RETIREMENT PLAN UPDATES
DOL Releases Interpretive Guidance and Solicits Input on Pooled Employer Plans
On July 28, 2025, the U.S. Department of Labor (DOL) issued guidance as part of a request for information (RFI) regarding pooled employer plans (PEPs). PEPs are retirement plans adopted by two or more unrelated employers to provide retirement benefits. The guidance is targeted at assisting smaller employers to select PEPs and clarifies fiduciary obligations for participant employers in PEPs. The DOL is also seeking information about PEP marketplace practices to potentially develop a regulatory safe harbor.
IRS Issues Uncashed Retirement Check and Tax Withholding Guidance
On July 16, 2025, the Internal Revenue Service (IRS) released Revenue Ruling 2025‑15, which clarifies the federal tax withholding and reporting responsibilities when a retirement check is issued, remains uncashed and a second check is subsequently issued. The guidance discusses that a reissued retirement check, if for the same amount as the original check, is not subject to additional withholding. However, additional withholding is required if the reissued check is for a greater amount than the original check. The guidance emphasizes that the retirement plan is not entitled to a refund or adjustment for withholding on uncashed retirement checks, and plan administrators may not recover amounts withheld to the IRS through refunds.
DOL Advisory Opinion Finds Racial Equity Program Unlawful
On July 21, 2025, the DOL issued Advisory Opinion 2025‑01A, rescinding its previous approval of Citigroup, Inc.'s Racial Equity Asset Manager Program (Racial Equity Program). Through the Racial Equity Program, Citigroup paid all or a portion of the investment management fees for diverse managers retained by Citi-sponsored employee benefit plans, rather than the plan or plan participants paying these fees. Although the DOL's prior opinion, Advisory Opinion 2023‑01A, considered the Racial Equity Program lawful, the DOL emphasized now in Advisory Opinion 2025-01A that the Program is instead unlawful because its allocation of benefits on the basis of race violates civil rights laws.
HEALTH AND WELFARE PLAN UPDATES
IRS Releases 2026 ACA Employer Shared Responsibility Penalties
On July 22, 2025, the IRS announced the 2026 increases to the employer shared responsibility penalties under the Affordable Care Act (ACA). Large employers may be liable for an employer shared responsibility penalty pursuant to Internal Revenue Code (Code) section 4980(H)(a) if the employer's coverage is not offered to 95 percent of full‑time employees, or Code section 4980(H)(b) if the employer offers coverage but the coverage is unaffordable or does not provide minimum value. Beginning with the 2026 plan year, the penalties will be $3,340 per employee per year under Code section 4980(H)(a) (a $440 increase from 2025) and $5,020 per employee per year under Code section 4980(H)(b) (a $600 increase from 2025).
IRS Releases 2026 ACA Affordability Percentage Adjustment
On July 18, 2025, the IRS issued the inflation‑adjusted percentage for 2026 to ascertain whether employer‑sponsored health coverage is affordable for purposes of the ACA. Beginning with the 2026 plan year, the affordability percentage is indexed to 9.96 percent (an increase from 9.02 percent in 2025).
Ninth Circuit Finds UnitedHealthcare's Claim Denial Process Violates ERISA
The U.S. Court of Appeals for the Ninth Circuit issued an opinion in Solis v. T‑Mobile U.S., Inc., No. 24‑2412 (9th Cir., July 15, 2025), vacating the district court's decision that affirmed denial of medical claims because UnitedHealthcare (United) inadequately explained its claim denials. In Solis, the plaintiff underwent a smaller surgery during a larger procedure. United denied coverage for the smaller surgery because the procedure was "not supported," but "may be considered included" under other billing codes, which it repeated verbatim in the administrative appeal. The court found that the vague denials fell short of ERISA's requirement to provide specific reasons and cite plan provisions for the denial, making the administrative process defective.
Second Circuit Upholds No Surprises Act Billing IDR Process for HHS
On July 22, 2025, the U.S. Court of Appeals for the Second Circuit issued an opinion in Neurological Surgery Practice of Long Island, PLLC v. HHS, No. 24‑1884 (2d Cir. 2025), affirming the lower court's ruling that a health care provider cannot compel HHS to enforce statutory independent dispute resolution (IDR) deadlines on health plans or IDR entities. The provider sued HHS and alleged that the agency failed to lawfully implement the No Surprises Act (NSA), that the unlawful implementation of NSA created a backlog of pending provider payment disputes and that it suffered harm from unpaid or delayed reimbursements from health plans. The lower court dismissed the provider's case; although sympathetic to the provider's financial harm, HHS had implemented the system as required by law. The Second Circuit affirmed the decision, acknowledging that the provider must seek holistic improvement of the IDR process through Congress or HHS rather than the courts.
COMPLIANCE DEADLINES AND REMINDERS
General Compliance
- Form 5500 for Calendar Year Plans with Extensions. For plans that obtained an extension for filing their Form 5500, the Form 5500 must be filed by October 15, 2025.
- Summary Annual Report. Plan administrators whose plans must provide Summary Annual Reports generally must distribute them within nine months after the end of the plan year (e.g., for plan years that ended December 31, 2024, the deadline is September 30, 2025). However, if a plan received an extension for filing its Form 5500, the nine-month deadline is extended by two months.
Health and Welfare Plans
- Health Reimbursement Arrangements. Plan sponsors of health reimbursement arrangements (HRAs) must offer participants an opportunity to waive and opt out of future reimbursements from their HRA. To satisfy this requirement, an opt‑out notice can accompany open enrollment materials.
Retirement Plans
- Annual Funding Notice. Calendar-year defined benefit plans with 100 or fewer participants must generally provide an Annual Funding Notice by the Form 5500 filing deadline, including Form 5500 filing extensions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
