Q1 2026 Newsletter

RLC Direct Benefits Brief

March 2026

Coming in 2027: New Ways to Save for Retirement

During the president's 2026 State of the Union Address, he referenced a new retirement savings initiative aimed at workers who lack access to employer-sponsored retirement plans. While no legislation has been formally introduced yet, several policy signals and related regulatory activity provide insight into how the proposal may work and how it could interact with existing retirement incentives.

The proposal is designed to address the long-standing retirement coverage gap in the U.S. According to the Bureau of Labor Statistics, 50% of private-sector workers do not have access to an employer-sponsored retirement plan, particularly employees of small businesses, gig workers, and part-time employees.

The administration’s concept would provide a federally supported retirement account that could function similarly to the Thrift Savings Plan, which is available to federal government employees. The proposal would allow individuals without workplace plan coverage to save through a low-cost national retirement account structure.

$1,000 Government Contribution

Policy discussions surrounding the proposal include a federal contribution of up to $1,000 per year to qualifying accounts.

The federal contribution would be like a matching contribution incentive, encouraging workers to begin saving for retirement even if their employers do not offer retirement plans. Eligibility/contribution rules are vague, but possible characteristics include:

• Targeting workers without access to employer plans,

• Using income-based eligibility (a la the existing Saver’s Credit/Match incentives), and/or

• Depositing contributions directly into the individual’s retirement account.

“Deemed Overpayment” Funding Method

Some early regulatory discussions have referenced using a “deemed tax overpayment” mechanism to deliver federal contributions (similar to what the administration has proposed for Trump Accounts for children).

Under this approach:

1. The government treats the $1,000 as if the individual overpaid federal tax.

2. The IRS then processes that overpayment as a refund.

3. Instead of sending a check to the taxpayer, the refund is deposited directly into the retirement account.

This structure is administratively attractive because it leverages the IRS refund system rather than creating a new federal payment infrastructure.

Trump Plan Separate from the Saver’s Match

It is important to note that this proposal is distinct from the Saver’s Match created under SECURE Act 2.0. Beginning in 2027, the Saver’s Match will allow eligible individuals to receive a federal matching contribution deposited directly into their IRAs or employer retirement plans when they make contributions.

The following table outlines the key differences between the proposed federal retirement plan and the Saver’s Match.

The proposed new account concept would supplement — not replace — the Saver’s Match framework.

Potential Implications for Advisors

If implemented, the federal program could create several planning considerations.

1. New entry point for first-time savers: Millions of workers without workplace plans could gain access to a national retirement account platform.

2. Coordination with IRA strategies: Advisors may need to determine whether clients should prioritize between:

• Traditional or Roth IRAs,

• Employer plans (when available), and/or

• The new federal account structure.

3. Increased government incentives for saving: Between the upcoming Saver’s Match and this potential federal contribution, government matching incentives for retirement savings may expand over the next several years.

Federal Program is Proposed

At this stage, information on the proposed federal retirement program is limited. There is

• No formal legislation implementing the new account structure, and

• No details related to income limits, contribution caps, account custodians, and investment options.

Additional guidance from Treasury and Congress will be necessary before the proposal becomes operational.

Advisor Practice Points

The retirement proposal referenced in the State of the Union signals a continued policy trend toward direct federal incentives to encourage retirement savings, especially among workers without employer plan access. Advisors should monitor upcoming legislation and regulatory developments, particularly how the proposal interacts with the Saver’s Match scheduled to begin in 2027.

Proposed Regulations Detail Trump Accounts, More Info Needed

As a follow-up to IRS Notice 2025-68, covered in RLC’s Q4 2025 newsletter, the Treasury Department and IRS issued proposed regulations (REG-106540-25) on March 9, 2026, implementing the new “Trump Accounts,“ which are tax-advantaged savings accounts for children created under the One, Big, Beautiful Bill Act of 2025. The proposed regulations provide key details on how to establish (starting July 4, 2026) and administer these accounts. For financial advisors, the program represents a new savings vehicle for minors that may intersect with retirement planning, education funding, and family wealth planning strategies. Proposed to apply January 1, 2026, the IRS seeks comment by May 8, 2026.

The proposed regulations do not change the basic framework for Trump Accounts introduced in IRS Notice 2025-68, but they add several operational rules and clarify how to open accounts and administer the $1,000 government contribution.

What’s New in the Proposed Regulation?

The proposed regulation

• Provides regulatory text under IRC §530A, including formal definitions such as “initial Trump account,” “rollover Trump account,” “responsible party,” etc.

• Sets the earliest establishment date as July 4, 2026.

• Establishes the formal election process to open an initial Trump Account and indicates the election must be filed on Form 4547 or Online Form 4547.

