New 2026 Retirement Plan Guidance: What Retirement Plan Administrators and Business Owners Need to Know

Recent federal guidance has brought important changes to how retirement plan rollovers, required minimum distributions (RMDs), and early withdrawal penalties are explained to employees and plan participants. While this update was issued by Treasury and the IRS, its real-world impact is felt most by retirement plan administrators, business owners, and high-income professionals who sponsor or participate in retirement plans.

At Velin & Associates, Inc., we help business owners, doctors, creators, and high-net-worth families understand how these rules affect both their companies and their personal wealth strategies.

Let’s break down what this update means and who it is for.

Who Are Retirement Plan Administrators?

A retirement plan administrator is the person or entity responsible for operating and maintaining a retirement plan such as:

• A 401(k)
• A profit-sharing plan
• A defined benefit pension
• A solo 401(k) for business owners

In most small and mid-size businesses, the retirement plan administrator is:

• The business owner,
• A financial officer,
• A CPA, or
• A third-party plan administrator (TPA) hired by the company.

If you run a medical practice, dental office, Amazon business, Shopify store, or a creative agency, and you offer a retirement plan to yourself or your employees — you are legally acting as the retirement plan administrator, even if you outsource some of the paperwork.

This means you are responsible for making sure:

• Employees receive proper rollover explanations
• Required minimum distributions are handled correctly
• Tax reporting is accurate
• Plan participants are not misled about taxes or penalties

That is exactly where this new guidance comes into play.

What Changed in 2026?

Treasury and the IRS issued updated “safe harbor explanations” — these are standardized explanations retirement plan administrators can use when someone:

• Leaves a job
• Retires
• Rolls over a 401(k)
• Withdraws funds
• Inherits a retirement account

These explanations must now reflect major changes from recent tax laws, including:

• New rules for early-withdrawal penalties
• New RMD ages
• New rules for surviving spouses
• Updated Roth vs non-Roth tax treatment

If plan administrators use these safe harbor explanations correctly, they are protected from liability if a participant later claims they were misinformed.

Why This Matters for Business Owners

Many business owners don’t realize that retirement plans create legal and tax obligations, not just investment benefits.

Example:

A dental practice owner offers a 401(k) to staff and allows rollovers when employees leave. If one hygienist rolls her account into an IRA and later gets hit with unexpected taxes, she could claim she was misled — unless the administrator provided a compliant safe harbor explanation.

We help our clients ensure these rollover notices are correct and up to date, protecting the business from legal and tax exposure.

Roth vs Non-Roth: Why It Matters More Now

The new guidance separates:

• Traditional retirement accounts (tax-deferred, taxable when withdrawn)
• Roth accounts (tax-free if rules are met)

Many plan participants misunderstand this — and that leads to costly mistakes.

Example:

A YouTuber running a media business may have both:

• A Roth Solo 401(k)
• A traditional pre-tax Solo 401(k)

If they roll money incorrectly, they could accidentally trigger thousands in taxes. Our team helps ensure the rollover explanations they receive — and give to themselves — follow the new 2026 standards.

Required Minimum Distributions (RMDs) Changed

The age at which people must begin withdrawing money from retirement accounts has increased. That creates planning opportunities — but also compliance risks.

Example:

A High Net Worth Individual may not need retirement income yet, but missing an RMD can result in penalties of 25% or more of the amount that should have been withdrawn. As plan administrators of their own solo plans or family businesses, they must use updated RMD rules.

We integrate this into estate, tax, and retirement planning.

Early Withdrawals and Penalties

The 10% early withdrawal penalty has new exceptions. If plan administrators don’t explain them correctly, participants may make bad decisions.

Example:

A Shopify Store owner might tap retirement funds to expand inventory. Whether or not a penalty applies depends on how the plan is structured and how the withdrawal is processed. The updated safe harbor explanations help prevent incorrect tax treatment.

Why This Is Not Just “IRS Paperwork”

This guidance directly affects:

• Business owners who sponsor plans
• Doctors and medical practices
• Filmmakers and creative professionals
• Amazon and Shopify entrepreneurs
• Anyone managing long-term wealth

If rollover explanations are wrong, the business — not the IRS — becomes liable.

That is why our accounting firm team integrates retirement plan compliance into tax planning, bookkeeping, and long-term strategy.

How Velin & Associates Helps

We work with:

• Doctors & Medical Practices
• TikTokers, YouTubers & Filmmakers
• Shopify Stores & Amazon Businesses
• Business Owners and High Net Worth Individuals

We review:

• Plan design
• Rollover processes
• Distribution rules
• RMD schedules
• Tax reporting

So your retirement plans work for you — not against you. For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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