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Do I Need an Independent Trustee for My ESOP Transaction?

"In most ESOP transactions, particularly leveraged buyouts, there is an inherent conflict between the goals of selling shareholders and the goals of the ESOP.... The independent trustee serves as the neutral fiduciary, charged with evaluating the transaction and deciding whether the ESOP should proceed. This includes the initial transaction forming the ESOP and any subsequent transactions involving an ESOP. The independent trustee works to make sure these inherently conflicted transactions meet regulatory requirements by remaining arms-length transactions."

IRS Guidance Clarifies New HSA Rules Under the One Big Beautiful Bill

"[T]he new guidance [1] clarifies that the safe harbor does not extend to in-person services, medical equipment, or drugs furnished in connection with telehealth or other remote care services.... [2] clarifies how Direct Primary Care Service Arrangements (DPCSAs) interact with HSAs.... [3] provides that beginning January 1, 2026, bronze and catastrophic health plans, including those obtained through a health insurance exchange, will be treated as HSA-compatible, even if they don't meet the traditional high-deductible requirements."

IRS Provides Relief for Reporting of State PFML Benefits

"Under these rules, medical leave benefits paid by a state to employees -- when funded by employer contributions -- are considered taxable income and wages for federal employment tax purposes. [IRS Notice 2026-6 provides that], for 2026, states and employers are not required to follow the usual income tax withholding and reporting requirements for these payments and will not face penalties for noncompliance."

Actions to Take Early in 2026 If You Increased Your Dependent Care FSA Max

"While the increase sounds positive for employees, it can create challenges with nondiscrimination testing ... When the limit jumps to $7,500, HCEs are more likely to contribute the maximum, which can skew the ratio and increase the risk of failing the test. If you have had problems passing this test in the past, you will likely continue to have problems and potentially experience an even greater difference in the ratio."

Year-End Tax Challenges for Benefits While on Leave

"[It] is important to understand the tax issues affected by your administration of group health plan benefits for employees on leave, particularly for leaves that cross calendar years. If you provide group health benefits and an employee takes approved leave, it is likely that such employee has benefit continuation rights under federal or state law.... Employers have options for collecting premium payments, and each option comes with its own advantages and risks.... IRS guidance has made it clear that an employee cannot make pre-tax payments for premium payments for benefits to be received in a subsequent tax year."

Did Your 401(k) Plan Meet the Discretionary Contribution Notice Requirements?

"For plan sponsors with a pre-approved 401(k) plan document that contains a discretionary matching contribution, there is a new compliance requirement.... [A] plan must include a clear, predetermined formula for how contributions will be allocated. To meet the new requirement, pre-approved plan documents with discretionary matching contributions must contain the required complaint language and meet two notice requirements."

When Can You Use the DOL Calculator for Earnings on Plan Corrections?

"The DOL provides an online tool that calculates lost earnings for plan sponsors when they owe earnings to their retirement plans due to a prohibited transaction.... Under EPCRS, the IRS provides that to the extent possible earnings on any corrections should be calculated using actual earnings.... There are also several rules of administrative convenience that may be used when the correction involves increasing a participant's account.... There are different rules of administrative convenience that may be used when the correction involves decreasing a participant's account."

IRS Provides Chance to Avoid Roth Catch-Up for Some 403(b) and 457 Participants

"In 403(b) plans, employees with at least 15 years of service at eligible employers, such as public schools and certain nonprofits, may qualify for an additional catch-up contribution of up to $3,000 per year, capped at $15,000 total. The Roth catch-up requirement does not apply to these ... Similarly, for governmental 457(b) plans, the Roth requirement applies only to the extent catch-up contributions exceed the regular 457(b) limit."

When Does Your ERISA Plan Need an Audit?

"Most plans with 100 or more eligible participants at the beginning of the plan year must include an accountant's audit report when filing Form 5500. There is a general exception which allows some smaller plans to avoid attaching an audit to their filing.... For sponsors of health and welfare plans, the good news is that ERISA's audit requirement generally only applies if the plan is funded through a trust (for example, a VEBA), or if participant contributions are otherwise segregated from the employer's general assets."

Deadline Approaching for 457(b) Plans Maintained by Tax-Exempt Organizations

"If you have made any of the following changes in operation to your plan, an amendment is necessary by year end: [1] RMD age ... [2] Roth distributions ... [3] Small benefit amount ... [4] Unforeseeable emergencies."