• Clarifies that an account can be opened any time up to 12/31 of the year the child turns 17 and still receive the government seed contribution.

• Specifies that the individual making the election becomes the default responsible party with authority to manage the account.

• Establishes that a Trump Account is a type of traditional IRA but cannot be a SIMPLE IRA or SEP IRA.

• Clarifies that an individual may have only one funded Trump Account at a time, though full trustee-to-trustee rollovers are permitted.

• Specifies that an initial Trump Account may be created or organized by the Secretary (Treasury) or by a trustee once the election is made.

• The current proposed regulations address only account establishment and the election process; other areas are reserved for later rulemaking.

The major development in the proposed regulations is procedural clarity, not substantive changes. Notice 2025-68 (See Q4 2025 newsletter) already described the policy framework, including, potentially:

• A $5,000 annual contribution limit,

• A $2,500 employer contribution,

• A $1,000 government seed contribution for children born 2025–2028,

• Limited investments and no deductions for contributions, and

• Distributions are prohibited before age 18.

Mechanism for $1,000 Government Deposit

For the $1,000 pilot contribution, a child must generally:

• Be a U.S. citizen with a Social Security Number,

• Be born between 2025 and 2028, and

• Have a Trump account established.

The $1,000 government contribution is not considered a standard contribution by a parent, employer, or the child. To integrate it into the traditional IRA framework, the IRS will treat it as a “deemed overpayment” to the Trump Account. This avoids requiring the child or parent to contribute first, and it ensures the contribution is not subject to the usual annual traditional IRA contribution limits.

The deemed overpayment is simply an administrative bookkeeping mechanism that allows the IRS to fund the $1,000 pilot contribution without affecting contribution limits or triggering taxes. It is not an actual excess contribution by the child or parent but is treated as such for accounting purposes.

For tax purposes, the $1,000 contribution

• Is not taxable to the child,

• Creates basis in the account similar to a nondeductible traditional IRA contribution, and

• Does not count toward the $5,000 annual contribution limit for other contributors.

Example:

Jane’s parents open a Trump Account for Jane, age 3, by completing all parts of IRS Form 4547. The government contributes $1,000 via the deemed overpayment mechanism. Jane now has a $1,000 basis in her account before any parent or charity contributions, with all growth tax deferred. Jane’s mom and dad later contribute $5,000 (annual limit). Further, a local charity awards Jane a $5,000 contribution. So, in Year 1, Jane has $11,000 in her Trump Account.

Many Open Questions Remain

Despite having proposed regulations, several important aspects of Trump Accounts remain undefined or are pending future rulemaking. We still do not know…

• What asset classes are permitted for investment, and whether restrictions apply.

• If distributions are allowed before age 18, how qualified distributions work, and whether early withdrawals incur penalties or recapture.

• How reporting forms (e.g., Forms 5498, 1099-R, or others) will be affected.

• How Trump Accounts interact with other IRAs (e.g., rollovers, aggregation rules, nondeductible contributions, pro-rata distribution rules).

• How employers report and administer contributions.

• What happens if the child dies, or how spousal or contingent beneficiary elections work?

• How trustee-to-trustee rollovers, multiple accounts, or conversions to Roth IRAs will operate.

• How Trump Accounts coordinate with 529 plans and Education Savings Accounts.

• How excess contributions, errors, or mismanagement of the federal contribution would be corrected.

Advisor Practice Points

Even with incomplete guidance, advisors can prepare for Trump Accounts now.

• Highlight that the $1,000 government seed contribution is effectively “free money” for eligible children, is not included in the annual contribution limit, and is tax advantaged.

• Encourage parents or guardians to open accounts early to ensure eligibility for the $1,000 contribution, although the election window extends to 12/31 of the year the child turns 17.

• Document the “responsible party” for each account.

• Compare Trump Accounts with 529 plans, custodial accounts (UGMA/UTMA), and traditional IRAs for children to identify overlaps or complementary benefits.

• Consider intergenerational gifting strategies for grandparents or other family members.

• Until the IRS specifies permitted investments, caution clients about assumptions on asset types or risk exposure.

• Prepare to recommend diversified, long-term strategies once guidance is finalized.

• Track all parent, employer, or third-party contributions separately to avoid potential future issues.

• Be ready to integrate Trump Accounts into future tax reporting once forms are available.

• Keep clear records of elections to open accounts, responsible party appointments, and any contributions beyond the IRS $1,000 deposit.

• Track IRS announcements and proposed/final regulations.

• Update clients when rules are clarified.

• Consider including Trump Accounts in ongoing estate or education planning discussions.

