Retirement Plans Archives - Spotlight on Benefits

DOL Takes Aim at Proxy Advisory Services—What Plan Fiduciaries Need to Know About Technical Release 2026-01 and Their Fiduciary Duties Related to Proxy Voting

President Trump is strongly critical of proxy advisory services and last year directed several federal agencies — including the Department of Labor (DOL) and the Securities and Exchange Commission (SEC) — to do something about it. In his December 11, 2025, executive order, President Trump stated that “proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ — even though investor returns should be the only priority.¹

Even before the executive order, DOL’s Employee Benefits Security Administration (EBSA) drew a legal “line in the sand” regarding what one of its officials termed “politicized investing,”² reminding plan fiduciaries that ERISA does not permit them to “subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to other objectives.”³ More recently, EBSA Assistant Secretary Daniel Aronowitz announced that EBSA will prioritize civil investigations involving breaches “of the duty of loyalty [including self-dealing and conduct promoting] goals unrelated to participants’ best interests, such as the promotion of environmental, social, or governance objectives.”⁴

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ERISA Litigation Roundup: Supreme Court Unanimously Rules Multiemployer Pension Plans May Use Post-Measurement-Date Actuarial Assumptions to Calculate Withdrawal Liability

On May 21, 2026, the US Supreme Court issued a unanimous decision in M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, No. 23-1209, resolving a circuit split on a question of enormous financial consequence to employers participating in multiemployer pension plans (MPPs): whether a plan’s actuary must adopt its actuarial assumptions for purposes of withdrawal liability calculations on or before the “measurement date” for those calculations, or whether it may instead select assumptions after that date. In an opinion authored by Justice Jackson, the Court held that ERISA does not require actuarial assumptions to be adopted “as of” the measurement date, but stressed that these actuarial assumptions must still reflect the actuary’s “best estimate of anticipated experience under the plan,” which generally requires that the assumptions reflect information about the plan’s conditions as they stood on the measurement date.

Background

Under ERISA and the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), an employer that withdraws from an underfunded MPP must pay “withdrawal liability,” which is its proportionate share of the plan’s unfunded vested benefits (UVBs). The statute requires this liability to be calculated “as of” the last day of the plan year preceding the employer’s withdrawal, or the “measurement date.” Calculating UVBs requires actuarial assumptions about the plan and its future benefit obligations, most notably a discount rate that converts the plan’s future liabilities to present-day dollars. The discount rate dramatically affects the total withdrawal liability figure.

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DOL Proposes New Rules for Electronic and Paper Benefit Statements

On February 25, 2026, the Department of Labor (DOL) released proposed regulations that would amend the rules for electronic delivery of employee benefit plan disclosures, as required by SECURE 2.0. These proposals aim to harmonize the DOL’s electronic disclosure safe harbors with new statutory mandates regarding paper statements for retirement plans.

A Brief History of Electronic Disclosures

Since 2002, the DOL has provided two safe harbor frameworks for the electronic delivery of ERISA-required disclosures. The 2002 safe harbor permitted electronic delivery for employees with regular work-related computer access (“wired-at-work”) or those who affirmatively consented, but it required a default paper disclosure for others. The 2020 safe harbor expanded electronic delivery for retirement plans by allowing default electronic disclosure if a participant provided a valid electronic address, with an initial paper notice and the right to opt out at no cost. These rules enabled most plans to use electronic delivery; the DOL estimates that over 96% of retirement plan participants receive some ERISA disclosures electronically.

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Roth Catch-Up Rules for Rehires: What Employers Need to Know Under the Final Regulations

SECURE 2.0 and the final IRS regulations on Roth catch-up contributions introduce a significant administrative consideration for employers and plan administrators: how does the Roth-only catch-up rule apply to rehired employees?

Background

Section 603 of the SECURE 2.0 Act requires catch-up contributions to be made as after-tax Roth contributions if the contributing employee received wages in the prior calendar year that exceed $150,000 (and as adjusted for inflation). Wages are defined as FICA wages (as reported in Box 3 of Form W-2) paid by the employee’s common law employer in the prior year (or paid by a common paymaster or other company-controlled group member if the company has elected permissive aggregation of wages).

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The Roth Catch-Up Contribution Requirement and a Statutory Merger

As the Roth catch-up contributions become effective this month, issues not addressed in the final regulations are coming to light.

Question: Our company completed a statutory merger — how does that impact the Roth catch-up contributions requirement?

