discussing both Section 3(c)(11) and Rule 180 issues. In the SECURE Act, Congress expressly amended ERISA and the tax code to treat PEPs as single-employer plans. The SEC staff viewed that legislative intent as supporting analogous treatment under the securities laws. Other MEPs are not treated the same way; therefore, the rationale supporting the staff’s conclusions for PEPs does not necessarily extend to other pooled arrangements. To be clear, these discussions were informal and do not constitute an official Commission interpretation. Nevertheless, they are consistent with both the text of the published staff statement and the statutory analysis on which it is based. Where Do MEPs Go from Here? As already noted, while PEPs are growing in number, there are still a significant number of non-PEP MEPs. For PEP providers, the staff statement substantially reduces regulatory uncertainty. For providers of other MEPs, the staff statement leaves them considerably less settled. A non-PEP MEP cannot simply assume that it may rely on the Section 3(c)(11) analysis described in the staff statement. Similarly, providers relying on Rule 180 to offer CITs to plans that include self-employed individuals should recognize that the published guidance does not expressly extend to those arrangements. But this does not necessarily mean that non-PEP MEPs are investment companies or that CITs cannot qualify for the exemption with non-PEP MEPs. Rather, it means the securities law analysis may differ between otherwise similar MEPs based on their status as a PEP. A non-PEP MEP will need to comply with the existing rules and cannot take comfort from the SEC staff statement. While PEP status has been a plan and fiduciary-design consideration for years, the staff statement may now also mean it influences the available investments and the required design for securities law compliance. Next Steps The SEC’s guidance is an important reminder that design can carry implications beyond ERISA and the tax code. Technically, the staff statement’s inapplicability leaves non-PEP MEPs where they have been for years and doesn’t change the rules. However, it undoubtedly raises questions about Investment Company Act registration and, for plans covering self-employed individuals, access to CITs. It is now clear that whether your MEP is a PEP affects not only ERISA fiduciary duties and tax code requirements but also securities law consequences. As a result, providers of non-PEP MEPs should consider evaluating their stance on securities compliance and whether they can or want to satisfy the requirements to be a PEP going forward. Original article: https://www.napa-net.org/news/2026/6/the-sec-clarified-peps--but-left-other-meps-behind/

A new survey by Voya Investment Management finds that participants who invest in target date funds (TDFs) feel significantly more confident about their retirement savings than their peers who are not invested in TDFs. When asked whether investing in a TDF makes them feel more confident about making good investment decisions, 95% of employed TDF investors said yes, including 39% who strongly agreed. Among those who don’t invest in TDFs, total agreement dropped to 75%, with only 14% strongly agreeing. The survey found that 71% of employed TDF investors said they feel confident that they’ll reach their retirement goals, compared to 58% of non-TDF investors. Employed TDF investors also report less stress — more than 90% said that investing in a TDF helps reduce the stress of retirement planning. Among those who don’t use TDFs, 73% said the same. Among participants with access to a TDF, 83% of employees and 86% of retirees reported that they chose to invest in it. The top reasons offered for their TDF investment decision include: professional management, ease of use, built-in diversification, and ongoing rebalancing. Sources: https://grothman.house.gov/news/documentsingle.aspx?DocumentID=503 https://www.congress.gov/bill/119th-congress/house-bill/7362?loclr=cga-committee https://www.asppa-net.org/news/2026/2/form-5500-more-time-to-comply/ https://www.napa-net.org/news/2026/2/bipartisan-bill-introduced-to-simplify-form-5500-reporting/

The ultimate proof of retirement plan participant success is in the results: whether the participant achieves a financially secure retirement. In the meantime, plan sponsors can look at a variety of metrics to help evaluate and track plan outcomes. The 2025 PLANSPONSOR Defined Contribution Survey identified several of these metrics, summarized below. While not exhaustive, this overview illustrates the range of lenses sponsors use to gauge employee financial wellness and retirement readiness, beyond analysis of plan lineup investment options and performance. Plan Participation & Contribution Behaviors. Participation and savings patterns offer insight into how employees are engaging with their plan and whether contribution behaviors are supporting long-term savings goals. • Plan Participation Rate: Percentage of eligible employees actively contributing to the plan. • Average Deferral Rate: Average percentage of compensation deferred by participants. • Employer Match Utilization Rate: Percentage of participants contributing enough to receive the full employer match. Auto-feature Effectiveness. These are metrics tied to automatic plan features and their