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Year-End Amendments for 457(b) Plans

"The SECURE 2.0 changes that have most commonly been put into effect for such plans are [1] an increase in the small balance distribution limit from $5,000 to $7,000 and [2] an increase in the required minimum distribution age from age 72 under the SECURE Act of 2019 ... If a calendar year non-governmental 457(b) plan has operationalized either change, or both, a plan amendment will be needed to reflect the relevant changes by December 31, 2025[.]"

Consider Nonqualified Plans When Implementing New Roth Catch-Up Contribution Rules

"401(k) plan sponsors who also maintain a nonqualified deferred compensation plan [should] ... [1] Determine how the Roth catch-up requirement will be implemented.... [2] Review the terms of any nonqualified plans and assess whether the answers to item 1 above will affect the plans.... [3] Implement plan amendments and administrative procedures that ensure compliance by the 401(k) plan under Code Section 414(v)(7) and the nonqualified plans under Code Section 409A."

Coming Soon to Your 401(k) Plan: Tontines and Other Exotic Investments

"[I]nvestment fiduciaries will have to focus even more intently on engaging in a prudent process and documenting that process when evaluating the merits of alternative assets for participants in ERISA defined contribution retirement plans."

The Interaction Between State Paid Family Medical Leave and Employer Short-Term Disability Programs

"Employees often are denied LTD benefits if they did not receive STD benefits during the LTD policy's exhaustion period, so the importance of applying for both PFML and STD benefits when a need for medical leave arises cannot be overstated.... [If] an employee applies for PFML and STD benefits at different times, it may result in the employee receiving PFML and STD benefits consecutively, rather than concurrently, which in turn may lead to requests for longer leaves of absence from work.... Another way to simplify the medical leave benefit process is to offer combination PFML-STD policies that provide one medical income replacement benefit to employees that equals or exceeds the state-required PFML benefit."

The Importance of ERISA Status for Severance Plans

"A recent First Circuit decision ... illustrates how ERISA preemption of state law protects employers where a former employee asserts state law claims alleging improper termination of employment to avoid paying severance benefits. This post describes the benefits of ERISA preemption, provides an overview of the First Circuit decision, and highlights key aspects courts look to in determining whether a severance program is an ERISA plan." [Orabona v. Santander Bank, N.A., No. 24-1905 (1st Cir. Jun. 16, 2025)]

Do We Have to Make It a Top Hat Plan?

"[T]here are some plans written as top hat plans, including retention incentive plans and long-term incentive plans, that do not need to be top hat plans. In other words, some employers, perhaps guided by overly conservative advice, needlessly refrain from offering plans with a deferral element to personnel who do not belong to a select group of management or highly compensated employees."

Implications and Action Items for ERISA Attorneys Following Cunningham v. Cornell University

"[A]ttorneys for ERISA fiduciaries must hope that the district courts can quickly develop a body of case law under Rule 7(a)(7) that will allow them to screen out meritless prohibited transaction claims. At the very least, litigation counsel for ERISA fiduciaries should become familiar with case law concerning application of the Rule in their Circuit and prepare to file motions for an order requesting a Rule 7(a)(7) reply in each lawsuit where a prohibited transaction count is alleged." [Cunningham v. Cornell Univ., No. 23-1007 (S.Ct. Apr. 17, 2025)]

Retirement Plan Default Beneficiary Hierarchy: Considerations for Plan Sponsors

"This post outlines practical considerations for plan sponsors regarding their defined contribution plan's default beneficiary hierarchy. [1] Keep it simple.... [2] [T]he effective date for [any] change should be prospective ... [3] Take care when moving onto a new recordkeeper's plan document.... [4] Disclose the default beneficiary hierarchy in participant communications."

Preventive Services vs. Preventive Care

"In the context of medical coverage, the terms 'Preventive Services' and 'Preventive Care' are often used interchangeably. The two terms, however, have very different meanings. Understanding the difference can have significant implications for plan sponsors and participants alike."

DOL Updates Model Annual Funding Notices for SECURE 2.0

"[While FAB 2025-02] encourages using the updated models to ensure compliance, it also recognizes that the new guidance may have arrived too late for some plans to do so. If a plan's notice was already prepared or well in process when the FAB was issued, it may be used if the administrator determines that it reflects a reasonable, good-faith interpretation of section 101(f), as amended by SECURE 2.[0] To the extent the notice does not meet that standard, the administrator must take appropriate corrective action."