News Archive

"As we approach 2026, employers sponsoring cafeteria plans may take advantage of several important developments that permit optional changes to plan design and administration.... [1] Dependent Care FSA limit increase.... [2] Potential introduction of Trump Accounts.... [3] Health FSA and carryover limit adjustments.... [4] Nondiscrimination testing considerations."  MORE >>

"Notice 2025-68 addresses several topics of interest to employers, including: [1] Employers can offer employees the option to fund accounts for their dependent children via pretax contributions under an Internal Revenue Code (IRC) Section 125 cafeteria plan. [2] The $2,500 limit on employer contributions that are non-taxable to the employee is an annual limit that applies per employee regardless of how many dependent children the employee has.... [3] Account trustees -- not employers -- are responsible for ensuring that aggregate individual and employer contributions don't exceed the annual $5,000 limit."  MORE >>

"Employer contributions must be made pursuant to a Code Section 128(c) Trump account contribution program. Requirements similar to requirements that apply to a dependent care assistance program (regarding discrimination, eligibility, notification, statements, and benefits) apply to a Trump account contribution program."  MORE >>

"As subsidies shrink or disappear, many people are seeing their exchange premiums increase dramatically ... The cafeteria plan rules do allow for election changes if an employee (or spouse or eligible dependent) who is currently enrolled in employer sponsored coverage seeks to change their election in order to enroll in exchange coverage. This, however, is a one-way street ... It does not allow individuals to move from exchange coverage onto group plans."  MORE >>

"Employers who wish to make contributions to Trump Accounts starting next year will be required to establish a separate written plan (and, if applicable, may be required update its Code Section 125 cafeteria plan document to enable employee pre-tax contributions). Employers may also consider other steps that may be required to operationalize contributions."  MORE >>

"Employers may make contributions of up to $2,500 (subject to cost-of-living adjustments after 2027) per calendar year to the Trump account of an employee (or the employee's dependent) that will be excluded from the employee's gross income. An employer must make contributions under a 'Trump account contribution program,' which is a separate written plan maintained by the employer for the exclusive benefits of its employees that meets requirements regarding discrimination, eligibility, notification, statements and benefits similar to the requirements of a dependent care assistance program under Section 129 of the Internal Revenue Code."  MORE >>

"Financial institutions that currently offer IRAs will want to consider whether they want to add this new account option. Although the rules are similar to IRAs, there are a number of nuanced differences that will require careful set-up.... Employers should consider whether they want to add Trump Account contributions to their employee benefit line-up. Employers who do so will need to establish a Section 128(c) Trump Account contribution program."  MORE >>

"[Notice 2025-68] provides Q&As addressing the various Trump account requirements, along with a number of important clarifications regarding: [1] how the accounts are established, [2] available contribution sources (including the pilot program and employer programs), [3] distribution and investment restrictions, [4] reporting requirements, [and] [5] the (in)applicability of ERISA for employer programs."  MORE >>

"End of year is a great time to review and prepare for upcoming compliance deadlines related to your group health plan offerings. Here's what you need to know to prepare for a new year: [1] [ACA] ... [2] Gag clause attestation ... [3] Internet price comparison tool ... [4] Plan document updates ... [5] Nondiscrimination testing ... [6] Life insurance imputed income."  MORE >>

"There are a variety of mistaken elections that can occur each year. They may be made by employees out of confusion, the result of bad programming in the enrollment platform, or mistaken paper election.... [This article discusses] the parameters of correcting cafeteria plan elections."  MORE >>

Dec. 2025. "Use Form 4547 to make the election to establish an initial Trump account for the exclusive benefit of a child who is eligible for a Trump account. Also use Form 4547 to make an election for a $1,000 pilot program contribution from the U.S. Treasury to a child's Trump account if they are eligible for the contribution." [Also available: Draft IRS Form 4547: Trump Account Election(s)]  MORE >>

"While there are still several unanswered questions regarding implementation and administration of Trump accounts, the guidance provides employers more clarity on how they can include Trump account contributions among the benefits offered to employees. The IRS included a comment request in Notice 2025-68 on several issues regarding these accounts, and ... additional guidance from IRS [is expected]."  MORE >>

"A Trump account contribution program may be offered via salary reduction under a section 125 cafeteria plan if the contribution is made to the Trump account of the employee's dependent but not if the contribution is made to the Trump account of the employee.... The Treasury Department will select one or more financial institutions as a financial agent to serve as trustee of the initial Trump accounts."  MORE >>