influence on participant behavior over time, including retention, savings progression, and inertia effects. • Automatic Enrollment Capture Rate: Percentage of automatically enrolled participants who remain in the plan. • Automatic Enrollment Opt-out Rate: Percentage of automatically enrolled participants who decline participation. • Automatic Escalation Success Rate: Percentage of participants whose contribution rates increase as scheduled. Participant Engagement. Engagement metrics provide insight into whether and how participants are interacting with plan resources, tools, and support channels. • Participant Registration Rate: Percentage of participants registered for online plan access. • Online Engagement Rate: Frequency of participant interaction with plan websites, tools, or planning resources. • Call Center Volume and Participant Inquiry Patterns: Frequency and subject matter of participant inquiries to plan service centers. Financial Wellness and Stress Indicators. These metrics offer context around participants’ broader financial health, highlighting behaviors that may affect long-term savings. • Financial Education Engagement Rate: Participation in advisory sessions or group education programs. • Loan and Hardship Withdrawal Rate: Percentage of participants taking plan loans or hardship distributions. From Metrics to Meaning Plan sponsors have lots of data at their disposal to evaluate plan success. Working with an advisor can help sponsors identify the most relevant data points to track, interpret results in context, and emphasize progress over time rather than relying solely on snapshot comparisons or industry averages — all while remaining aligned with the plan’s overall goals. Sources: https://www.plansponsor.com/surveys/2026-dc-survey-plan-benchmarking/

In many ways, saving through your employer-sponsored retirement plan has never been more convenient. Automatic enrollment, auto-escalating contributions, and target date funds can make saving feel almost effortless by quietly adjusting your contributions and investments over time. While automatic features remain powerful allies in your savings strategy, you may also want to ensure your overall approach to retirement savings reflects any significant life events, like marriage, kids, job and income changes, and shifting financial priorities. Below are some ideas to consider for keeping your savings strategy aligned with your goals as life changes happen. Increase your contributions as your earnings rise. Increase your contribution rate to reflect raises and bonuses, so your long-term savings potential keeps pace with your earnings. Reassess your savings rate as you pay down debt. As credit card balances, personal loans, student debt, or other monthly obligations decline, you may gain added flexibility to increase retirement plan contributions. Contribute enough to maximize your match. If you haven’t reviewed your elections in a while, you could be leaving part of an employer match on the table. Revisit beneficiary designations after major life events. If you experience changes in your marital status, dependents, or other personal circumstances, you may want to adjust your beneficiary elections. Take advantage of catch-up opportunities. For the 2026 tax year, participants aged 50 and older can contribute an additional $8,000 above the standard limit, with higher catch-up amounts — up to $11,250 — available for participants aged 60-63, subject to IRS limits and plan provisions. Retirement planning is a long game, and even small misalignments can compound over time and meaningfully affect your retirement readiness. Decisions made in the final years leading up to retirement can be especially important with less time to course correct. Periodic plan check-ins can go a long way toward keeping your savings strategy aligned with the realities of your life. Even if you’re using a target date fund or your plan’s automatic features, taking the time for quarterly or annual reviews can help you stay on track toward meeting your retirement goals.  Source: https://www.psca.org/news/psca-news/2025/6/automatic-features-have-tripled-in-use-since-2007

When employees leave an organization, they face an important decision about their retirement savings. Do they leave them in their former employer’s plan? Roll them into an IRA or into their new employer’s plan? Or cash out? The decision a participant makes can have a lasting impact on their retirement savings trajectory. Many participants, however, don’t fully understand their distribution options or the associated tax consequences. A 2024 Government Accountability Office (GAO) report found that more than half of participants surveyed didn’t know they could leave their savings in a former employer’s plan, and only 38% indicated they understood the tax implications of indirect rollovers. The IRS recently issued a guidance document aimed at helping sponsors shepherd participants through this process. IRS Notice 2026-13 provides safe harbor language sponsors can use to deliver certain written explanations to eligible participants about distribution options required under IRC Section 402(f). What Happens When a Participant Departs? When participants leave their jobs, they generally have four options for their 401(k) and other workplace defined contribution retirement plan