Inés Sosa, Author at Spotlight on Benefits

Minnesota Secure Choice: What Employers Need to Know as Compliance Deadlines Approach

Minnesota’s Secure Choice Retirement Program requires employers doing business in Minnesota to either enroll workers in the state’s payroll‑deduction IRA program or, if the employer already offers a qualifying retirement plan (e.g., a 401(k), 403(b), SEP, or SIMPLE), to certify its exemption from that requirement by the end of the employer’s assigned registration window. All employers with 100+ covered employees must set up a Minnesota Secure Choice Employer Account by June 30, 2026, and either enroll their workers in the state’s payroll‑deduction IRA program or certify their exemption by the required date. Noncompliant employers face graduated fines of up to $500 per employee after an initial warning period.

Who Is a “Covered Employer”?

The Secure Choice Retirement Program applies to any private-sector employer that has been doing business in Minnesota for at least 12 months and employs five or more covered employees receiving Minnesota taxable wages. Temporary or seasonal employees expected to work 180 days or less are excluded from the count.

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The IRS Makes It Easy for Employers to Set Up an Educational Assistance Plan

The Internal Revenue Service (IRS) recently issued a template plan document that employers can use to establish a qualified educational assistance program under Section 127 of the Internal Revenue Code (Code). For employers looking for a straightforward plan, the IRS has made it simple. For employers with more tailored objectives, including around course restrictions, grade requirements, clawback provisions, or benefit allocation, a custom plan document may be a better option.

What is a Section 127 Program?

A qualified educational assistance program under Section 127 of the Code allows employers to provide up to $5,250 per employee per year in tax-free benefits for tuition, fees, books, supplies, equipment, and qualified education loan repayments. The $5,250 cap will be indexed for inflation beginning with taxable years after 2026.

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Increase to Dependent Care Flexible Spending Account Limit

On July 4, 2025, the Trump administration signed into law the final version of H.R. 1- One Big Beautiful Bill (OBBB). The OBBB includes various changes that affect employee benefits, including an optional increase to the annual amount an employer can allow an employee to contribute on a tax-favored basis to their dependent care assistance program/flexible spending account (FSA).

For plan years starting on or after January 1, 2026, the maximum dependent care FSA contribution limit will increase from $5,000 to $7,500 a year (and from $2,500 to $3,750 per year if married and filing taxes separately). This new dependent care FSA contribution limit is not indexed for inflation.

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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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IRS Announces 2025 Retirement Plan Limits

The Internal Revenue Service (IRS) recently announced the 2025 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2025. The following limits apply to retirement plans in 2025:

The limit on elective deferrals under 401(k), 403(b) and eligible 457(b) plans increased to $23,500.
The limit on catch-up contributions by participants aged 50 or older did not change and remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2025 is $31,000.
The enhanced catch-up contribution limit for those ages 60-63 in 2025 is $11,250. This means that the maximum amount of elective deferral contributions for these participants in 2025 is $34,750.
The Internal Revenue Code (Code) Section 415 annual addition limit is increased to $70,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $280,000 for defined benefit plans.
The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $350,000.
The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $160,000 (which, under the look-back rule, applies to HCE determinations in 2026 based on compensation paid in 2025).
The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $230,000.

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Strict Construction: Seventh Circuit Affirms Written Pension Obligations

On March 22, 2024, the United States Court of Appeals for the Seventh Circuit issued a ruling in Bulk Transp. Corp. v. Teamsters Union No. 142 Pension Fund, ordering the Teamsters Union No. 142 Pension Fund (the “Fund”) to repay Bulk Transp. Corp. (“Bulk Transport”) $2.3 million in withdrawal liability it had erroneously assessed upon Bulk Transport.

Bulk Transport and the Fund had a collective bargaining agreement (“CBA”) from 2003 to 2006. The CBA included a Construction Agreement and a Steel Mill Addendum. In 2004, Bulk Transport signed a contract for LISCO work – a term used by the parties to describe work hauling commodities. The LISCO work was not explicitly covered by the CBA, but Bulk Transport made contributions for the work using the wage rated and pension terms of the Addendum because the Union threatened to strike otherwise. In 2005, Bulk Transport stopped performing the LISCO work and subsequently stopped making contributions to the Fund for the employees who were performing that type of work. The Fund assessed withdrawal liability on Bulk Transport. Bulk Transport paid the withdrawal liability but requested arbitration.

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IRS Announces 2024 Retirement Plan Limits

The IRS recently announced the 2024 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2024. The following limits apply to retirement plans in 2024:

The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $23,000.
The limit on additional catch-up contributions by participants aged 50 or older remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2024 is $30,500.
The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $69,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $275,000 for defined benefit plans.
The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $345,000.
The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $155,000 (which, under the look-back rule, applies to HCE determinations in 2025 based on compensation paid in 2024).
The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $220,000.

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You Can’t Have Your Cake and Eat it, Too

On July 7, 2023, the U.S. District Court for the Northern District of Alabama issued a ruling in Perfection Bakeries Inc. v. Retail Wholesale & Dep’t Store Int’l Union & Indus. Pension Fund, ordering Perfection Bakery, Inc. (Perfection Bakery) to pay the Retail Wholesale and Department Store International Union and Industry Pension Fund (the Fund) withdrawal liability in the amount of $15.6 million.

The court affirmed the previously issued arbitrator’s decision regarding the amount of withdrawal liability Perfection Bakery owed the Fund for its 2018 complete withdrawal. Perfection Bakery argued that the partial withdrawal liability it had paid as a result of its 2016 partial withdrawal should count towards the 2018 total withdrawal liability to reduce the total liability overhead cost. Perfection Bakery argued that the Fund, by not doing so, had misinterpreted the applicable law governing withdrawal liability.

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Use of Forfeitures in Qualified Retirement Plans

On February 27, 2023, the IRS and the Department of Treasury published proposed regulations regarding the use of forfeitures in qualified retirement plans. If finalized, the proposed rule will be effective for plan years beginning on or after January 1, 2024. However, plans may rely on the proposed regulations now.

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