As we dive into 2026, the construction landscape continues to shift. Federal infrastructure spending is still strong, but contractors face ongoing challenges like a shortage of skilled workers, high material costs, and new rules from the Davis-Bacon Act. In this tough market, protecting your profit margins matters more than ever.

For prevailing wage contractors, the secret to staying competitive isn’t just about bidding lower, it’s about bidding smarter. One of the most effective ways to do this is through strategic management of your fringe benefits. By moving away from cash payouts and adopting a custom retirement solution, you can free up money to invest back into your business and your team.

Here’s how optimizing your prevailing wage fringe benefits can help your company succeed in 2026.

Slash Labor Burden by Reducing Payroll Taxes

With labor costs going up, paying fringe benefits as cash on paychecks could be losing you money. When you pay fringe as wages, they are subject to payroll taxes (FICA, FUTA, SUTA) and increase your workers’ compensation premiums.

By redirecting those fringe benefits into a qualified retirement plan, you remove them from the payroll tax equation. For example, for a company with 25 employees, moving $5 per hour into a benefits plan can save tens of thousands each year. In an industry where margins are often thin, these savings go straight to your bottom line.

Strengthen Compliance with Davis-Bacon Regulations

The Davis-Bacon and Related Acts (DBRA) have had major updates recently, with renewed focus on enforcement and record-keeping. Dealing with changing regulations requires careful attention.

A custom retirement solution designed for prevailing wage work automatically ensures you stay compliant. By allocating fringe dollars into approved bona fide plans, you streamline your certified payroll reporting and reduce the risk of costly audit findings. It’s peace of mind that lets you focus on your projects, not the paperwork.

Win the War for Skilled Talent

The labor shortage isn’t going away in 2026. To attract and retain skilled workers, you need to offer more than just a paycheck. Skilled tradespeople are increasingly looking for stability and long-term value.
When you contribute to a robust retirement plan, you show a commitment to your team’s future that cash wages can’t match. This sets your company apart as an employer who invests in people for the long haul.

Build Financial Security for Your Workforce

Your crew is the backbone of your business, and they deserve a prosperous future. But for most employees, cash payments are often spent right away to cover daily expenses, leaving little for their retirement.

A custom retirement plan ensures that the hard-earned fringe dollars work harder for your employees’ long-term security. Pairing these plans with financial wellness education empowers your team to understand the value of their benefits, fostering loyalty and financial stability.

Customize Plans for Operational Flexibility

Government contractors often deal with ebbs and flows in their workload. A cookie-cutter 401(k) typically does meet the unique needs of prevailing wage jobs.

Custom plans offer the flexibility you need. Whether you utilize profit-sharing features, safe harbor provisions, or tiered contributions, you can design a plan that adapts to different project sizes and seasonal demands. This ensures your benefits strategy supports your business goals instead of holding them back.

Sharpen Your Bids and Win More Contracts

As private sector activity fluctuates, competition for government contracts is heating up. Every dollar in your bid counts.

By reducing labor costs with a bona fide benefits plan, you lower your total project costs. This allows you to submit leaner, more competitive bids without cutting into your profits or your employees’ pay. It gives you an edge to win more jobs and keep your crews working.

Start Building a Better Future Today

You are always building, whether it is important infrastructure for the country or a secure future for your employees. Make sure your fringe dollars are put to good use in 2026.

For nearly 40 years, Beneco has partnered with contractors to navigate the complexities of prevailing wage. We specialize in building custom solutions that ensure compliance, reduce costs, and help you take better care of your workforce.

Ready to see how much you could save? Contact the Beneco team today to discuss a custom retirement solution that puts your fringe dollars to work for you.