account balances: Leave the assets in their former employer’s plan Roll them into a plan sponsored by their new employer Roll them into an IRA Cash out via a lump-sum distribution The first three options preserve the tax-advantaged status of retirement savings, allowing assets to continue growing under applicable tax rules. With the fourth option, however, participants may owe income taxes on the taxable portion of the distribution and may be subject to an additional 10% early distribution penalty if the participant is under age 59½. Among the first three options, the decision to keep assets in a former employer’s plan versus rolling them over can be a consequential financial choice, given potential differences in fees, investment options, and other characteristics of the former employer plan, the new employer plan, and an IRA. The Safe Harbor Guidance In the 2024 report, the GAO recommended that Section 402(f) notices provide clearer and more concise information about the four distribution options and their associated tax consequences. The report also included recommendations for the timing of these disclosures. In response, the IRS issued Notice 2026-13, which updates and clarifies the safe harbor explanations under Section 402(f). The revised guidance aims to help plan administrators meet the written notification requirement in light of recent statutory changes. The notice includes two separate safe harbor explanations: one for Roth accounts and one for non-Roth accounts. Both meet the requirements of Section 402(f) for an eligible rollover distribution if they’re provided to the recipient within a “reasonable period of time” (as defined in regulations) before the distribution is made. The guidance also addresses changes to the law, including updates related to: The 10% additional tax on early withdrawals from retirement plans Required minimum distribution rules for surviving spouses The increased age for determining dates for beginning required minimum distributions Next Steps for Plan Sponsors Sponsors can use the safe harbor language to meet Section 402(f) requirements when providing departed participants with an explanation of their distribution options. The language may be customized based on plan design, provided the modifications don’t affect the substantive requirements of the safe harbor explanation. For example, plans without after-tax employee contribution options may remove that portion of the language. The new safe harbors, however, may have a limited shelf life. The IRS is already anticipating updates to reflect future changes, including provisions of the SECURE 2.0 Act that become effective for taxable years beginning after December 31, 2026. Also, the updated explanations will not satisfy Section 402(f) to the extent the explanations are no longer accurate if there are changes in relevant law occurring after January 15, 2026. Increase your contributions as your earnings rise. Increase your contribution rate to reflect raises and bonuses, so your long-term savings potential keeps pace with your earnings. Reassess your savings rate as you pay down debt. As credit card balances, personal loans, student debt, or other monthly obligations decline, you may gain added flexibility to increase retirement plan contributions. Contribute enough to maximize your match. If you haven’t reviewed your elections in a while, you could be leaving part of an employer match on the table. Revisit beneficiary designations after major life events. If you experience changes in your marital status, dependents, or other personal circumstances, you may want to adjust your beneficiary elections. Take advantage of catch-up opportunities. For the 2026 tax year, participants aged 50 and older can contribute an additional $8,000 above the standard limit, with higher catch-up amounts — up to $11,250 — available for participants aged 60-63, subject to IRS limits and plan provisions. Retirement planning is a long game, and even small misalignments can compound over time and meaningfully affect your retirement readiness. Decisions made in the final years leading up to retirement can be especially important with less time to course correct. Periodic plan check-ins can go a long way toward keeping your savings strategy aligned with the realities of your life. Even if you’re using a target date fund or your plan’s automatic features, taking the time for quarterly or annual reviews can help you stay on track toward meeting your retirement goals. Sources: https://www.irs.gov/newsroom/treasury-irs-provide-new-safe-harbor-explanations-for-retirement-plan-administrators https://www.irs.gov/pub/irs-drop/n-26-13.pdf https://www.irs.gov/irb/2026-06_IRB https://www.gao.gov/products/gao-24-107167

