BENEFITS DIGEST

Three days before trial was set to begin, the parties in the Envision employee stock ownership plan litigation told the court they had signed a term sheet on material settlement terms and are completing a full agreement, which they expect to execute by November 20, with a preliminary-approval motion requested for December 4. The court vacated the October 26 trial date. The October 23 notice discloses no settlement amount, and an agreement in principle is not a final settlement, let alone an approved one. The case, filed in 2021, had been heading to trial on claims about how the plan acquired company stock, so ESOP companies and trustees following the valuation-litigation wave lose the trial test and wait for the terms to become public.

Cooley reviews the SEC staff’s October 15 interpretations on Form S-8, the registration statement for employee equity plans, covering awards granted before an initial public offering or in an acquisition, registration timing for restricted awards, fee treatment of forfeited awards, and share counting, with practice-oriented detail on when issuers can rely on the new positions. Staff interpretations are not rules, and the firm is careful to say so.

Mayer Brown summarizes SEC staff interpretations issued October 15 on Form S-8, the registration statement for employee equity plans, covering fee calculations, awards granted before an initial public offering, acquisition-related awards, former employees, and reuse of unused restricted stock unit registration capacity. One useful nuance is that employer contributions and employee-directed purchases can take different fee treatment. A separate interpretation starts the two-business-day clock for Form 4, the insider transaction report, on the transaction’s local date, which matters for cross-border grants.

Employers that rely on brokers to help workers obtain individual-market coverage have a stake in the federal freeze on registering and training new Marketplace agents and brokers, which runs through February 1, 2027 and overlaps the November 1 to January 15 enrollment window. The National Association of Benefits and Insurance Professionals is suing HHS over the freeze, which Healthcare Dive reports affects roughly 19,000 agents. The association’s [complaint](https://digest.theinnerfirm.com/docs/nabip-v-kennedy-complaint-2026-10-15.pdf) says HHS acted without adequate authority or required procedure, while the government points to enrollment misconduct. No court has ruled on the freeze’s lawfulness.

A retirement plan can need cash even when its participants aren’t asking for withdrawals. A termination, recordkeeper change or merger can create demands that an investment’s redemption restrictions make difficult to meet. Fred Reish examines the plan-level liquidity example in the DOL’s proposed investment-selection rule. One proposed path would let fiduciaries rely on an eligible mutual fund’s regulated liquidity program. For other vehicles, including collective investment trusts, the example calls for a written representation or appropriate due diligence about a comparable program, critical review of any representation, and attention to information that calls it into question. The proposal would offer a route to a prudence presumption for this factor, not the only way to satisfy ERISA. A representation would still need to be read and understood, not merely filed.

Retirement Learning Center’s Case of the Week takes a question from a financial advisor and explains a trap in plan terminations. Terminating a 401(k) normally lets participants take their money, but not if the employer keeps or creates another plan. If any alternative defined contribution plan exists from the termination date through 12 months after the last dollar is paid out, the termination is not a valid reason to distribute employees’ salary contributions and certain other protected contributions. The restriction is about using termination as a distribution event, not a flat ban on replacing a plan. Some replacements don’t count, including an ESOP, a SEP, a SIMPLE IRA, a 403(b) and a 457(b) plan, and there is a narrow exception for a new plan that covers almost entirely different employees. The piece walks through a sponsor that wants to terminate in October, pay out by December and start fresh in January, which fails, and suggests a merger or transfer instead.

Consultants at October Three, J.P. Morgan Asset Management and Russell Investments describe the same change in client conversations. With average corporate pension funding at 99 percent this year, up from 77 percent in 2008 by Russell’s tally of public filings, employers with fully funded pension plans are asking how to use them rather than how to wind them down. The options include reopening frozen plans, improving benefits, and applying surplus to shore up an acquired company’s pension, and some employers are watching for legislation that would let surplus move into the 401(k) plan. For a decade the standard endgames were keeping a frozen plan quietly invested in bonds or terminating it by buying annuities. Neither is the automatic answer anymore.

Fred Reish continues his series on the Labor Department’s proposed rule for selecting investments in participant-directed plans, this time on liquidity at the plan level rather than the participant level. The proposal’s example asks fiduciaries weighing a fund that holds private assets to think about what happens when the plan itself needs to exit the investment, say in a recordkeeper change or a corporate merger, and whether redemptions by other investors could knock the fund off its target allocations. The proposal would treat fiduciaries as prudent if they evaluate the fund’s maximum illiquid allocation, how long a sale would take without giving up value, and the required exit notice. Reish’s caution is that weighing other plans’ redemptions isn’t common practice today and most committees aren’t equipped for it, which points toward delegating the analysis to an investment manager with authority to make the decision.

Fred Barstein catalogs what stands between the retirement industry and its favorite growth story, advisers turning plan participants into wealth management clients. The hurdles are practical. Most participants don’t hold enough assets to interest advisers under traditional service models, engagement is famously hard, recordkeeper technology in some shops dates to the 1990s, and there’s no standard format for plan or participant data. He also notes that recent litigation means sharing participant data may now require plan sponsor permission, and that some providers would rather keep participant relationships for themselves. His bottom line is that convergence is real but will take longer and cost more than the pitch decks suggest. Sponsors fielding wealth-service offers from their plan providers can borrow his checklist.

