BENEFITS DIGEST

Two sets of proposed regulations address how employer-sponsored Trump Account contribution programs will operate and how account assets may be invested before a beneficiary turns 18. Seyfarth walks through the requirements, including a separate written plan document, a $2,500 per-employee cap on tax-favored Section 128 contributions, cafeteria plan elections for employee pre-tax contributions to dependents' accounts, and nondiscrimination testing that tracks the dependent care FSA rules. Contributions default to an S&P 500 index ETF with ESG index funds off the table, and open questions remain, from tracking eligible dependents to coordinating contributions across a controlled group.

Groom collects its August publications in one place, spanning DB plan funding rules, 45S credit and Saver's Match guidance, dependent care nondiscrimination, the wellness program enforcement relief, the e-delivery proposal, and the tobacco surcharge litigation.

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.”

PSCA's annual Health Savings Account survey found 83% of eligible employees contributed to their HSAs in 2025, up from 73% a year earlier, while only about a quarter of employers actively position HSAs as part of a long-term retirement savings strategy. NAPA's read: participation is no longer the problem, and the open opportunity for employers is helping workers treat the accounts as more than a spending vehicle.

PSCA survey finds more than 80% of employees contribute to their workplace Health Savings Accounts, but not enough workers are tapping their unique tax advantages.

Employers that provide a Dependent Care Assistance Program will be pleased to learn that for the first time in 45 years, the IRS has issued guidance on how to apply the nondiscrimination rules that apply to DCAPs.

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

Mercer reads the August 11 proposed regulations the way plan sponsors will experience them: testing requirements for dependent care FSAs get easier to satisfy, and employers may rely on the proposed rules immediately.

Eversheds Sutherland works through the August 11 proposed regulations on Trump Account employer contribution programs and the parallel DCAP nondiscrimination rules, a law-firm companion to the consultant takes already in this run.

Aon's Compliance and Policy Consulting team digs into the DCAP half of the August 11 proposed regulations: clarified nondiscrimination testing that should raise passing rates, especially on the average benefits test, where only employees actually contributing are counted and workers earning under $25,000 may be excluded. Employers may rely on the proposed rules for 2026 plan-year testing now. Comments are due September 25, with a public hearing set for October 15.

The number behind the EBRI release covered here Wednesday: average HSA balances hit a record $5,532, while just 18 percent of accountholders invest any assets outside cash.

PLANSPONSOR's angle on the same EBRI study: HSAs are being used as spending accounts, with only 18 percent of participants investing beyond cash.

Average HSA balances hit a record high, but EBRI finds most account holders still contribute well below the maximum and few invest beyond cash. The accounts are growing as savings vehicles faster than they are maturing as investment vehicles.

The companion analysis: for the first time, comprehensive regulatory guidance on dependent care assistance program nondiscrimination testing under section 129, including the 55 percent average-benefits test that has run on informal practice for decades.

Mayer Brown's analysis of Monday's proposed regulations: the up-to-$2,500 tax-free employer contribution to Trump Accounts, the workplace-program nondiscrimination and reporting requirements, and the first formal guidance on the 55 percent average-benefits test for dependent care assistance programs.

The adviser-side angle on the proposed regulations: pre-tax payroll deductions similar to health savings accounts, though other vehicles may offer better benefits for some families.

Lockton's compliance team digs into the section 129 half of this week's proposed regulations and finds the detail vendors will care about most: the 55% average benefits test denominator counts only employees actually receiving dependent care assistance, not the whole workforce. The alert walks through correction mechanics for failed tests and advises employers to test early and verify their vendor's methodology for 2026.

Treasury and the IRS proposed the framework for employer Trump account contribution programs: a separate written plan, eligibility classes tested under DCAP-style nondiscrimination rules including a 90% sliding-scale safe harbor, written employee notification, and W-2 reporting, with employees able to exclude up to $2,500 per year of employer contributions. The proposal also updates the section 129 DCAP nondiscrimination rules themselves, reflecting the OBBBA's increase of the dependent care exclusion to $7,500. Employers may rely on the proposed rules now; comments are due September 25 and a public hearing is set for October 15.

Before adopting a Trump Account (OBBBA Section 530A) contribution program, Mayer Brown advises employers to benchmark it against existing benefits like dependent care FSAs and 529 plans, check whether enough employees have young dependents to benefit, and weigh administrative cost against real recruitment value.

Effective for plan years beginning on or after January 1, 2026, the statutory limit on tax-free contributions to a Code Section 129 Dependent Care Assistance Program increased from $5,000 to $7,500 (and $2,500 to $3,750 for married individuals filing separately).