Every fall, HR teams face the same crunch: open enrollment deadlines, year-end payroll prep, policy updates, and a workforce that's already thinking about the holidays. Getting ahead of these tasks now means fewer scrambles in December—and a smoother start to the new year.
Here's what to prioritize before Q4 closes out.
1. Review and Update Your Employee Handbook
Annual handbook reviews often get pushed to January, but fall is the better time. State employment laws change constantly—California, New York, and Illinois saw notable updates this year—and your handbook should reflect them before year-end performance reviews and offer letters go out.
Key areas to audit:
Remote and hybrid work policies
AI and technology usage guidelines (increasingly scrutinized by regulators)
Harassment and discrimination policies
PTO accrual and carryover rules
Pay transparency and salary range disclosures (now required in 20+ states)
If legal reviewed your handbook more than 12 months ago, schedule a new pass.
2. Finalize Your Holiday Schedule and Time-Off Policy
Publish the 2027 holiday calendar before open enrollment begins. Employees factor PTO and holidays into benefits elections, and late announcements create confusion.
Also address year-end PTO logistics now: communicate any use-it-or-lose-it deadlines, blackout periods, and whether employees can carry unused days into 2027. The earlier this lands in inboxes, the fewer last-minute requests you'll manage in December.
3. Help Employees Maximize Their 2026 401(k) Contributions
Fall is the last window for employees to adjust their 401(k) deferrals and still hit the annual limit. The IRS 2026 contribution limits are:
Employee deferral limit: $24,500
Catch-up contribution (age 50–59 and 64+): $7,500 (total: $32,000)
Enhanced catch-up (ages 60–63): $11,250 under SECURE 2.0 (total: $35,750)
Remind employees how many pay periods remain in the year and what deferral percentage they'd need to reach the limit. Many payroll systems can run this calculation automatically.
Also verify that your employer match is on track—some plans cap the match mid-year once an employee hits the limit early ("true-up" provisions handle this differently across plans, so it's worth confirming with your plan administrator).
4. Run Open Enrollment for 2027 Benefits
Open enrollment typically runs October through mid-November for January 1 effective dates. Key items to communicate:
Health insurance: Summarize any plan or premium changes clearly. A one-page comparison of plan options reduces call volume to HR significantly.
Health FSA: The 2026 IRS limit is $3,400 per employee (up from $3,300 in 2025). When helping employees elect for 2027, encourage them to estimate healthcare spending realistically—overcontributing is a common and costly mistake.
Dependent Care FSA: The 2026 limit increased to $7,500 for single filers and married-filing-jointly households (up from $5,000), and $3,750 for married-filing-separately. This 50% increase, effective for plan years beginning in 2026 under the One Big Beautiful Bill Act, means eligible employees can set aside an additional $2,500 in pre-tax income for qualifying childcare or dependent care expenses. Actual tax savings depend on each employee's marginal rate—a family in the 22% federal bracket saves roughly $550 in federal taxes on that additional $2,500, plus applicable state taxes. Note: your plan document must permit the increased contribution limit, and employees generally cannot increase their DCFSA elections mid-year without a qualifying life event. This is a significant and underreported change—worth a callout in your open enrollment communications.
FSA run-out reminder: Remind employees to submit receipts for 2026 FSA expenses before the plan year closes. Most plans allow a grace period of up to 2.5 months or permit carryover of up to $680 of unused health FSA funds into 2027—but only if your plan document includes those provisions.
5. Update Employee Contact Information
Before W-2s are prepared, verify that every employee's mailing address is current. A returned W-2 triggers re-mailing costs and IRS complexity. Send a company-wide prompt asking employees to confirm their address in your HRIS.
This is also a good moment to refresh emergency contacts, beneficiary designations for benefits and 401(k) accounts, and direct deposit information. These rarely get updated on their own—a prompted fall check catches most gaps.
6. Prepare for Payroll Year-End
W-2 forms must be distributed to employees by February 1, 2027 (January 31 falls on a Sunday, so the deadline shifts to the next business day). The IRS filing deadline is also February 1, 2027 for both paper and electronic submissions.
Start payroll year-end prep now:
Reconcile year-to-date payroll figures against your general ledger
Verify employee Social Security numbers using the SSA's free verification service
Confirm supplemental wages (bonuses, awards, commissions) are coded correctly
Identify any contractors who crossed the $600 threshold and will need a 1099-NEC
If you're processing a year-end bonus run, decide whether it falls in the last December payroll period or in January—the timing affects tax withholding and W-2 reporting.
7. Review Workers' Compensation Coverage
Most workers' compensation audits happen after the policy year ends—but reviewing early gives you time to address any surprises before they become premium adjustments. Check:
Headcount and payroll changes since your last audit period
Job classifications for employees who changed roles
Whether remote employees working in new states triggered additional coverage requirements
Premium adjustments based on audit results can be significant. Working with your broker before the audit window gives you leverage.
8. Pull Annual People Metrics
Year-end executive reports and board updates happen in Q1—which means the data needs to be ready before December closes. Compile now:
Voluntary and involuntary turnover by department and tenure band
Time-to-fill for open roles
Training and development hours per employee
Headcount vs. plan (over or under budget?)
Diversity and representation data if your company reports it publicly or to investors
These metrics also feed compensation benchmarking and headcount planning for 2027. The teams waiting on your numbers will thank you for having them early.
9. Launch Your Annual Review Cycle
If annual reviews are tied to year-end or Q1 compensation changes, starting the cycle in October is not early—it's on time. Waiting until November or December compresses everything into the period when managers are most distracted.
Steps to take now:
Set and communicate review dates to all managers
Distribute self-evaluation templates 3–4 weeks before due dates
Calibrate rating scales with managers before reviews begin—inconsistency is the most frequent employee complaint about the process
Identify employees who may need a documented performance improvement plan before year-end
If compensation changes are effective January 1, all approvals need to be complete before the first payroll of 2027 processes.
Frequently Asked Questions
What is the 401(k) contribution limit for 2026? The employee 401(k) deferral limit for 2026 is $24,500. Employees age 50–59 and 64 and older can contribute an additional $7,500 catch-up for a total of $32,000. Under SECURE 2.0, employees ages 60–63 have an enhanced catch-up limit of $11,250, bringing their total to $35,750.
What is the FSA contribution limit for 2026? The health FSA limit for 2026 is $3,400 per employee (up from $3,300 in 2025). The dependent care FSA limit is $7,500 for single filers and married-filing-jointly households—a significant increase from $5,000—and $3,750 for married-filing-separately. The dependent care increase took effect for plan years beginning in 2026.
When must employers distribute W-2s to employees? Employers must furnish W-2 forms to employees by January 31 of the following year. For tax year 2026, January 31 falls on a Sunday, so the deadline shifts to February 1, 2027 for both employee distribution and IRS filing.
What should HR prioritize in Q4? The highest-priority Q4 HR tasks are: running benefits open enrollment, communicating 401(k) contribution deadlines to employees, completing year-end payroll reconciliation, and launching the annual review cycle. Starting all four in October—rather than December—is what separates a smooth year-end from a stressful one.
What is the dependent care FSA limit for 2026? The dependent care FSA limit increased to $7,500 for 2026 for single filers and married couples filing jointly (up 50% from $5,000), and $3,750 for married-filing-separately. This is a household limit, not per spouse. The change was enacted under the One Big Beautiful Bill Act for plan years beginning in 2026. Employers must confirm their plan document permits the increased contribution amount before communicating the new limit to employees.