BENEFITS DIGEST

Proposed regulations in this morning's Federal Register would write into the regulations what Revenue Ruling 71-447 and the case law behind it established decades ago, that a racially discriminatory private school is not tax exempt. Two things are new. The rule reaches every private school from kindergarten through universities and trade schools, and it treats race-based criteria as discrimination for any purpose, sweeping in diversity-motivated scholarships, donor-restricted funds, and other school-supported programs. Religious admissions criteria survive if they are genuinely religious rather than proxies for ancestry or ethnicity. If finalized, the rule applies to taxable years beginning after May 31, 2027, and comments are due 60 days after publication.

The Retirement Learning Center addresses what happens to outstanding 401(k) loan balances when employees arrive through a merger or acquisition, a recurring administration question in deal integration.

HaloMD claims the No Surprises Act has cut out-of-network emergency spending by 13% to 52%, saving $1 billion to $4 billion a year. Independent researchers are skeptical. The study leans on assumptions rather than actual payment data, ignores the cost of running the arbitration system, and comes from a company that files about a quarter of all arbitration claims itself. Worth knowing before this number shows up in a policy fight.

Two district courts issued ERISA venue rulings within a day of each other, and both moved the case out of the plaintiff's chosen forum. In one, a 401(k) fiduciary-breach class action filed in the Southern District of California was transferred to Nebraska under section 1404(a), where the plan is administered and its fiduciaries sit. Useful reading for anyone choosing where to file an ERISA case, or trying to move one.

This week's roundup, a short-handed edition with no case of the week, flags two decisions as most notable. In Central States v. McClain the Seventh Circuit held that Arkansas's latest pharmacy benefit manager regulation survives ERISA preemption, and in Liu v. Kaiser the Ninth Circuit extended the substantial compliance doctrine to benefit elections. The edition also collects the week's decisions on arbitration, attorneys' fees, fiduciary breach, disability claims, preemption, exhaustion, and pleading.

ERIC's read of the Georgetown research puts No Surprises Act arbitration costs at $22.4 billion over four years, with filings up 77 percent year over year and providers winning roughly 85 percent of disputes at awards well above median in-network rates. The employer lobby wants Congress to recalibrate the IDR process, arguing plans and workers ultimately absorb the pressure.

The quarterly survey tracks health plan design challenges after Barbich v. Northwestern, the forfeiture line following the Eighth Circuit's standing dismissal in Matula, actuarial-equivalence rulings in the Sixth and Eleventh Circuits, and the Supreme Court's withdrawal-liability decision in M&K Employee Solutions, with the Fifth Circuit's en banc surcharge case and Anderson v. Intel on the watch list.

In Bennett v. Hartford Life and Accident Insurance Company, No. 25-CV-21039-RAR, 2026 WL 2450695 (S.D. Fla. Aug. 21, 2026), United States District Judge Rodolfo A. Ruiz II granted the plaintiff's request to transfer the case out of her chosen forum, while shifting the costs of the move to her.

In Larkin v. Caremark Rx, No. 1:25-cv-07307 (S.D.N.Y.), participants allege the PBM wrongfully denied coverage for the GLP-1 drug Zepbound on medical-necessity grounds while steering them to Wegovy. According to early reports, the court has now declined to compel arbitration based on an arbitration provision in CVS's website terms of use, letting the ERISA coverage claims proceed. The order itself is not yet publicly posted, and the decision date is unconfirmed.

New proposed regulations make it easier for dependent care flexible spending accounts (“DCFSAs”) to pass applicable nondiscrimination rules under the Internal Revenue Code and, in particular, the “average benefits test.”

On remand from the Eighth Circuit, a Minnesota federal judge again dismissed the proposed class action claiming Wells Fargo used about $2.2 million in 401(k) forfeitures to reduce its own matching contributions rather than pay plan expenses, this time without prejudice. The ruling turns on standing rather than the merits, so whether the forfeiture-offset practice itself is permissible remains an open question.

