BENEFITS DIGEST

Russell McNorton’s question is about responsibility, not the number. His Form 5500 analysis places $977 in per-participant administrative cost at the 90th percentile for smaller plans, a benchmark rather than damages in any lawsuit. He argues the bigger fiduciary risk is failing to assign who monitors costs and documents the review, since committee meetings alone don’t establish oversight. McNorton works for an administration-services provider, and a fee level by itself doesn’t prove a breach.

The Ask the Experts column walks through which participant count governs a 403(b) plan’s Form 5500 filing status. For plan years beginning in 2023 and later, large-plan versus small-plan status for defined contribution plans generally turns on participants with account balances, while other questions on the form use different counts, so eligible employees without balances may drop out of one number and remain in another. The experts’ caution is to resist using the filing-status count for every participant line on the form.

An unfinished audit leaves a 403(b) sponsor with a filing problem, not an obvious extension. Groom Law Group and CAPTRUST recommend getting a realistic completion date from the auditor and taking that information to outside ERISA counsel. The DOL’s Delinquent Filer Voluntary Compliance Program may help address a late filing, but the authors advise getting counsel’s direction on whether and when to use it. Their answer doesn’t endorse submitting an incomplete Form 5500.

Suzanne Whitlock bought a voluntary supplemental disability policy offered through her employer, insurance brokerage Lockton Companies, paid the premiums herself and kept the coverage after she left. When the insurer denied her anxiety and depression claim, she sued for benefits under ERISA and asserted alternative state law claims. Judge Andrew Schopler held ERISA governs the policy because Lockton negotiated a 30 percent discount, marketed the benefit as carefully selected, collected and remitted premiums, reported the plan on its Form 5500 and, decisively for the safe harbor analysis, received commissions and fees on the program. With the state law claims displaced, the court conducted a trial based on the written record and entered judgment for the insurer. Whitlock showed that her earnings had fallen, but didn’t prove that her condition prevented her from performing all her usual duties or working the hours her occupation normally required, and the court noted both psychiatrists tied her symptoms to situational stress while she was building her own company on 32 to 40 hours a week.

CBIZ’s October update flags three dates for employers. Medicare Part D creditable coverage notices, which tell employees whether their drug coverage is at least as good as standard Medicare coverage, are due before October 15. Extended Form 5500s for calendar-year plans are due October 15, and Massachusetts HIRD filings open November 15. The Labor Department’s benefits agency, in new Field Assistance Bulletin 2026-03, is focusing mental health parity enforcement on blanket exclusions of mental health treatment, the review practices plans use to decide whether care is necessary, and inadequate provider networks. Its updated red-flags checklist helps plans spot potential problems in their own designs while new regulations are drafted. The issue also covers the Trump Accounts temporary regulations, with IRS automatic enrollment reaching more than 60 million children and comments open through November 29, San Francisco’s 2027 health care expenditure rates, New York and New Jersey paid leave figures for 2027, and the District of Columbia’s October 1 reductions in paid family leave durations and maximum benefits.

A former Macy’s employee alleges that the company allowed excessive broker compensation to be built into the premiums workers paid for supplemental insurance, the accident, critical illness and hospital indemnity policies offered alongside its health plan. Munson v. Macy’s Inc. names Macy’s, Aon Consulting, Aon Insurance Agency and Hewitt Insurance Brokerage as defendants, and it is built almost entirely on commission data from the plan’s public Form 5500 filings. The suit claims Macy’s breached its fiduciary duties by never market-testing Aon’s compensation and by telling employees the products came at discounted group rates, and it asks the court to make the Aon entities give up compensation allegedly received through the breaches. It also alleges the 2022 carrier switch increased commissions without genuine competition, pointing to an allegedly near-identical commission pattern at BlueTriton Brands, placed by the same Aon entity through the same Aflac subsidiary in the same years. The case is assigned to Judge John Cronan, and no defendant has responded yet.

The voluntary benefits suit against Macy’s and Aon ended with a one-line [notice of dismissal](https://digest.theinnerfirm.com/docs/chin-v-macys-dismissal-2026-09-30.pdf) filed September 30, three months after the July [complaint](https://digest.theinnerfirm.com/docs/chin-v-macys-complaint-2026-07-02.pdf), without prejudice and without explanation. The dismissal did not decide whether the allegations have merit. What set the case apart was its method. Bailey & Glasser assembled Form 5500 data from more than 16,000 employers to argue that the broker compensation built into Macy’s workers’ premiums, 36.7 percent on average over six years, ran far above a market median of roughly 20 percent. And it used Aon’s own placements as the yardstick, pointing to Target, where Aon reported $214 in total commissions on roughly $10 million of premiums for the same products through the same carrier, in the same year its entities collected 50.8 percent of premiums at Macy’s.