DOL Proposed Rules for Paper Benefit Statements

Defined contribution and defined benefit plans must provide paper benefit statements to plan participants starting in 2026. The DOL released a proposed rule to amend its existing 2002 and 2020 electronic disclosure safe harbor regulations to implement Section 338 of the SECURE 2.0. The rule would require retirement plans to provide at least one paper benefit statement each year for defined contribution plans (and every three years for defined benefit plans). Comments are requested by April 27, 2026. The rules would take effect after finalization.

IRS Announcement 2026-07 Delays Some RMD Regs.

The IRS, pursuant to IRS Announcement 2026-07, has delayed the application of certain proposed required minimum distribution (RMD) regulations until it issues final rules. In 2022, the IRS issued proposed RMD regulations to update RMD rules under IRC Sec. 401(a)(9). In July 2024, the Treasury published final RMD regulations, followed by additional proposed regulations later that year.

Announcement 2026-07 states that Treasury anticipates portions of the future final RMD regulations will apply no earlier than the calendar year that begins six months after the final regulations are published in the Federal Register. Proposed regulations affected include:

• Treasury Regulation §1.401(a)(9)-4—Rules on the successor beneficiary of a surviving spouse beneficiary.

• Treasury Regulation §1.401(a)(9)-5

• When a spouse is treated as a deceased plan participant,

• Treatment of distributions from 401(k) plan designated Roth accounts, and

• RMD failures.

• Treasury Regulation §1.401(a)(9)-6—How qualified longevity annuity contracts (QLACs) are treated for RMD purposes if payments are split after divorce.

Advisor Practice Points

Until Treasury publishes final regulations and they take effect, financial advisors can assist taxpayers in applying reasonable, good-faith interpretations of the statutory law for calculating RMDs.

New Penalty Exception for LTC Premiums Takes Effect

Section 334 of SECURE Act 2.0 created a new exception to the 10% early distribution penalty under IRC §72(t) for withdrawals used to pay premiums for long-term care (LTC) insurance. The rule is effective for distributions on or after January 1, 2026. Plan permitting, participants may take distributions from employer retirement plans before age 59½ without the 10% early withdrawal penalty if the distribution is used to pay premiums for qualified LTC insurance contracts, including certain LTC riders on life insurance or annuity contracts. The distribution remains taxable, however.

The penalty exception applies to the lesser of

• The LTC insurance premium amount,

• 10% of the participant’s vested account balance, or

• $2,500 annually (indexed for inflation).

The rule applies to distributions from defined contribution plans, including 401(k), 403(b), 403(a), and governmental 457(b) plans. Industry guidance assumes the rule does not currently apply to IRAs, although further IRS guidance could clarify this.

Plans are not required to offer this distribution option. If they do, employers must amend their plans to permit it. Participants may not rollover the amounts taken, nor can they repay the amounts to the plan.

Advisor Practice Points

Advisors can help clients understand the following key points of distributions for LTC insurance.

• How to check for availability through their workplace retirement plans. Many employer plans may not offer the option initially.

• The annual cap ($2,500 indexed) means the amount will cover only a portion of LTC premiums, depending on the insured’s age.

• Even though the penalty is waived, the withdrawal is taxable income, which may affect tax brackets or Medicare Income-Related Monthly Adjustment Amounts.

USPS Changes “Timely Mailed, Timely Filed” Rule

The United States Postal Service (USPS) issued a final rule, effective December 24, 2025, clarifying that a postmark reflects the date an item is received at the first USPS processing facility—not the date the item is deposited at a local post office, mailbox, or retail counter. This clarification materially affects reliance on the “timely mailed, timely filed” rule under IRC §7502. Financial organizations, taxpayers, and advisors should reassess client communications, internal procedures, and risk management practices, particularly during peak the contribution/filing seasons.

Under IRC §7502, documents and payments delivered by U.S. mail are deemed timely filed if:

1. The envelope is properly addressed and mailed;

2. The mailing bears a postmark dated on or before the applicable deadline; and

3. The document is delivered.

Historically, many taxpayers and financial organizations have assumed that the postmark date corresponds to the date the item was physically deposited with USPS. Now, the USPS expressly states that a postmark reflects the date the item enters the first USPS processing facility—not the date the item was accepted at a retail counter, self-service kiosk, or mailbox. Further, self-service postage labels and online “Click-N-Ship” labels do not qualify as postmarks for purposes of establishing timely mailing.

Consequently, there may be a gap between deposit/acceptance and postmarking, resulting in a postmark dated after a deadline. The USPS has indicated that same-day postmarking is unlikely in many cases and encourages the public to adjust mailing behavior accordingly.

The change impacts

• Tax returns, payments, and extensions;

• Benefit claims and appeals where administrative deadlines often hinge on postmark evidence;

• Compliance and reporting filings that require mailed submissions by a specific date; and

• ERISA-required notices and communications that are mailed.