Eight federal appellate courts have now held that ERISA plan sponsors cannot use an arbitration clause to strip participants of plan-wide relief, with representative-capacity bars, remedy limits capping recovery at individual accounts, and class-action waivers each failing across ten circuit decisions. The carve-outs sponsors tried instead (exceptions for injunctive relief, savings clauses promising ERISA remedies, general severability language) have each been tested and rejected on appeal, and legacy waiver language drafted before this consensus formed is unlikely to survive a challenge. Nixon Peabody's ERISA litigation team identifies two structures no court has yet foreclosed (delegating arbitrability to the arbitrator and clauses that omit the restrictive language entirely) and advises sponsors to audit existing arbitration provisions now rather than wait for a challenge to test them.

The Treasury Department recently issued proposed regulations providing long-awaited guidance on employer contributions to Trump Accounts under Internal Revenue Code Section 128.

Internal Revenue Code Section 409(p) (Section 409(p)) imposes significant obligations on S corporation Employee Stock Ownership Plans (ESOPs) with severe penalties for noncompliance.

Treasury and the IRS proposed rules defining what a Trump Account can hold before the beneficiary turns 18: generally an unleveraged mutual fund or ETF tracking a broad U.S. equity index such as the S&P 500, charging no more than 0.1 percent in annual fees, with the trustee selecting a default fund when no election is made. The August 11 rules told employers what they may contribute; this one tells trustees what the money may sit in. Comments are due October 20, 2026.

Dependent Care Assistance Programs are subject to the nondiscrimination rules that are set forth in Internal Revenue Code Section 129 (Section 129).

Mercer's GRIST desk tallies the pension risk transfer docket after Schoen v. ATI: four district courts have now dismissed PRT challenges for lack of standing while four have let them proceed, with the DOL filing amicus briefs on the sponsor side and noting that no annuity selected in a risk transfer has defaulted in thirty years. The Konya and Doherty appeals are positioned to resolve the split.

In an unpublished memorandum, the Ninth Circuit affirmed an arbitration award holding that a multiemployer plan actuary's use of PBGC-published interest rate assumptions to calculate withdrawal liability violated ERISA's requirement that assumptions represent the actuary's best estimate of anticipated experience. The plan's 7 percent minimum funding rate applied instead. See The Second Thing above.

The long-standing saver's tax credit, a nonrefundable credit for low- to middle-income taxpayers, is being replaced beginning next year with a government matching contribution of up to $1,000 annually paid directly into a plan or IRA. Groom walks through what Notice 2026-48 signals about the coming regulations.

A Pennsylvania federal court dismissed a class action challenging ATI's $1.5 billion pension risk transfer to Athene, holding under Thole that retirees whose monthly benefits remain unchanged lack standing, and that the alleged risk of future harm was too speculative. The decision deepens the district-court split over Athene-related de-risking suits, with standing rejected in Schoen, Camire, and Bueno but sustained in Konya and Doherty, both now on interlocutory appeal to the Fourth and Second Circuits. Nixon Peabody's ERISA litigation team advises sponsors to document annuity-provider selection under the DOL's six-factor guidance before closing, since no court has yet reached the fiduciary merits on a developed record.

In Pover v. Capital Group Companies, the Ninth Circuit held a 401(k) plan's arbitration clause unenforceable under the effective vindication doctrine because it barred participants from pursuing representative claims and the plan-wide relief ERISA section 409(a) makes available. Mayer Brown advises sponsors to review existing arbitration language, preserve all arbitrability arguments at the district court, and weigh whether arbitration's benefits still outweigh its limits for plan-wide monetary disputes.

Though the plan document appeared to require arbitration in pursuing recovery in a fiduciary breach suit, a federal appellate court has affirmed a district court decision rebuffing that requirement.

In Stempel v. Unum Life Insurance Company of America, No. 24 C 6077, 2026 WL 2241244 (N.D. Ill. Aug. 4, 2026), the court dismissed an ERISA disability suit for failure to exhaust administrative remedies after the claimant could not establish that he actually mailed his appeal.

Rev. Proc. 2026-30 updates the application procedures in Rev. Proc. 2026-4 to streamline requests for letter rulings.

The key is understanding that termination isn’t a single event but a process that requires formal employer action and a complete plan wind-up.

“As far as the nonqualified plan space goes, this is the premier event,” Barry Downey said of the upcoming NAPA Nonqualified Plan + Workplace Wealth Forum.

