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Investment Insights
13 min

DC Pulse // January 2026

January 2026

Research, regulations, returns and trends in DC

  • MFS DC Takes

    MFS DC Takes

    2026 MFS US Retirement Outlook




    20th Anniversary of PPA:

    The retirement plan landscape has been transformed: traditional DB plans are rare, while DC plans are dominant.

     



    DC Key Investment Themes:

    96% of all DC plans offer TDFs. What is the role of the core menu going forward? What innovation will we see in 2026?

     


    DC Key Regulatory, Legislative and Litigation Themes:

    Litigation increased in 2025; regulation is anticipated in 2026. Our survey data shows a lack of demand for private assets.

     


    On the Minds of Plan Sponsors, Advisors and Participants:

    The changing regulatory and legislative landscape and inflation are top concerns.

     



    The Path Forward for Corporate DB Plans?

    Funded status improvements have implications for growth assets and fixed income duration.

     


    Actions to Consider in 2026 and Beyond:

    We can help you prepare for an eventful year. Learn more in our paper, 2026 MFS US Retirement Outlook.

     
    Download Now

  • DC Regulatory and Legislative Happenings  

    IRS 2026 Contribution Limits

    Retirement plan contribution limits, effective January 1, 2026, include:

    401(k) Contributions: 

    • Increased to $24,500
    • Catch-up for 50+: increased to $8,000
    • Higher catch-up ages 60-63: $11,250 (unchanged)

    IRA Contributions: 

    • Roth and Traditional: increased to $7,500
    • Catch-up: Increased to $1,100 

    Health savings accounts (HSAs) contribution limits, effective January 1, 2026, include:

    • Increased to $4,400 for an individual 
    • Increased to $8,750 per family

    2026 Social Security Benefits

    The Social Security Administration announced an increase in benefits for Old-Age, Survivors, and Disability Insurance (OASDI) and Supplemental Security Income (SSI) of 2.8% for 2026.

    The average Social Security benefit will increase by $56 per month.

    The maximum amount of earnings subject to Social Security tax increases to $184,500 from $176,100. 

    Trump Accounts 

    Treasury and the IRS issued guidance on “Trump Accounts,” expected to go live on July 4, 2026. Trump Accounts are tax-deferred savings accounts for children under age 18. They generally function like a traditional IRA, but with special “growth period” rules. Accounts can only invest in certain mutual funds or ETFs that track an index of primarily US companies, and withdrawals from the accounts will be limited.

    The initial federal pilot program will provide a $1,000 deposit for children born between 2025 and 2028. Michael and Susan Dell pledged $6.25 billion to support these accounts, providing an estimated $250 to 25 million children.

    Contributions to these accounts are limited to $5,000 per year and will be indexed to inflation after 2027.

    Proposed Legislation 

    Several proposed pieces of retirement legislation emerged this quarter, including:

    The ERISA Litigation Reform Act seeks to raise the pleading standards for certain allegations in ERISA litigation.

    The Retirement Investment Choice Act would codify the August 2025 executive order focused on alternative and digital assets in DC plans.

    The Incentivizing New Ventures and Economic Strength Through Capital Formation Act (INVEST Act) is a bill that packages more than 20 measures, including permitting 403(b) plans to invest in collective investment trusts (CITs). It passed the House with bipartisan support. 

    Sources:

    IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
    IRS: Rev. Proc. 2025-19
    SSA: Social Security Announces 2.8 Percent Benefit Increase for 2026 | News | SSA
    IRS: Notice of intent to issue regulations with respect to section 530A Trump accounts
    PLANSPONSOR: IRS, Treasury Offer Updates on How Trump Accounts Will Work
    U.S. Representative Randy Fine: Congressman Fine Introduces ERISA Litigation Reform Act to Strengthen Legal Standards and Protect Retirement Plans
    Retirement Investment Choice Act
    House Committee on Financial Services: INVEST Act

    Download Now

  • DC Market Data

    20th Anniversary of the Pension Protection Act (PPA)

                                                                                                                                                    

     

    Word of Caution: Coverage Problem Persists4

    Despite improvements to the DC system, 42% of all workers age 18–65 in the private sector do not have access to a 401(k) plan (over 40 million workers). 

    –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

                                                                                                                                                 

    Accumulation is Essential. Automatic features and QDIAs have boosted participation and balances in DC plans, but there is still more that can be done.

    Plan sponsors should continue to monitor the QDIA option and its appropriateness to help participants accumulate assets for sufficient retirement outcomes.

    Sources: 
    1US Department of Labor Employee Benefit Security Administration from Form 5500 filings for plans with >100 participants for plan years ending in year shown.  
    2Cerulli US Defined Contribution Distribution 2025.
    3Fidelity Q3 2025 Retirement Analysis. 
    4Census Bureau’s Survey of Income and Program Participation.

