Benefits Catch-Up – Q2 2026

Qualified Retirement Plans

California District Court Rules in Favor of Plan Sponsor in Actuarial Equivalence Lawsuit

Since 2018, plaintiffs have brought numerous lawsuits alleging that their pension plans use outdated actuarial assumptions in converting single life annuity payments to optional forms of payment, arguing that there is a requirement under the Employee Retirement Income Security Act (ERISA) that such assumptions be reasonable. Several cases have settled, and to date, none have gone to trial. Earlier this year, the Sixth Circuit held that ERISA does impose an obligation to use reasonable actuarial assumptions, and sent two cases back to the district courts to determine whether the factors used were reasonable. However, on April 8, 2026, in Berkeley v. Intel Corporation, a district court in California held that ERISA does not require plan sponsors to use continuously updated “reasonable” actuarial assumptions. The latest decision continues to create uncertainty regarding the future of these lawsuits.

PBGC Issues First Opinion Letter in Over Two Decades, Addresses Annuity Buyouts and Reportable Events

On June 15, 2026, the Pension Benefit Guaranty Corporation (PBGC) issued Opinion Letter 26-001, its first opinion letter since relaunching the program earlier this year after a roughly 24-year hiatus. The letter addresses whether an annuity buyout for active participants in a frozen defined benefit plan triggers the "active participant reduction" reportable event under ERISA, which requires notice to the PBGC when the number of active participants drops below 80% of the beginning-of-year count. The PBGC concluded that annuitized individuals who are expected to remain employed may be disregarded when calculating whether the threshold has been met. The PBGC reasoned that a pension risk transfer does not reflect the financial distress or workforce contraction that the reportable event rules are designed to identify, because when plan liabilities transfer to an insurer, the PBGC’s exposure decreases. The letter also provides that annuitized participants may generally be excluded from the reduction calculation while remaining in the beginning-of-year count.

DOL Issues Temporary Non-Enforcement Policy on Paper Pension Benefit Statements and E-Delivery

On May 12, 2026, the Employee Benefits Security Administration issued Field Assistance Bulletin (FAB) 2026-02, announcing a temporary enforcement policy on paper pension benefit statements in connection with proposed electronic delivery regulations the Department of Labor (DOL) published in February. The proposed regulations would amend the 2002 “wired at work” safe harbor to require employers who want to provide electronic pension benefit statements to send a one-time initial paper notice to newly eligible participants before defaulting them into electronic delivery. The proposed regulations also would amend the 2020 “notice and access” safe harbor to require that participants and beneficiaries be given the opportunity to affirmatively elect electronic delivery in lieu of paper benefit statements, and that each paper statement include an explanation of how to make that election along with contact information for the plan sponsor, plan administrator, or other designated plan representative. FAB 2026-02 provides that the DOL will not pursue enforcement actions against plan administrators working in good faith toward compliance while the rulemaking is pending. 

Health & Welfare Plans

Tri-Agency Final Rule Updates Federal Independent Dispute Resolution Process Under the No Surprises Act

On June 4, 2026, the Department of Health and Human Services (HHS), DOL, and Treasury issued a final rule announcing a temporary enforcement policy on paper pension benefit statements in connection with proposed electronic delivery regulations the Department of Labor (DOL) published in February. The proposed regulations would amend the 2002 “wired at work” safe harbor to require employers who want to provide electronic pension benefit statements to send a one-time initial paper notice to newly eligible participants before defaulting them into electronic delivery. The proposed regulations also would amend the 2020 “notice and access” safe harbor to require that participants and beneficiaries be given the opportunity to affirmatively elect electronic delivery in lieu of paper benefit statements, and that each paper statement include an explanation of how to make that election along with contact information for the plan sponsor, plan administrator, or other designated plan representative. FAB 2026-02 provides that the DOL will not pursue enforcement actions against plan administrators working in good faith toward compliance while the rulemaking is pending.

IRS Announces 2027 Health Savings Accounts (HSAs), High-Deductible Health Plans (HDHPs), and Excepted Benefit Health Reimbursement Arrangements (HRAs) Limits

On May 29, 2026, the Internal Revenue Service (IRS) released Revenue Procedure 2026-24 providing 2027 inflation-adjusted limits for health savings accounts, high-deductible health plans, and excepted benefit HRAs. For 2027, the annual HSA contribution limit increases to $4,500 for self-only coverage (up from $4,400) and $9,000 for family coverage (up from $8,750); the catch-up contribution for individuals age 55 and older remains $1,000. HDHP minimum deductibles rise to $1,750 (self-only) and $3,500 (family), and annual out-of-pocket maximums increase to $8,700 (self-only) and $17,400 (family). The excepted benefit HRA limit increases to $2,250. The revenue procedure also confirms that a direct primary care service arrangement (DPCSA) will not disqualify an individual from HSA eligibility for 2027, provided aggregate monthly fees do not exceed $150 per individual or $300 for arrangements covering more than one individual.