Answer: Based on past IRS guidance, it is more than likely that an employee of either company in a statutory merger that was subject to the Roth catch-up contribution requirements of SECURE 2.0 Act prior to the statutory merger will continue to be subject to the Roth catch-up contribution requirements after the merger. Similarly, if the statutory merger occurs midyear, the employee’s compensation for the year of the merger will include compensation paid by either entity.

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Updated Guidance: Minnesota Paid Family Leave and Defined Contribution Plan Compensation

In IRS Notice 2026-6, the IRS issued a one-year extension of the tax treatment of medical benefits received by an employee through a paid family leave program (PFL). Minnesota has implemented the one-year extension and will not be treating PFL medical benefits as W-2 compensation that must be reported by the employee’s employer for 2026. Accordingly, employers sponsoring a qualified retirement plan that covers Minnesota employees will have an additional year to consider the impact of the PFL medical benefit taxation on their retirement plan’s administration.

Previously we reviewed how medical benefits received by an employee pursuant to Minnesota’s PFL would impact an employee’s W-2 compensation for purposes of a qualified retirement plan. With the one-year extension from the IRS and the Minnesota Department of Employment and Economic Development, employers in Minnesota will not have to include PFL medical benefits on the employee’s W-2 for 2026 and therefore will not have an impact on the definition of compensation in the employer’s retirement plan.

Unless additional guidance is issued, beginning in 2027 the state of Minnesota will be requiring employers participating in the state’s program to report PFL medical leave benefits (not family benefits) on the employer’s Form W-2 and this may implicate the definition of compensation in the employer’s defined contribution retirement plans. Employers should review the definition of compensation in their retirement plan documents to determine whether any action is needed prior to 2027.

We will continue to monitor and provide updates. If you have any questions, please reach out to your Faegre Drinker benefits counsel.

Minnesota Paid Family Leave and Defined Contribution Plan Compensation

Beginning in 2026, Minnesota will implement a paid family leave program (PFL) that provides family leave and medical leave benefits. The State of Minnesota will be requiring employers participating in the State’s program to report PFL medical leave benefits (not family benefits) on the employer’s Form W-2 — and this may implicate the definition of compensation in the employer’s defined contribution retirement plans. Employers should review the definition of compensation in their retirement plan documents to determine whether any action is needed prior to 2026.

Background on Minnesota PFL Taxation

On October 1, 2025, the Minnesota Department of Employment and Economic Development issued guidance on the taxation of contributions to the Minnesota PFL program and distributions from the program. This guidance only applies to employers participating in the PFL program administered by the State of Minnesota and will not apply to a fully insured or self-funded PFL program.

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IRS Issues Final Roth Catch-up Rules and What You Need to Know

On September 16, 2025, the Internal Revenue Service (IRS) published final rules on the Roth catch-up contribution requirements of SECURE 2.0 Act (Final Rules). Many of the requirements from the proposed rules are retained, although there have been some changes to try and ease plan administrative issues.

Background on Roth Catch-Up Contribution Changes

Section 603 of the SECURE 2.0 Act requires catch-up contributions to be made as after-tax Roth contributions if the contributing employee received wages in the prior calendar year that exceed $145,000 (and as adjusted for inflation). The definition of wages is defined as FICA wages. All eligible participants must have the opportunity to elect Roth catch-up contributions (and Roth cannot be limited to just those employees earning above the $145,000 wage limit as adjusted).

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In Case You Missed It: Spotlight on Benefits — Spring 2025

Written by members of Faegre Drinker’s benefits and executive compensation team, this blog features analysis and information on matters related to retirement plans, health and welfare plans, ESOPs, fiduciary governance, and other benefits issues. This quarterly digest provides links to our most popular posts during the past few months so that you can catch up on what you missed or re-read them.

Stop the Presses — Annual Funding Notice Guidance Issued

By Inés Sosa & Mark Rosenfeld
On April 3, 2025, the U.S. Department of Labor 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.

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Navigating Cryptocurrency Investments in Employer-Sponsored Retirement Plans

By Mona Ghude & Kristina Ferris Salamoun
As cryptocurrency’s popularity as a high-risk, high-reward investment option grows, the question of incorporating cryptocurrency into employer-sponsored retirement plans has sparked debate among regulators, employers and investors alike.

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

By Karen Gelula & Allison S. Egan
The DOL, the HHS and the IRS announced they will not enforce the 2024 Final Rule regulations for the Mental Health Parity and Addiction Equity Act. The agencies noted they will reconsider or modify the 2024 Final Rule, and each department will review its enforcement approach.

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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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