    Download Now

  • Investment Index Returns 

    As of December 31, 2025 

    BENCHMARK

    10 YEARS

    5 YEARS

    3 YEARS

    1 YEAR

    YTD

    3 MONTHS

    BALANCE

    Illustrative 60/40 Portfolio

    9.78%

    8.47%

    15.46%

    13.70%

    13.70%

    2.03%

    EQUITY

    S&P 500

    14.82%

    14.42%

    23.01%

    17.88%

    17.88%

    2.66%

    Russell 1000® Growth

    18.13%

    15.32%

    31.15%

    18.56%

    18.56%

    1.12%

    Russell 1000® Value

    10.53%

    11.33%

    13.90%

    15.91%

    15.91%

    3.81%

    Russell 2000®

    9.62%

    6.09%

    13.73%

    12.81%

    12.81%

    2.19%

    MSCI EAFE

    8.18%

    8.92%

    17.22%

    31.22%

    31.22%

    4.86%

    MSCI Emerging Markets

    8.42%

    4.20%

    16.40%

    33.57%

    33.57%

    4.73%

    MSCI ACWI

    11.72%

    11.19%

    20.65%

    22.34%

    22.34%

    3.29%

    FIXED INCOME

    Bloomberg US TIPS

    3.09%

    1.12%

    4.23%

    7.01%

    7.01%

    0.13%

    Bloomberg US Aggregate

    2.01%

    -0.36%

    4.66%

    7.30%

    7.30%

    1.10%

    Bloomberg Global Aggregate

    2.39%

    0.34%

    5.12%

    4.86%

    4.86%

    0.78%

    CASH

    Cash

    2.23%

    3.31%

    5.03%

    4.40%

    4.40%

    1.02%

    Sources:
    SPAR, FactSet Research Systems Inc., MFS analysis. Illustrative 60/40 portfolio comprises 60% S&P 500 and 40% Bloomberg US Aggregate and is rebalanced monthly. This hypothetical example is for illustrative purposes only. MSCI indices shown are net returns. Returns for the Bloomberg Global Aggregate Index are hedged to USD.
    Cash is based on returns for the FTSE 3-month Treasury Bill Index. 
    The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. You should consider your client’s financial needs, goals, and risk tolerance before making any investment recommendations.

    Download Now

     

    Disclosures

    “Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).

    Frank Russell Company ("Russell") is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes. 
    Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication.

    BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

    MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

    Source FTSE International Limited ("FTSE") © FTSE 2022. "FTSE®" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.

    The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice from the Advisor. No forecasts can be guaranteed.

    Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries. 

MFS DC Takes

2026 MFS US Retirement Outlook




20th Anniversary of PPA:

The retirement plan landscape has been transformed: traditional DB plans are rare, while DC plans are dominant.

 



DC Key Investment Themes:

96% of all DC plans offer TDFs. What is the role of the core menu going forward? What innovation will we see in 2026?

 


DC Key Regulatory, Legislative and Litigation Themes:

Litigation increased in 2025; regulation is anticipated in 2026. Our survey data shows a lack of demand for private assets.

 


On the Minds of Plan Sponsors, Advisors and Participants:

The changing regulatory and legislative landscape and inflation are top concerns.

 



The Path Forward for Corporate DB Plans?

Funded status improvements have implications for growth assets and fixed income duration.

 


Actions to Consider in 2026 and Beyond:

We can help you prepare for an eventful year. Learn more in our paper, 2026 MFS US Retirement Outlook.

 
Download Now

DC Regulatory and Legislative Happenings  

IRS 2026 Contribution Limits

Retirement plan contribution limits, effective January 1, 2026, include:

401(k) Contributions: 

  • Increased to $24,500
  • Catch-up for 50+: increased to $8,000
  • Higher catch-up ages 60-63: $11,250 (unchanged)

IRA Contributions: 

  • Roth and Traditional: increased to $7,500
  • Catch-up: Increased to $1,100 

Health savings accounts (HSAs) contribution limits, effective January 1, 2026, include:

  • Increased to $4,400 for an individual 
  • Increased to $8,750 per family

2026 Social Security Benefits

The Social Security Administration announced an increase in benefits for Old-Age, Survivors, and Disability Insurance (OASDI) and Supplemental Security Income (SSI) of 2.8% for 2026.

The average Social Security benefit will increase by $56 per month.

The maximum amount of earnings subject to Social Security tax increases to $184,500 from $176,100. 

Trump Accounts 

Treasury and the IRS issued guidance on “Trump Accounts,” expected to go live on July 4, 2026. Trump Accounts are tax-deferred savings accounts for children under age 18. They generally function like a traditional IRA, but with special “growth period” rules. Accounts can only invest in certain mutual funds or ETFs that track an index of primarily US companies, and withdrawals from the accounts will be limited.