Real Life

Example 1:

Administrators can treat an IRA contribution made between January 1, 2026, and April 15, 2026, as a 2025 contribution if it is accompanied by a written, irrevocable election designating the contribution for 2025. If the administrator receives a contribution after April 15, 2026, it may still treat the contribution as timely for 2025 if the envelope bears a qualifying postmark dated on or before the deadline. If later, the contribution would count as a 2026 contribution.

Example 2:

A small business owner drops off their 2025 federal income tax return (paper filing) and tax payment in a USPS mailbox by the April 15, 2026, deadline. The USPS picks up the mail, including the tax return, and takes it to a regional processing facility the next day, where it is postmarked April 16, 2026. Under the new guidelines, the IRS could classify it as a late filing and payment.

Advisor Practice Points

Postmarks now reflect the date an item is received at the first USPS processing facility.

Consequently, there may be a gap between deposit and postmarking, resulting in a postmark dated after a contribution or payment deadline. Advisors can assist clients by encouraging them to

• Send documents, filings, payments, etc., well before statutory deadlines,

• Request hand cancellation at a USPS counter, or

• Obtain evidence (e.g., certificate of mailing) of the date USPS accepted the item.

These methods provide stronger evidentiary support than automated processing marks.

Farewell to the Fiduciary Rule … for Now

After federal courts vacated the rule, the Department of Labor (DOL) posted a Notice of Court Vacatur, officially ending litigation over its 2024 Retirement Security Rule. The now-dead rule, finalized in April 2024, would have expanded when the DOL would treat financial professionals providing retirement investment recommendations as fiduciaries under ERISA (e.g., one-time recommendations). Courts had already blocked the rule from taking effect following legal challenges by industry groups. By moving to vacate the rule rather than continuing to defend it on appeal, the DOL signaled that it does not intend to revive the regulation in its current form.

With the 2024 fiduciary rule and amendments to related prohibited transaction exemptions (PTEs) set aside, the prior 1975 regulatory framework stands. In practice, this means the longstanding fiduciary definition under ERISA—often associated with the five-part test for investment advice—continues to govern when financial advisors are treated as fiduciaries for retirement plan purposes. This development removes near-term uncertainty about compliance with the expanded rule. According to its current regulatory agenda, the DOL plans to issue a new final rule on this issue by May 2026.

Advisor Practice Points

• Examine practices and procedures considering the long-standing five-part test.

• Follow PTEs for protection.

• Watch for further developments.

Proposed Law Changes

Federal lawmakers have proposed several new bills that would, if enacted, affect retirement savings.

The Retirement Rollover Flexibility Act (Identical bills: HR 6450 and S.3352)

With bipartisan support, the proposal would allow individuals to roll Roth IRA assets into designated Roth accounts in 401(k), 403(b), or governmental 457(b) plans. Current law permits rollovers only from plans to IRAs, not the reverse for Roth IRA assets. The bill aims to simplify the consolidation of retirement savings and improve portability. The Senate’s Committee on Finance and the House’s Ways and Means Committee are now considering their respective bills.

Retirement Simplification and Clarity Act (HR 6324)

HR 6324 is a bipartisan proposal to expand in-service distribution and rollover options in workplace retirement plans. Intended to simplify rules so workers can move savings between accounts or access certain retirement funds more easily while still employed. For example, individuals aged 50 and older could transfer funds from their 401(k) plans into an annuity. Referred to the House Committee on Ways and Means.

Form 5500 Filing Simplification Act (HR 7362)

The bill would simplify Form 5500 filing for employee benefit plan administrators by reducing complexity and redundancies. Referred to the House’s Committee on Education and Workforce, and Committee on Ways and Means.

Protecting Prudent Investment of Retirement Savings Act (HR 2988)

H.R. 2988 would modify fiduciary investment standards for employer-sponsored retirement plans, particularly regarding the use of pecuniary vs. non-pecuniary factors in investment decisions. The impact would be to tighten fiduciary decision-making standards and limit ESG-style considerations unless financially justified. Passed in the House, sent to the Senate, and referred to the Committee on Health, Education, Labor, and Pensions.

Emergency Savings Enhancement Act of 2025 (HR 6417 and S 3333)

The identical bills would increase the balance limit for pension-linked emergency savings accounts (PLESAs) from $2,500 to $5,000, expand eligibility to include highly compensated employees, reduce administrative burden, simplify tracking requirements, and make it easier for employers to offer PLESAs. The House referred its version to the Committee on Education and Workforce, and the Committee on Ways and Means and the Senate referred its version to the Committee on Health, Education, Labor, and Pensions