Retirement Plan Changes for 2026: What Child Care Business Owners Should Know
Retirement benefits may not be the first thing on your mind when you’re running a child care program — but the rules are changing in 2026, and these updates affect both you and your staff. The IRS is raising savings limits, and several SECURE 2.0 rules are taking effect. Understanding these changes now can make your payroll planning smoother and help you support your team.
Higher Savings Limits
The IRS adjusts retirement-plan limits regularly to keep up with the cost of living. For 2026:
401(k), 403(b), and similar plans: up to $24,500
IRAs: up to $7,500
These increases give owners and employees more room to save — especially helpful if you pay yourself through payroll.
Catch-Up Contributions Explained
People 50 and older can save extra each year:
Standard catch-up (50+): $8,000 in 2026
“Super catch-up” (ages 60–63): $11,250 during those four years only
Think of it in three steps:
Under 50: regular limit
50–59: extra help
60–63: a short window with even more room to save
New SECURE 2.0 Rules Affecting Child-Care Businesses
Automatic Enrollment for Certain New Plans
If you opened a new 401(k) or 403(b) after December 29, 2022, then beginning in 2025 you must automatically enroll eligible employees at 3–10%, increasing 1% each year until 10–15%.
(Older plans are not affected.)
Part-Time Employees Become Eligible Sooner
Starting in 2025, employees who work 500 hours per year for two years must be allowed to join the plan — an important change for programs that rely on floaters, substitutes, or part-time staff.
Roth Requirement for High-Earning Employees
Beginning in 2026, employees earning about $150,000+ the prior year must make their catch-up contributions as Roth, meaning taxed now, tax-free later. In practice, many businesses won’t feel this change until January 2027 when payroll providers update their systems.
What Child-Care Owners Should Do Now
Check with your payroll provider if you have one to make sure they’re ready for the new limits and rules.
Review staff hours, especially part-time employees who may soon qualify.
Consider starting a plan if you don’t have one — SECURE 2.0 offers strong tax credits for small businesses.
Explain the basics to staff so they understand catch-ups and the new limits.
The Bottom Line
The 2026 and 2027 retirement-plan changes are designed to help people save more and modernize how plans work. For child-care owners, these updates offer a chance to support staff, stay compliant, and strengthen your own long-term financial health.