MORE FROM 2025 Retirement Plan Fiduciaries Can Expect a Continued Era of ERISA Litigation A Supreme Court decision in April made it easier for plaintiffs to keep ERISA “prohibited transaction” claims in play longer, and just days later a rare ERISA trial resulted in a huge win for a class of 401(k) plan participants. The SCOTUS ruling and the $39 million jury award creates a potential new wave of litigation risks for retirement plan sponsors and fiduciaries. A Growing Call for Financial Wellness Programs and Menopause- Related Benefits Financial wellness programs were in the spotlight this year, and for good reason – a 2024 report by BrightPlan shows that 91% of workers surveyed were
EMPLOYEE BENEFITS AND TAX
stressed about their finances, and that employees’ financial stress costs US businesses an estimated $183B annually in lost productivity and engagement. Menopause-related benefits also took the stage in 2025, and we explored how menopause-savvy workplaces can benefit both employers and employees. States Got Creative With New Benefits-Related Laws Alabama enacted a law in April that will soon make it the first state in the country to offer a tax-advantaged way for businesses to contribute to benefits for independent contractors. In June, Nevada launched a state-facilitated retirement program for private sector employees, joining a growing list of states to do so. And Illinois will soon require fully insured health policies issued in the state to cover parents and stepparents who qualify as dependents, creating new challenges for employers that sponsor such plans.
2025 PREDICTIONS RECAP
As we predicted, Trump’s DOL is shifting away from a 2022 final rule that allowed plan fiduciaries to consider environmental, social, and governance factors in investment decisions. The agency unveiled a set of high-priority action items in September, which included plans for updating the ESG rule to require fiduciaries to “select investments and exercise shareholder rights based only on financial considerations relevant to the risk-adjusted economic value of a particular investment, and not to advance social causes.” Trump Administration Reversed Course on Biden-Era “ESG Rule” for 401(k) Plans In line with our predictions, the ACA’s enhanced premium tax credits are on track to expire at the end of 2025 – a heated policy issue that was largely to blame for the federal government’s longest-ever shutdown this year. However, the Supreme Court gave the federal government the greenlight in June to continue enforcing the ACA’s preventive-care mandates. In a 6-3 bipartisan decision, SCOTUS rejected constitutional challenges brought to the structure of the US Preventive Services Task Force – but the Court’s rationale could potentially make the coverage rules more susceptible to political influence. The ACA’s Preventive Care Mandates Survived, But Its Enhanced Subsidies May Not
PREDICTIONS FOR 2026
So-Called “Alternative Investment” Options Are Coming for Your 401(k) Plan President Trump signed an executive order in August to allow 401(k) plan fiduciaries to include alternative assets – such as private equity, real estate, and cryptocurrency – in their investment portfolios. The administration argues that alternative investment options in defined contribution plans will offer competitive returns and diversification opportunities, but opponents have expressed concerns over illiquidity, volatility, low transparency, and high investment fees. One thing is certain – private assets hitting 401(k) plans on a wide scale will open the door for new liability risks for employers and plan administrators. The DOL is expected to clarify its position on the matter by early 2026, so stay tuned for regulatory updates. Increased Healthcare Costs, Political Maneuvering Will Keep Employers on Their Toes
OUR PREDICTIONS WERE MOSTLY RIGHT
HOW DID WE DO?
MORE FROM 2025 Major Benefits-Related Changes Under the “Big Beautiful Bill” President Trump signed a massive budget bill in July that contains various provisions that impact employee benefit plans. For example, the law expands the rules for health savings accounts and increases the contribution limit for dependent care flexible spending accounts for the first time ever (aside from temporary COVID-era increases). Federal Judge Struck Down the Reproductive Healthcare Privacy Rule
A recent Mercer survey found that the average cost of employer-sponsored health insurance will increase by 6.7% in 2026 – the highest increase in 15 years – and surpass $18,500 per employee. We expect this issue to come into the spotlight in a big way next year ahead of the mid-term elections – similar to the current political clashes over ACA subsidies and the sky-rocketing costs for marketplace plans once they expire. Flying Blind Over Increasingly Complicated Tax Rules A depleted IRS will make it even more difficult for employers and employees to get certainty and assistance with the ever-expanding number and complexity of tax compliance issues and obligations.
Sheldon J. Blumling Irvine Partner, Chair
A Texas federal judge’s decision in June tossed out Biden-era reproductive healthcare privacy protections, halting a 2024 final rule (which applied to HIPAA covered entities) with nationwide effect.
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