In Munoz v. Alorica, Inc., No. 25-7359, 2026 WL 2199195 (9th Cir. July 30, 2026), former participants in the Alorica 401(K) Retirement Plan brought this action under ERISA on behalf of a putative class.

F.4th —-, No. 24-5298, 2026 WL 2196257 (9th Cir. July 30, 2026), Plaintiff sued her former employer, The Capital Group Companies, Inc., and its fiduciaries on behalf of the company’s defined-contribution retirement plan.

Like several other pro-employer pension risk transfer rulings, the judge said the plaintiffs lack standing to sue as they continued to receive promised benefits.

Employee sued her former employer's retirement plan for fiduciary mismanagement; Ninth Circuit upheld denial of arbitration, finding the plan's class-action waiver unenforceable under ERISA's effective-vindication doctrine.

To avoid politics and focus solely on the numbers, we will refer to Trump accounts as “530A accounts,” so named by the section of the Internal Revenue Code enacted under the One Big Beautiful Bill Act (OBBBA) on July 4, 2025.

Roberts Disability Law, P.C. secured a procedural win for its client in Goldman v. Unum Life Insurance Company of America, No. 3:26-cv-01022-LJC, —F.Supp.3d—-, 2026 WL 2184768 (N.D. Cal. July 21, 2026), where United States Magistrate Judge Lisa J.

The Department of Labor recently issued proposed regulations that would implement sweeping revisions to long-standing electronic disclosure safe harbors for health and welfare plans.

Revenue Procedure 2026-26 provides the 2027 indexing adjustments for the ACA premium tax credit applicable percentage table and sets the required contribution percentage at 10.22 percent, up from 9.96 percent for 2026. That figure drives the employer affordability safe harbors, so sponsors should have it in hand before setting 2027 employee contributions.

The Internal Revenue Service (“IRS”) released Notice 2026-36 (Notice of Intent to Issue Regulations under Section 4960), (the “Notice”) relating to the tax on executive compensation under Internal Revenue Code (“Code”) Section 4960, as modified by the One Big Beautiful Bill Act (the “OBBBA”)

Section 409A of the Internal Revenue Code (Section 409A) imposes strict rules governing the timing of deferred compensation payments, such as when and under what circumstances such payments can be made.

In Guenther v. BP Retirement Accumulation Plan, No. 24-20551, 2026 WL 2031828 (5th Cir. July 14, 2026) (per curiam), the United States Court of Appeals for the Fifth Circuit vacated a judgment entered in favor of a class of current and former BP employees on their ERISA fiduciary-breach claims and remanded for the

The United States District Court for the District of New Jersey, per U.S. District Judge Esther Salas, granted the defendants’ motions to dismiss a pro se ERISA claimant’s short-term disability suit and to compel arbitration of his retaliation claim.

In Supreme Linen Services, Inc. v. U.S., 2026 WL 1220078 (S.D. Fla. 2026), an employer sued the federal government after the Internal Revenue Service (IRS) assessed an employer shared responsibility penalty against the company.

The U.S. Department of Labor (the “DOL”) recently issued Technical Release 2026-02, providing guidance on whether certain Trump accounts established under Section 530A of the Internal Revenue Code and the One, Big, Beautiful Bill Act (“Trump Accounts”) and employer contribution programs to such accounts constitute employee benefit plans subject to ERISA.

This month’s Friday Five discusses decisions (1) allowing a bad faith claim to proceed against a long-term disability insurer based on its handling of a claim for benefits, (2) enforcing a forum-selection clause in an ERISA plan against the plan’s insurers that were not parties to the plan, and more.

The court denied Defendant Metropolitan Life Insurance Company’s motion.

Trump Accounts, a new tax-advantaged individual retirement account (IRA) intended for the benefit of minor children, were established under Internal Revenue Code (Code) Section 530A as part of the

Investment menu rulemaking and outstanding SECURE Act and SECURE 2.0 guidance dominated the regulators’ newly posted lists.

“If at first you don’t succeed, try, try again” is a famous quote with unclear origins dating back over 200 years. It is a saying that plaintiff firms appear to have used as inspiration for their

Transfer-tax safe harbor for individual donors who contribute to Trump accounts under IRC §530A. If specified conditions are met, contributions are treated as completed gifts that are not future