Hall Benefits Law recaps PHI Health’s suit against Anthem, the air-ambulance operator’s claim that the insurer and the plans it administers haven’t paid about $30 million in final awards from the No Surprises Act’s independent dispute resolution process, plus more than $1.3 million in interest. IDR determinations are binding and payment is generally due within 30 days, yet it remains unsettled whether a court can actually compel payment of an unpaid award, which is what this Indiana federal case may answer. PHI also alleges Anthem delayed and underpaid awards to pressure providers into below-market network deals. The roughly 70 employer plans named alongside Anthem, and every self-funded sponsor it administers, have a direct stake in the answer.

The firm closes its six-part series with a checklist of its recommendations for executive pay. Review compensation arrangements before merger talks begin, when planning can still help, rather than at the closing table. Check deferred compensation documents regularly, because operating correctly under a flawed document doesn't prevent tax penalties. Confirm the valuations behind private-company equity awards. And calendar the 30-day window for a Section 83(b) election, the choice to be taxed on restricted equity when it's granted rather than as it vests. That window opens when the equity is transferred, and it can't be reopened. The firm also recommends modeling what executives will actually keep after taxes, since the headline number rarely matches the take-home result.

Lockton runs one of the country’s largest insurance brokerages, and two of its employees now claim it put itself on both sides of its own benefits plan. Lockton sponsors its welfare plan and serves as the plan’s named fiduciary, and the complaint alleges it also installed itself as the plan’s broker. In that role, the suit says, Lockton picked the carriers for employee-paid products from life insurance to long-term disability, set its own commission and fee structure, and let carriers build that compensation into the premiums employees paid by payroll deduction. The complaint puts that compensation at $3.3 million from 2020 through 2024, drawn from the plan’s own government filings, with some fees routed through a benefits-communication firm Lockton fully acquired in 2025. The claims accuse Lockton of using its position to benefit itself at employees’ expense, and the relief sought includes repayment of the allegedly improper compensation and appointment of an independent person to oversee the plan. Capozzi Adler filed October 1 in Kansas City federal court, the latest in a wave of voluntary-benefits suits filed since December 2025. Lockton hasn’t yet responded in court.

PBGC expanded its merger FAQs for multiemployer plans that received special financial assistance, adding examples of the withdrawal liability modifications available to merged building and construction industry plans under its merger regulation. The headline modification lets a merged plan compute a withdrawing employer's share from its share of contributions rather than unfunded vested benefits, which keeps assessments closer to what the rescued plan would have produced on its own and helps show PBGC that a merger won't increase its risk of loss. The agency's worked examples show the stakes: in one scenario the default method zeroes out a $2.5 million assessment that the modification mostly preserves. The update landed the same day as the attrition-event reporting waiver we covered Monday, and the same week a Maryland decision below shows how much can turn on who bears withdrawal liability.

Arkansas has required pharmacy benefit managers to reimburse pharmacies at least the national average acquisition cost of a drug since 2015; a law passed last year finally gave pharmacies the right to sue over violations, with statutory damages up to $10,000 per violation. Twelve independent Arkansas pharmacies have now become the first to use it, filing in Missouri state court, Express Scripts' home turf. They say they documented about 48,300 underpaid prescriptions between August 2025 and March 2026, likely an undercount given their limited view into claims data, and the complaint does not mince words: “Express Scripts' failure to comply with Arkansas law is not a technological challenge; it is a business decision.” Express Scripts says it pays competitive rates and will defend itself. One to watch for plan sponsors as states keep building private enforcement mechanisms against PBMs.

Ahead of the October 6 Supreme Court argument, the piece maps the circuit split on whether an ERISA plaintiff must plead a comparator fund similar in aims, risks, and strategies to the investment it challenges. By their count five circuits require the showing and two reject it, with the Eleventh Circuit's August reversal in Johnson v. Royal Caribbean the newest entry on the no side. The argument is that a benchmark should be necessary but never sufficient without allegations of a flawed process, and they tie the standard to a March Labor Department proposal folding the same concept into a fiduciary safe harbor.

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.

For companies and investors in the fast-growing health and wellness sector, building a lasting business takes more than meeting consumer demand.

Transactions involving an ESOP shareholder, and an ESOP trustee serving as fiduciary for participants, create complexity a private equity buyer will not find in non-ESOP deals. Foley maps the terms and issues unique to these acquisitions.

We also explore how Section 315 and Section 101 of the SECURE 2.0 Act impact plan mergers and family attribution rules, as well as why engaging ERISA counsel for a legal opinion is essential now that the IRS no longer issues determination letters for coverage testing.

This comes amid a wave of plan sponsors opting to outsource the investment management of their pension plans.

Principal acquires benefits company; LPL Financial hires 2 advisers in separate transactions; Retirement and Wealth at Alliant buys Retirement Solution Group; and more.