Employees, particularly those early in their careers, are worried about their ability to handle major, unexpected expenses. According to a new CAPTRUST report, emergency savings is the top financial concern for workers aged 18-30 and ranks among the top three worries for older employees. For employers, this finding highlights a broader business challenge, as employees’ financial stress can affect productivity. Employees Uneasy as Preparedness Lags According to research by Empower, 50% of American workers admit they’re stressed about their current level of emergency savings. Additionally: 32% have no emergency savings 64% say building emergency savings is a top financial priority 52% regret not starting an emergency fund sooner Empower also found that 29% of Americans say they can’t afford an unexpected expense of more than $400. While financial experts often recommend that individuals set aside an amount of emergency savings equal to six months of their salary, many U.S. adults fall well short of that benchmark. The Empower study found that median emergency savings across all Americans is just $500, with amounts varying by generation: • Gen Z: $400 • Millennials: $300 • Gen X: $500 • Baby Boomers: $2,000 What Does This Mean for Employers? According to the CAPTRUST study, three quarters of employees say that financial concerns affect their motivation at work, and 62% report experiencing moderate to severe stress that impacts their productivity and overall wellbeing. According to a November 2025 report by Fidelity, employee financial stress costs employers $183 billion annually in lost productivity. Emergency Savings Benefits 401(k)s and other workplace defined contribution plans can play a role in helping provide emergency savings, though using assets set aside for retirement savings has tradeoffs – namely, money taken from the plan will not compound over time to support a retirement nest egg. According to an Employee Benefit Research Institute (EBRI) survey, 77% of responding firms offer or plan to offer emergency savings benefits in the next year or two. The most common emergency savings benefit is the ability to take loans from a 401(k) plan, made available by 56% of employers. While 21% allow up to $1,000 in penalty-free withdrawals for personal and financial emergencies from retirement accounts (a new plan feature option enacted in SECURE 2.0 effective in 2024), another 43% indicated they planned to implement this benefit within the next year or two. Additionally, SECURE 2.0 allows eligible non-highly compensated employees as defined by the IRS to open pension-linked emergency savings accounts (PLESAs) as part of their retirement plan. PLESA balances can reach up to $2,500 and are funded with after-tax (Roth) contributions, enabling participants to withdraw funds early without being subject to the 10% early distribution penalty. What Else Can Plan Sponsors Consider Doing? While doing so would likely come at a cost, employers could consider leveraging retirement plan advisors to better support workers’ financial preparedness. Nearly all employee respondents to CAPTRUST’s survey (98%) said they would use an advisor if one were offered at no cost, and 40% identified one-on-one advice as the most helpful tool for easing their financial concerns. Tailoring financial content and support by career stage also may help reduce stress levels. For example, early-career employees report the highest levels of mental and physical impact from financial stress, so they may require a different level of support than their older colleagues.

The start of a new year is a natural time to set fresh financial resolutions, but unfortunately most don’t last past February. One reason may be that our money goals often don’t align with the way we naturally think or how we stay motivated once the initial enthusiasm fades. A study of more than 2,400 individuals published by American Psychologist found that people tend to save more successfully when their savings goals fit their personality — specifically their “Big Five” personality traits. Here’s how higher levels of these traits may influence everyday saving behavior… Openness: You’re creative, future-minded, and receptive to new experiences. Goals tied to inspiration, growth, or meaningful exploration may feel more motivating. If this sounds like you, saving for retirement abroad, travel, or a hobby you’ve always wanted to try may help you keep your saving plan on track. Conscientiousness: You like plans, order, and follow-through. Practical, clearly defined goals (e.g., methodically paying down a credit card balance or making extra mortgage payments) might appeal to your disciplined nature. Extraversion: You gain energy from people and social interactions. Goals connected to shared experiences or exciting future plans that involve others — such as organizing a family reunion, group travel, or saving to move to an active retirement community — may help keep you on course. Agreeableness: You’re driven by connection, cooperation, and concern for others. Financial goals that benefit loved ones or reflect shared values, such as creating a legacy trust for future generations or prioritizing charitable giving, may feel more purposeful and motivating. Neuroticism: While this word may feel like something you’d hear in a Woody Allen movie, neuroticism is simply a measure of sensitivity to stress and negative emotions. So, goals that ease worry and create a sense of security, calm, or safety — such as building a rainy-day fund or reducing debt — might be particularly effective for you. Saver, Know Thyself Even without taking a formal personality test, you can still consider which traits feel like a match and choose goals with those tendencies in mind to achieve what the researchers called “person-goal fit.” Ask yourself: “Am I drawn more to new experiences, regimented plans and checklists, energizing social interactions, supporting others, or easing financial anxiety?” Ultimately, your likelihood of sticking with a financial goal often depends on what it truly means to you. What motivates one person may barely register for someone else. When your savings goals fit your personality, you may be surprised at how much easier the follow-through becomes. Sources: https://www.apa.org/pubs/journals/releases/amp-amp0001128.pdf

