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Employee Benefit Compliance Priorities for Year End

"Plan sponsors should be collaborating with their payroll vendors and recordkeepers to understand how mandatory Roth catch-up contributions will be processed for high wage earners ... [If] at least one applicable retirement plan within a controlled group permits super catch-up contributions, all controlled group retirement plans must also permit super catch-up contributions.... By February 16, 2026, each HIPAA covered entity and business associate must update its Notice of Privacy Practices (NPP) ... Some section 409A corrections under Notice 2008-113 must be completed by year-end, making now the ideal time to identify and finalize correction of any lingering errors."

IRS Elects to Contribute Complex Final Regs on Super and Roth Catch-Ups

"If a plan sponsor chooses to apply a deemed Roth catch-up election when the participant's combined Roth and pre-tax contributions reach the Code section 402(g) limit, and the participant affirmatively elects pre-tax catch-up ... the plan sponsor will need to develop a process through which the earlier Roth contributions are taken into account in making any correction with respect to the pre-tax catch-up amounts."

Executive Order Will Facilitate Retirement Plan Investment in Alternative Assets

"[1] Direct versus indirect investment ... [2] Digital assets ... [3] Lifetime income ... [4] Adoption of safe harbors and other regulations and guidance ... [5] Coordination among regulators ... [6] ERISA litigation." 

One Not-So-Big Summary of the Compensation and Benefits Law Changes in the One Big Beautiful Bill Act

"After having been left out of the initial House bill, the Act includes the long-awaited telehealth extension.... Although employees may want to take advantage of the increase in the DCAP contribution limit, employers should continue to run and monitor DCAP nondiscrimination testing ... Employers that want to offer [Trump Account] contributions to their employees will need a formal plan document and will need to comply with certain nondiscrimination testing rules."

The One, Big, Beautiful Bill: Benefits-Related Provisions as of May 15

"The OBBB will likely continue to evolve as the bill progresses through the legislative process. [This article provides] a brief overview of some of the most impactful employee benefits items."

Supreme Court Lowers Pleading Standard for ERISA Prohibited Transaction Claims

"[P]laintiffs will likely test the courts, leveraging the advantages this decision has given them and the inherent inconsistency in applying these 'tools.' Plan sponsors should assess their potential risks and consider mitigation efforts, including strategies they would employ in the event of a claim. For example, plan sponsors could consider paying plan expenses from corporate assets rather than plan assets, which would eliminate the possibility of a section 406(a)(1)(C) prohibited transaction." [Cunningham v. Cornell Univ., No. 23-1007 (S.Ct. Apr. 17, 2025)] 

Insurance Company Providing 401(k) Retirement Plans Not an ERISA Fiduciary with Respect to Foreign Tax Credits from Mutual Fund Shares

"Considering ordinary notions of property rights, the court concluded that the foreign tax credits were inalienable and owned by John Hancock as the legal and taxable owner of the shares of the mutual fund. The fact that the foreign tax credits were the result of foreign taxes on the Romanos fund did not make them assets of the fund. This was underscored by the fact that the Romano Law Plan was a tax-exempt plan unable to use the credits." [Romano v. John Hancock Life Ins. Co. (USA), No. 22-12366 (11th Cir. Oct. 30, 2024)]

Proposed Regs Explain the Expansion of 'Covered Employees' Under Code Section 162(m)

"In assembling compensation data for potential covered employees, companies should take a broad view of their employee population to correctly identify the next five highest compensated employees under the Proposed Regulations (i.e., companies should consider individuals that are employed through foreign entities, PEOs or other third parties). Companies should also be prepared to conduct the analysis on an annual basis to redetermine the group of five additional employees."

IRS Provides 'Super' and Roth Guidance

"Plan sponsors that choose not to allow the super catch-up contributions may want to review the language in their plan documents related to catch-up contributions. If the plan document broadly allows catch-up eligible participants to defer the maximum permitted under Internal Revenue Code Section 414(v), the plan document may inadvertently allow super catch-up contributions, even if this is not the plan sponsor's intent."

2024 Qualified Retirement Plan and Health and Welfare Plan Checklist: A Very Demure, Very Mindful Year

"Qualified retirement plans: [1] Long-term part-time employees ... [2] Catch-up provisions ... [3] Forfeitures ... [4] Expanding automatic enrollment in retirement plans ... [5] Roth catch-up contributions ... [6] Required minimum distributions ... [7] Annual notices ... [8] Qualified plan amendments ... Health and welfare plans: [1] Gag clause prohibition compliance ... [2] End of telehealth extension ... [3] Mental Health Parity and Addiction Equity Act requirements ... [4] HIPAA privacy reproductive health protections ... [5] Health and welfare plans cybersecurity."