The initial federal pilot program will provide a $1,000 deposit for children born between 2025 and 2028. Michael and Susan Dell pledged $6.25 billion to support these accounts, providing an estimated $250 to 25 million children.

Contributions to these accounts are limited to $5,000 per year and will be indexed to inflation after 2027.

Proposed Legislation 

Several proposed pieces of retirement legislation emerged this quarter, including:

The ERISA Litigation Reform Act seeks to raise the pleading standards for certain allegations in ERISA litigation.

The Retirement Investment Choice Act would codify the August 2025 executive order focused on alternative and digital assets in DC plans.

The Incentivizing New Ventures and Economic Strength Through Capital Formation Act (INVEST Act) is a bill that packages more than 20 measures, including permitting 403(b) plans to invest in collective investment trusts (CITs). It passed the House with bipartisan support. 

Sources:

IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
IRS: Rev. Proc. 2025-19
SSA: Social Security Announces 2.8 Percent Benefit Increase for 2026 | News | SSA
IRS: Notice of intent to issue regulations with respect to section 530A Trump accounts
PLANSPONSOR: IRS, Treasury Offer Updates on How Trump Accounts Will Work
U.S. Representative Randy Fine: Congressman Fine Introduces ERISA Litigation Reform Act to Strengthen Legal Standards and Protect Retirement Plans
Retirement Investment Choice Act
House Committee on Financial Services: INVEST Act

Download Now

DC Market Data

20th Anniversary of the Pension Protection Act (PPA)

                                                                                                                                                

 

Word of Caution: Coverage Problem Persists4

Despite improvements to the DC system, 42% of all workers age 18–65 in the private sector do not have access to a 401(k) plan (over 40 million workers). 

–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

                                                                                                                                             

Accumulation is Essential. Automatic features and QDIAs have boosted participation and balances in DC plans, but there is still more that can be done.

Plan sponsors should continue to monitor the QDIA option and its appropriateness to help participants accumulate assets for sufficient retirement outcomes.

Sources: 
1US Department of Labor Employee Benefit Security Administration from Form 5500 filings for plans with >100 participants for plan years ending in year shown.  
2Cerulli US Defined Contribution Distribution 2025.
3Fidelity Q3 2025 Retirement Analysis. 
4Census Bureau’s Survey of Income and Program Participation.

Download Now

Investment Index Returns 

As of December 31, 2025 

BENCHMARK

10 YEARS

5 YEARS

3 YEARS

1 YEAR

YTD

3 MONTHS

BALANCE

Illustrative 60/40 Portfolio

9.78%

8.47%

15.46%

13.70%

13.70%

2.03%

EQUITY

S&P 500

14.82%

14.42%

23.01%

17.88%

17.88%

2.66%

Russell 1000® Growth

18.13%

15.32%

31.15%

18.56%

18.56%

1.12%

Russell 1000® Value

10.53%

11.33%

13.90%

15.91%

15.91%

3.81%

Russell 2000®

9.62%

6.09%

13.73%

12.81%

12.81%

2.19%

MSCI EAFE

8.18%

8.92%

17.22%

31.22%

31.22%

4.86%

MSCI Emerging Markets

8.42%

4.20%

16.40%

33.57%

33.57%

4.73%

MSCI ACWI

11.72%

11.19%

20.65%

22.34%

22.34%

3.29%

FIXED INCOME

Bloomberg US TIPS

3.09%

1.12%

4.23%

7.01%

7.01%

0.13%

Bloomberg US Aggregate

2.01%

-0.36%

4.66%

7.30%

7.30%

1.10%

Bloomberg Global Aggregate

2.39%

0.34%

5.12%

4.86%

4.86%

0.78%

CASH

Cash

2.23%

3.31%

5.03%

4.40%

4.40%

1.02%

Sources:
SPAR, FactSet Research Systems Inc., MFS analysis. Illustrative 60/40 portfolio comprises 60% S&P 500 and 40% Bloomberg US Aggregate and is rebalanced monthly. This hypothetical example is for illustrative purposes only. MSCI indices shown are net returns. Returns for the Bloomberg Global Aggregate Index are hedged to USD.
Cash is based on returns for the FTSE 3-month Treasury Bill Index. 
The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. You should consider your client’s financial needs, goals, and risk tolerance before making any investment recommendations.

Download Now

 

Disclosures

“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’ product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).

Frank Russell Company ("Russell") is the source and owner of the Russell Index data contained or reflected in this material and all trademarks, service marks and copyrights related to the Russell Indexes. 
Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively "Bloomberg"). Bloomberg or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. Bloomberg neither approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

Source FTSE International Limited ("FTSE") © FTSE 2022. "FTSE®" is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.

The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice from the Advisor. No forecasts can be guaranteed.

Unless otherwise indicated, logos and product and service names are trademarks of MFS® and its affiliates and may be registered in certain countries. 

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