Lessons from This Year’s Market Volatility for 2026 401(k) Strategies
By Chris Cristallo, CFP® | 401(k) Advisor
This past year’s markets have been anything but calm. Interest rate uncertainty, inflation cycles, geopolitical events, and rapid sector shifts have all contributed to volatility. While that can create anxiety for participants, it also gives plan sponsors a valuable chance to evaluate how well their plan is supporting long-term retirement outcomes.
A thoughtful review now may help strengthen your investment menu, support better participant behavior, and position your plan for a sound approach for 2026.
1. Revisit Your Investment Lineup’s Resilience
Volatility highlights strengths and weaknesses in an investment lineup.
Consider the following:
• How did funds perform compared with peers during down markets?
• Did your target-date suite behave as expected?
Years like this help confirm whether your menu still aligns with participant needs and your investment policy guidelines.
2. Study Participant Behavior During the Swings
Participants often react emotionally to volatility, and that behavior can impact long-term results. Review trends such as:
• Did employees reduce contributions?
• Did many participants move to cash or stable value?
• Were younger employees more reactive than older participants?
3. Reassess the Strength of Your Default Options
Target-date funds and managed accounts remain the most important tools for guiding participants through uncertainty. Use recent volatility to evaluate:
• Whether glidepath risk levels still fit your workforce
• How managers performed across different market environments
• Whether diversification within the TDF series remains appropriate
Consider whether your population or risk expectations have changed heading into 2026.
4. Evaluate Whether Auto Features Are Doing Their Job
Automatic enrollment and automatic escalation help participants avoid emotional decision-making. Review your key metrics:
• Participation and opt-out rates
• Default contribution rates and whether they need to be increased
• Auto-escalation effectiveness
• Whether a reenrollment campaign could benefit participants
Even if your plan is not required to adopt SECURE 2.0 auto features, optimizing your auto design may improve participation and testing results.
5. Benchmark Fees and Provider Support Under Stress
Choppy markets make cost and service quality even more important. Ask:
• Are recordkeeping fees still competitive?
• Have investment costs stayed reasonable relative to peers?
• Did your provider offer adequate support during volatile periods?
Documenting your benchmarking helps maintain strong fiduciary governance.
6. Prepare for 2026 SECURE 2.0 Updates
While volatility is top-of-mind for participants, regulatory changes continue to reshape retirement plans. The most notable for 2026 is the Roth catch-up requirement for employees age 50+ who earned more than the indexed threshold. Coordinating early with payroll, HR, and your recordkeeper will prevent confusion and ensure compliance.
Plant the Seeds for a More Resilient 2026
Volatile markets are a reminder that the best retirement plans are built for all seasons. By reviewing your investment lineup, studying participant behavior, strengthening default features, and preparing for SECURE 2.0 changes, you can help participants stay confident and on track. A small investment of time now can lead to stronger savings rates and better long-term outcomes for everyone.
Together, let’s evaluate the way we approach retirement programs.
Chris Cristallo, CFP®
Retirement Plan Advisor at BEAM/BGA 401k
Sources
1. Vanguard, How America Saves 2025
2. Fidelity, 2025 Q2 Retirement Trends Report
3. J.P. Morgan, Guide to Retirement 2025
4. U.S. Department of Labor, Meeting Your Fiduciary Responsibilities
5. Internal Revenue Service, SECURE 2.0 Implementation Guidance
