Spotlight on Benefits

Navigating Cryptocurrency Investments in Employer-Sponsored Retirement Plans

Cryptocurrency has revolutionized the financial landscape, emerging as a high-risk, high-reward investment option. As its popularity grows, the question of incorporating cryptocurrency into employer-sponsored retirement plans has sparked debate among regulators, employers and investors alike.

Prior Guidance and Current Change

Over the past few years, federal guidance on cryptocurrency in retirement plans has fluctuated. In 2022, the Department of Labor (DOL) under the Biden administration issued guidance encouraging plan fiduciaries to “exercise extreme care” in considering whether to include cryptocurrency in employer-sponsored retirement plans, citing concerns over volatility and fiduciary risks. However, the Trump administration rescinded this guidance in May, taking a more neutral stance on cryptocurrency in retirement plans and potentially opening the door for broader exploration of crypto investments. These shifts reflect the evolving regulatory approach to cryptocurrency as an investment class.

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DOL and Other Agencies Announce Non-Enforcement of 2024 Regulation Regarding the Mental Health Parity and Addiction Equity Act

The Departments of Labor and Health and Human Services, along with the Internal Revenue Service (Agencies) recently announced they will not enforce regulations promulgated in 2024 regarding the Mental Health Parity and Addiction Equity Act (MHPAEA) (2024 Final Rule), implementing changes Congress made to the MHPAEA by way of the Consolidated Appropriations Act of 2021 (CAA). The Agencies noted they will reconsider or modify the 2024 Final Rule (and potentially other guidance) and review each department’s respective enforcement approach. Before the recent change in enforcement position, the DOL, in particular, had emphasized that MHPAEA compliance was one of its top enforcement priorities.

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Reminder: The CARES Act High-Deductible Health Plan Telehealth Rule Has Expired

Effective January 1, 2025, the special COVID-era rule under the CARES Act that allowed employers sponsoring high-deductible health plans to provide free telehealth visits without affecting employees’ eligibility to contribute to health savings accounts (HSA) has expired. Employers must now either ensure that telehealth services are preventive or subject to the plan’s deductible, or they must charge for such services in order to maintain HSA eligibility for their employees.

As noted in our prior blog post on health plan coverage post-COVID-19 emergencies, for plan years beginning on or after January 1, 2020, through December 31, 2024, employers that sponsor high-deductible health plans could, but were not required to, offer free telehealth services before meeting the plan’s deductible without affecting participants’ eligibility to contribute to an HSA.

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Stop the Presses – Annual Funding Notice Guidance Issued

On April 3, 2025, the Department of Labor (DOL) issued guidance on the Annual Funding Notice changes made by the SECURE Act 2.0 and provided model notices. Pension plan administrators should review and revise their annual funding notices in light of the new guidance.

Background

Section 343 of SECURE Act 2.0, passed December 29, 2022, implemented changes to the annual funding notice provided to defined benefit pension plan participants. The changes became effective for plan years beginning after December 31, 2023. For calendar year pension plans, the 2024 Annual Funding Notice (due no later than April 30, 2025) would be the first notice implementing the new rules. The DOL had not issued guidance or provided a model notice until the afternoon of April 3, 2025.

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(Auto) Enroll With It: Understanding the New Automatic Enrollment Requirements

On January 10, 2025, the Treasury Department and the Internal Revenue Service issued Proposed Regulations on the automatic enrollment requirements introduced by SECURE 2.0. The Proposed Regulations incorporate and expand upon previously issued interim guidance under IRS Notice 2024-2 and address various open issues.

SECURE 2.0

SECURE 2.0 generally requires that new 401(k) and 403(b) plans that are established on or after December 29, 2022 (the “enactment date”), automatically enroll employees at a uniform contribution rate of 3% (but not more than 10%) and also automatically increase the contribution rate by 1% annually, up to at least 10% (with a cap at 15%).

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New Self-Correction Component under the DOL’s Voluntary Fiduciary Correction Program

The Voluntary Fiduciary Correction Program (VFCP) has long been a source of reprieve to plan sponsors and fiduciaries from enforcement actions by the Department of Labor (DOL), by allowing the voluntary correction of a number of Employee Retirement Income Security Act (ERISA) violations before potential agency intervention. In coming forward and voluntarily correcting certain errors, the DOL continues to encourage plan sponsors and fiduciaries to engage in such behavior by issuing letters to those who have accepted VFCP submissions stating that the agency will not take any further action and will not pursue civil penalties on those matters. However, VFCP submissions require detailed applications which can be time-consuming and costly to prepare in comparison to the potentially minor correction that they are intended to rectify.

On January 15, 2025, the DOL’s Employee Benefits Security Administration (EBSA) amended and restated the VFCP, including finalized amendments to Prohibited Transaction Exception (PTE) 2002-51, to be effective March 17, 2025.

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ERISA Moments Ep. 31: The Trump Administration Policies for Retirement Plans

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, The Trump Administration Policies for Retirement Plans, below.

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Affordable Care Act Penalty and Reporting Relief

The Employer Reporting Improvement Act and the Paperwork Burden Reduction Act (PBA), each signed into law in December 2024, provide the following penalty and reporting relief for plan sponsors required to provide minimum essential coverage in accordance with the requirements of the Patient Protection and Affordable Care Act (ACA):

An individual’s date of birth may be used as a substitute when the individual does not have a tax identification number (TIN) for ACA reporting due in 2025 and after.

Reminder: Until further guidance is issued, to ensure that the reasonable cause exception from ACA reporting penalties is retained, plan sponsors should continue to solicit the individual’s TIN three times: (i) as part of the application for enrollment in the plan, (ii) within 75 days after the application is received and (iii) by December 31 of the year after the initial solicitation.

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ERISA Moments Ep. 30: DOL Investigations: Priorities for 2025

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Second Circuit Adopts “Meaningful Benchmark” Pleading Standard in ERISA Cases

In Singh v. Deloitte LLP, et al., No. 23-1108, 2024 WL 5049345 (2d Cir. Dec. 10, 2024), the Second Circuit Court of Appeals upheld a district court’s dismissal of a complaint alleging that plan fiduciaries caused an ERISA-governed 401(k) plan to pay excessive recordkeeping fees. This article discusses the Singh case and its impact on excessive-fee claims.

As more and more employers face lawsuits alleging that their 401(k) plans paid excessive recordkeeping and administrative fees, courts continue to grapple with the standard required for plaintiffs to plead plausible claims that survive motions to dismiss. The Second Circuit is the most recent Court of Appeals to adopt the “meaningful benchmark” pleading standard for claims alleging excessive recordkeeping or administrative fees, and it is among the most stringent pleading standards yet.

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