"Notice 2025-68 provides the first round of helpful guidance for IRA providers interested in maintaining these accounts, and employers interested in funding these accounts for their employees.... Most notable is the confirmation that parents can make pre-tax salary deductions (up to $2,500, indexed) through a cafeteria plan to contribute to their child's Trump account. Of course, employers can also simply elect to contribute up to $2,500 (indexed) tax-free to the Trump accounts of their employees under age 18 or to the accounts of their employees' dependents under age 18."  MORE >>

The IRS has now released all of the 2026 benefit limits, including both the cafeteria and health plan limits as well as all of the qualified retirement plan limits. Earlier this year, IRS also released the High Deductible Health Plan (HDHP) and Health Savings Account (HSA) limits. This chart shows all of these limits for 2025 and 2026.  MORE >>

"[A] handy chart (updated for this year) [describes] how each of these account types varies around eligible employers; eligible employees; the need for a plan document; who can make contributions to the account; this year's contribution limits (if any); the tax benefits to the employee and to the employer; and if investment earnings (if any) are taxed. [It also covers] funds availability to participants; any carryover provisions; portability of the account; eligible expenses to be reimbursed; substantiation requirements; and whether debit cards are available."  MORE >>

"While DCAPs provide significant tax benefits, they do so at a cost -- participant benefit elections are generally irrevocable for the next 12 months.... The exception to this rule is when the employee experiences a qualifying event (sometimes referred to as a qualifying life event, or 'QLE') as defined by the plan."  MORE >>

"Employers may structure their open enrollments as either active or passive.... Employers ... need to clearly communicate when the open enrollment period starts and ends.... Employers should be conscious of those who newly become eligible for their plans around the time of open enrollment as there may be confusion around the timing of elections.... While the IRS determines the allowable limits under the tax code, employers determine the allowable contribution limits under their [account-based] plans."  MORE >>

"An employer-sponsored plan may fail nondiscrimination tests if it includes any of these provisions that favor executives, management or other high-paid employees: [1] Lower contributions; [2] Availability of more benefits; [3] Higher level of benefit reimbursement; [4] Shorter waiting period; [5] Benefit limits that vary based on age, years of service or compensation."  MORE >>

"As a reminder, these annual adjustments are permissive, meaning employers/plan sponsors are not required to adopt [the] plan limit adjustments within their plan. If an employer/plan sponsor chooses to adjust their employee contribution/reimbursement amounts, they should reflect such changes within their accompanying document(s) that describe the plan(s)."  MORE >>

"Plan changes generally occur every year in today's world, and those annual actions could trigger plan amendment procedures. Plan sponsors should review the changes taking place for the upcoming year and determine whether they need a plan amendment, SMM, or SMR. Some of these changes may also require distributing an updated Summary of Benefits and Coverage."  MORE >>

"This article breaks down each update in plain language, helping HR leaders understand what's changing, what to review, and how to keep their benefits plans compliant. Learn how proactive HR teams use these annual updates to strengthen compliance processes and build employee trust."  MORE >>

"On October 9, 2025, the IRS issued Rev. Proc. 2025-32, which announces the 2026 indexed limits for certain health and welfare benefits. This is in addition to the limits the IRS announced in Rev. Proc. 2025-19 on May 1, 2025." [A chart shows 2025 and 2026 limits.]  MORE >>

"The adjustment for 2026 represents a $100 increase to the $3,300 health FSA salary reduction contribution limit for 2025.... The indexed carryover limit for plan years starting in calendar year 2026 to a new plan year starting in calendar year 2027 increases to $680. The carryover amount does not count toward the annual contribution limit."  MORE >>

"This revenue procedure modifies certain sections of Rev. Proc. 2024-40 ... to reflect the amendments to the Internal Revenue Code by ... the One, Big, Beautiful Bill Act (OBBBA). This revenue procedure sets forth inflation-adjusted items for 2026 for various Code provisions as in effect on October 9, 2025.

• For taxable years beginning in 2026, the dollar amount in effect under Section 45R(d)(3)(B) is $34,100. This amount is used under Section 45R(c) for limiting the small employer health insurance credit and under Section 45R(d)(1)(B) for determining who is an eligible small employer for purposes of the credit....
• For taxable years beginning in 2026, the dollar limitation under Section 125(i) on voluntary employee salary reductions for contributions to health flexible spending arrangements is $3,400. If the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $680....
• For taxable years beginning in 2026, the monthly limitation under Section 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $340. The monthly limitation under Section 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $340....
• For taxable years beginning in 2026, the term 'high deductible health plan' as defined in Section 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,900 and not more than $4,400, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $5,850....
• For taxable years beginning in 2026, the term 'high deductible health plan' means, for family coverage, a health plan that has an annual deductible that is not less than $5,850 and not more than $8,750, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $10,700."

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