Compliance Corner
last updated: March 24, 2026
Trump Accounts
- Trump accounts are a tax-advantaged savings account for children.
- All US children under 18 with a valid Social Security number are eligible.
- The federal government will make a one-time $1,000 pilot program contribution to each eligible child.
- There is a $5,000 annual limit. Employees can contribute through payroll deduction if they choose. If an employer offers Section 125 cafeteria plan, the contributions are pre-tax. Employers can contribute up to $2,500 of the annual limit, which does not count toward the employee's taxable income.
- Resources for more information:
Secure 2.0 Act
- High-Wage Earner Roth Catch-Up
- Employees (especially those age 50+) may begin asking about catch-up contributions and how they are taxed or applied to their retirement deductions. We’ve created a one-page overview outlining how catch-up contributions are handled in UKG Ready, what we're updating and whether any action is needed. Click here for the one-pager.
- Employees (especially those age 50+) may begin asking about catch-up contributions and how they are taxed or applied to their retirement deductions. We’ve created a one-page overview outlining how catch-up contributions are handled in UKG Ready, what we're updating and whether any action is needed. Click here for the one-pager.
One Big Beautiful Bill Act (OBBBA)
- 1099 limit for 2026
- OBBBA increased the 1099 reporting threshold from $600 to $2,000 for certain information returns and backup withholding. This change applies to tax years beginning after 2025, with the $2,000 threshold set to be adjusted for inflation starting in calendar year 2027. To learn more about how this change may affect your reporting obligations, we encourage you to review the IRS draft Publication 1099 here.
- Overtime reporting:
- In light of the "no tax on tips and overtime" provision, employers may notice increased employee questions regarding overtime reporting on Form W-2.
- If there is reported overtime in Box 14 of your employees' Form W-2, the amount shown already reflects the premium overtime portion.
Employees should not divide the amount by 3 or make any adjustments when referencing this figure for tax purposes. The value should be used as reported. - Please note that the payroll process reports earnings, but does not determine individual tax eligibility or deductions. Employees should consult a qualified tax professional for guidance on filing status, eligibility and how these provisions may apply to their personal tax situation.
- We recommend proactively communicating these clarifications to employees, as it can help prevent misreporting. For additional details, reference the IRS guidance on tips and overtime for tax year 2025 here.