New data suggests individuals’ decisions to take 401(k) loans are driven less by discretionary spending needs and more by day-to-day cash-flow constraints. A December 2025 study conducted by the Employee Benefit Research Institute (EBRI) and J.P. Morgan Asset Management sheds light on what drives participants to take out 401(k) loans and how those funds are used. The research links 401(k) records with Chase household spending data to see who takes defined contribution plan loans and where that money effectively goes. Housing, Healthcare, and Revolving Credit Approximately one in 10 private-sector 401(k) participants with a loan option took a new loan in plan years 2021-2022, the study found. Loan activity tended to rise and peak for participants in their 40s before tapering off in later years. The research also shows that new 401(k) loan use strongly increases as credit card utilization rises: just 6.9% of households with no card balance borrowed from their plan, compared to 19.8% of those using 80% or more of their available credit. This pattern indicates a link between borrowing behavior and tighter household cash flow. Additionally, high credit-card-use households contribute a smaller share of income to their plans and have lower plan account balances, further reinforcing the long-term drag elevated debt levels can place on retirement preparedness. When participants take a new plan loan, the only spending category that reliably shows an increase of more than 10% compared with non-borrowers is healthcare. A second lens, changes in the share of total spending, reveals that housing and unspecified cash spending are more likely to claim a bigger slice of the budget for loan-takers. The data also shows that, for a subset of households, new mortgages and plan loans often start around the same time. Notably, the decision to borrow from the plan appears largely independent of household income. Releasing Financial Pressure Valves for Participants The overall pattern suggests 401(k) borrowing tends to align with major medical and household expenses, as well as markers of financial stress, rather than with discretionary spending on travel, entertainment, or other purchases that might signal luxury consumption. This points to the role plan sponsors can play in helping influence loan behavior. Access to emergency savings and budgeting tools and mortgage education programs may help reduce reliance on plan loans while better aligning plan features with household cash flow needs and the financial demands of key life stages. Sources: https://www.ebri.org/docs/default-source/pbriefs/ebri_ib_647_dcloansprivsec-4dec25.pdf?sfvrsn=77bf052f_1

It’s been widely reported that the marriage rate among Americans has declined sharply in recent decades. According to the Census Bureau, 60.8% of households were headed by married couples in 1980. By 2024, that figure had fallen to 47.1% Divorced, widowed, or never partnered singles can face retirement planning challenges that differ from their married or partnered peers. Findings from Nationwide’s latest Advisor Authority study highlight some of these potential challenges. Nationwide’s survey suggests single investors are acutely aware of the added pressures they face. More than a third say they contend with greater financial strain than married or partnered peers. Moreover, nearly one in five said they wonder if they’ll ever be able to retire. That concern is reflected in the state of their retirement savings: only 23% reported that they have at least $250,000 saved for retirement, and only 18% said they have $500,000 or more. According to Nationwide, the challenges single savers face tend to surface across several key areas. Emergency funds It can be more challenging to build an emergency fund on a single income. Not having backup savings in place can make it more difficult to manage the unexpected and adhere to retirement savings strategies. Long-term care: Singles are less likely to have a clear caregiving solution in place, so long-term care solutions should be considered early in the planning process. Taxes: Singles could face higher tax rates compared to married couples, which can affect their savings abilities and goals. Social isolation: The research highlights the importance of a strong support network in a single person’s retirement planning strategy and suggests loneliness can take a toll on emotional well-being – both before and during retirement – which in turn can impact financial decisions. Without a partner to share the responsibilities of retirement planning and financial decision-making, single workers may benefit more from in-depth, one-on-one guidance and planning conversations with a financial advisor. Sources: https://news.nationwide.com/single-in-retirement-looking-for-love-and-financial-security/ https://www.cnbc.com/2025/12/11/single-income-households.html https://usafacts.org/articles/state-relationships-marriages-and-living-alone-us/