Proposed Rule Creates New Excepted Fertility Benefits Category

On May 10, 2026, the Departments of Treasury, DOL, and HHS jointly proposed rules to establish a new category of limited excepted benefits for fertility services, responding to Executive Order 14216 (Expanding Access to In Vitro Fertilization). The proposed rule would create a new pathway for employers to offer fertility benefits, including IVF, non-IVF treatments, diagnostics, counseling, medications, and surgical treatments, as a limited excepted benefit, separate from major medical coverage and thereby exempt from many Affordable Care Act, HIPAA, and No Surprises Act requirements. For more information, see our legal alert, “Expanding access to fertility benefits: Tri-Agencies’ proposed rule would create limited excepted benefit for fertility benefits,” published May 18, 2026.

Sixth Circuit Holds ERISA Preempts Tennessee PBM Laws

On April 7, 2026, the US Court of Appeals for the Sixth Circuit affirmed in McKee Foods Corporation v. BFP, Inc. that ERISA preempts key provisions of Tennessee’s pharmacy benefit manager laws as applied to self-funded employer health plans. The court held that Tennessee's “any willing pharmacy” requirements, which required PBMs and plan sponsors to admit any licensed pharmacy into their networks, had an impermissible connection with ERISA plans because they dictated network structure and cost-sharing design rather than merely regulating reimbursement rates. In distinguishing the Supreme Court’s 2020 decision in Rutledge v. PCMA, which upheld an Arkansas pharmacy reimbursement law, the Sixth Circuit emphasized that Tennessee’s statutes went further by directly controlling how plans must be structured, eliminating plan sponsors’ discretion to shape pharmacy benefit networks.

Executive Compensation and General Benefits

Treasury and IRS Announce Intent to Issue Proposed Regulations on Section 4960 Excise Tax

On June 5, 2026, Treasury and the IRS issued Notice 2026-36, announcing their intent to issue proposed regulations under Code section 4960. Guidance is needed regarding the expansion of the definition of “covered employees” as part of the One, Big, Beautiful Bill Act (the OBBBA), signed into law on July 4, 2025. Section 4960 imposes a 21% excise tax on applicable tax-exempt organizations that pay covered employees remuneration exceeding $1 million or excess parachute payments. For more information, see our legal alert, “Cast a wider net: Notice 2026-36 previews new era for the Section 4960 excise tax,” published June 24, 2026.

DOL Confirms Trump Accounts Generally Are Not ERISA Plans

On June 17, 2026, the DOL issued Technical Release 2026-02, addressing whether Trump accounts and employer contribution arrangements under Code section 128 are “employee pension benefit plans” subject to Title I of ERISA. The DOL concluded that Trump accounts generally will not be subject to ERISA Title I because they are typically established for the benefit of an employee’s dependent(s) rather than the employee, and therefore do not provide retirement income to employees. When employers do contribute to Trump accounts on behalf of their employees, there are certain safe harbors they may be able to apply to avoid creating ERISA plans. For more information, see our legal alert “DOL issues guidance confirming Trump Accounts generally are not ERISA plans,” published July 17, 2026.

SEC Staff Statement Clarifies Treatment of Pooled Employer Plans and Collective Investment Trusts

On May 4, 2026, the staff of the Securities and Exchange Commission’s Division of Investment Management issued a staff statement on the treatment of pooled employer plans (PEPs) under the federal securities laws. The staff stated that it would not object to PEPs relying on the “single trust exclusion” in Section 3(c)(11) of the Investment Company Act to avoid registration as investment companies, to the extent that the relevant PEPs are subject to ERISA and meet applicable Code qualification requirements.

The statement also provides that collective investment trusts (CITs) maintained by banks may rely on Rule 180 under the Securities Act when issuing interests to PEPs that cover self-employed individuals, provided the PEP (i) is subject to ERISA, (ii) satisfies the applicable Code qualification requirements, and (iii) meets the Rule 180 sophistication condition at the pooled plan provider level (rather than needing to do so separately with respect to each participating employer). While not legally binding, the practical effect is that qualifying PEPs that allow self-employed plans (often referred to as “Keogh plans,” “H.R. 10 plans” or “Rule 180 plans”) to participate, may be able to access CITs without triggering securities registration requirements.

IRS Updates FAQs on Educational Assistance Programs Under Section 127

On April 20, 2026, the IRS released updated frequently asked questions on educational assistance programs under Code section 127. The OBBBA permanently extended Section 127’s treatment of “qualified education loan” repayments as excludable educational assistance benefits, which was set to expire on January 1, 2026. In addition, the $5,250 annual exclusion limit will be indexed for cost-of-living increases starting in the 2027 tax year. The updated FAQs include a revised sample plan document reflecting these OBBBA amendments.

Presidential Executive Order Directs Treasury to Establish TrumpIRA.gov

On April 30, 2026, the President signed an executive order directing the Secretary of the Treasury to establish TrumpIRA.gov, a proposed federal platform to help connect American workers with individual retirement accounts (IRAs) offered by private-sector financial institutions. The platform, planned to be operational by January 1, 2027, would allow workers to filter and compare IRAs based on cost, quality, and investment options. The order also directed Treasury to ensure that workers contributing to qualifying IRAs receive the federal Saver's Match established under the SECURE 2.0 Act of 2022.