Employers that file Form 8955-SSA electronically need to prepare for a change in IRS systems. The FIRE system stops accepting filings November 19, and the newer IRIS platform becomes the only electronic option in January, so current FIRE users need an IRIS Transmitter Control Code application moving before the 2027 filing season. In the underlying question, Groom Law Group attorneys and CAPTRUST’s Michael Webb explain that Form 8955-SSA, which reports former employees who have earned benefits they haven’t collected, does not travel with the Form 5500 through the Labor Department’s EFAST2 system; it is a stand-alone return filed directly with the IRS, and electronic filing is generally mandatory for anyone required to file ten or more information returns in a year.

A new ICI and ISS Market Intelligence profile of large ERISA 403(b) plans, built from Form 5500 filings for 5,332 plans with at least 100 participants, finds employer contributions reached $13 billion in 2023, two and a half times the 2009 figure. Costs moved the other way. The average participant was in a plan costing 0.45 percent of assets in 2023, down from 0.68 percent in 2009. The share of large plans offering an employer contribution rose from 71 percent to 87 percent, target-date funds spread from about half of plan menus to 90 percent, and index funds now hold 42 percent of plan assets. For 403(b) sponsors wondering how their plan compares, the benchmarks just got a refresh.

Two benefits deadlines are approaching. Health plans with prescription drug coverage must tell Medicare-eligible individuals before October 15 whether the coverage is creditable, meaning expected to pay, on average, at least as much as standard Medicare prescription drug coverage, so recipients can decide about Part D during Medicare open enrollment, which runs October 15 through December 7. Because employers rarely know which spouses and dependents are on Medicare, Venable recommends simply sending the notice to everyone enrolled in or eligible for the health plan, using the CMS model notices. The separate online disclosure to CMS is due within 60 days after the plan year begins. October 15 is also the extended Form 5500 deadline for calendar-year plans that filed a Form 5558 extension by July 31.

In Raynes v. Arthur J. Gallagher (Illinois), LLC, No. 1:26-cv-11389 (N.D. Ill., filed Sept. 17, 2026), seven employees of the insurance brokerage bring a proposed class action alleging their employer sat on both sides of its own voluntary benefits program: as sponsor and fiduciary it selected the carriers for life, AD&D, disability, legal, and stop-loss coverages its workers bought with payroll deductions, and as broker it collected the commissions and administration fees built into those participant-paid premiums. Citing the plan's own Form 5500 filings, the complaint alleges $4.7 million in commissions and fees flowed to Gallagher affiliates from 2020 through 2024, and alleges prohibited self-dealing under section 406(b) and a breach of the duty of loyalty. These are allegations only, and Gallagher hasn't yet responded. Capozzi Adler represents the employees. For other sponsors, the case raises a straightforward question: who reviews and approves the broker's compensation inside your voluntary benefits program?

A plan administrator crunched 48,944 Form 5500 filings from the 2024 plan year and found the fee story many sponsors suspect. The median reported administrative cost among the plans studied is $162 per participant, but plans with 25 to 99 participants pay a median $364 while plans with 500 or more pay $104. In the author's words, “the dispersion inside a band is wider than the gap between bands,” and nearly a third of plans under 500 participants pay more than twice the study's overall median. The analysis comes from Admin316, a fiduciary-services vendor, so read the benchmarks with that in mind. The figures give sponsors a reason to check their fees against comparable plans, taking account of the services included.

Four practitioners answer one question and produce a workable audit checklist for health plan governance. The starting recognition: overseeing an ERISA health plan is not simply an HR function, and health plan oversight can carry fiduciary responsibilities for the people performing it, including HR staff. From there the advice gets concrete. Adopt a written committee charter and train the members. Read the plan's contracts and know how every service provider is paid. Make vendor oversight continuous, from compensation disclosures and gag clause review to periodic RFPs, and reframe the standard from “are we happy with our vendor” to “can we demonstrate that retaining this vendor is a prudent decision.” Get claims and pharmacy data and act on it. Keep a compliance calendar spanning the Form 5500, gag clause attestations, RxDC reporting and parity. Prudence is largely about process: keep a record of the information considered and the reasons for the decision.

The fourth quarter calendar for health and welfare sponsors, in one place. October 2 brings QSEHRA and ICHRA notices and Medicare Part D subsidy applications; October 15, creditable coverage notices and extended Form 5500s; December 15, summary annual reports for extension filers; December 29, the employer share of MLR rebates within 90 days of receipt; December 31, gag clause attestations plus WHCRA and Section 1557 notices. A companion checklist covers open enrollment materials—SBCs, Michelle's Law, HIPAA notices, wellness alternative standard disclosures—and the state assessments landing this quarter, from Massachusetts payor assessments to Washington's long term care tax.

Field Assistance Bulletin 2026-01 made late deposits of employee deferrals and loan repayments a DOL enforcement priority, and the agency is mining Form 5500 filings to find them. Small plans must deposit within seven business days of withholding; larger plans must deposit as soon as amounts can reasonably be segregated, typically two to three business days, with the fifteenth business day an emergency outer limit rather than a deadline. Ferenczy recommends written deposit procedures and prompt engagement with the Voluntary Fiduciary Correction Program when deposits slip.

The proposed legislation joins a companion bill in the House of Representatives that would modernize Form 5500 reporting requirements.

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.