BENEFITS DIGEST

Ian Berger explains how automatically opened Trump Accounts work and when families can start adding money. Only about seven million Trump Accounts had been opened by parents as of July, so Treasury automatically created an account for roughly 60 million more eligible children. The auto accounts live together in a master group trust and can hold only two things, the $1,000 federal contribution, which parents still must claim, and contributions from tax-exempt organizations. Before a family can add its own money or accept employer contributions, a parent must claim the account and move it out of the trust. The second announcement lets private foundations contribute publicly traded stock instead of cash, with no dollar cap and no effect on the $5,000 annual limit that applies to individual and employer contributions, though contributions must go to a targeted group of children and stock generally must be held five years before sale.

EBN’s award-winner roundup is a working catalog of enrollment season tactics from benefits managers at LandCare, BMO, Koch, Aflac and a handful of nonprofits. The common thread is retiring the two-week crash course in favor of year-round education, so enrollment becomes, in one manager’s phrase, a confirmation of informed decisions. Koch uses data to place its on-site enrollment events and tracks selection remorse as the thing to minimize, the University of Pittsburgh targets communications by age, tenure and enrollment history instead of one-size-fits-all blasts, a Louisiana health system is building its campaign around new state pharmacy laws that change what employees pay per fill, and a nonprofit set a measurable goal of a 5 percent increase in dependent care FSA enrollment. Aflac’s benefits chief supplies the market datapoint, with supplemental insurance offered by 31 percent of employers while 95 percent of employees call it essential.

Air ambulance operator PHI Health sued Anthem, dozens of employers and their health plans in Kentucky on October 6, seeking $2.6 million in unpaid balances on 116 No Surprises Act arbitration awards. Defendants include Walmart, Amazon, Toyota and the University of Kentucky. Beyond collecting the awards, PHI alleges that plan fiduciaries failed to respond to warning signs about Anthem’s payment practices. The complaint cites demand letters, other lawsuits and trade reporting that allegedly put them on notice, and says Anthem had accumulated more than a thousand unpaid awards approaching $30 million nationwide. PHI asks for corrective action that could include replacing Anthem as administrator, along with monetary relief. The court hasn’t ruled on those allegations.

A federal judge in Austin approved a settlement between the Justice Department’s Civil Rights Division and Texas-based University Village Memory Care over its treatment of Army National Guard Combat Medic Specialist Maria Opara. The suit alleged the facility demoted, or attempted to demote, Opara from her night shift supervisor position to a lower-paying one because she took leave to fulfill military orders, then terminated her when she refused the forced demotion. The settlement pays Opara $15,000 and requires the facility to update its USERRA policies and train every employee on them. Assistant Attorney General Harmeet Dhillon emphasized that each step was independently unlawful, the demotion over her service and the termination for refusing it. Military leave policies deserve the same documentation discipline employers give FMLA.

The initial 2026-2027 Priority Guidance Plan lists 121 projects the agencies intend to prioritize, and the benefits entries sketch the year ahead. From the One Big Beautiful Bill Act, the plan includes Trump Account guidance, regulations on the expanded employer child care credit, and guidance on the paid family and medical leave credit. The retirement entries run from an update to the Employee Plans correction program and a new program for correcting IRA mistakes, through SECURE 2.0 guidance including the saver’s match and student-loan matching contributions, to electronic-delivery modernization and defined benefit funding guidance. Other projects address fringe benefits and VEBAs, the tax-exempt trusts some employers use to fund benefits. For executive pay, the plan lists regulations on the deduction limit for high pay at public companies and the parallel excise tax at tax-exempt organizations. The list sets the agencies’ priorities for the coming year. It doesn’t change existing requirements or promise when any project will be finished.

When the No Surprises Act passed, regulators projected about 22,000 payment disputes a year. Providers initiated 2.6 million in 2025, and of the disputes that reached a decision, providers won 85%, at a median award more than four times the plan's median in-network rate. Research cited in a Georgetown University analysis puts costs attributable to the arbitration process at $22.4 billion from 2022 through 2025. The post explains the process, in which each side proposes a payment and the arbitrator must pick one number or the other, and the September letter in which 67 employer, consumer and patient groups asked Congress to replace arbitration with a predictable benchmark payment. Employers with self-funded plans should ask their claims administrator how many disputes involve their plan and what the awards are costing. Choosing in-network care can reduce exposure, but it doesn't eliminate surprise bills from out-of-network clinicians working at in-network hospitals.

Jay Keeton explains how a tax-exempt or governmental employer can combine a 457(b) plan with a separate 457(f) arrangement to provide additional executive compensation. A 457(b) plan can receive employee deferrals and employer contributions, subject to annual limits. A 457(f) arrangement can promise an additional benefit conditioned on continued service, like the article's example of a $200,000 retention benefit forfeited if the executive leaves within three years. The timing deserves care. The benefit generally becomes taxable income when the executive earns an unconditional right to it, even if payment comes later, so employers should coordinate vesting, payment, and payroll-tax treatment so the executive can cover the resulting tax bill.

Groom reads the new Treasury-IRS priority guidance plan, the agencies' annual list of the rules they intend to write. It carries 121 projects and no benefits surprises, and the item employers have waited longest for is still just a promise. Many employers fund retiree medical benefits through a tax-exempt trust called a VEBA, and some of those trusts now hold more money than the retiree benefits need. Redirecting the surplus toward coverage for current employees risks a 100 percent excise tax, the IRS stopped issuing private rulings blessing such moves seven years ago, and the regulations that would give employers a safe answer remain on the to-do list. Employers sitting on overfunded VEBAs keep waiting.

For tax-exempt organizations in related groups, "who is the employer" is a question with new stakes. Related nonprofits are treated as one employer when at least 80 percent of one organization's directors or trustees are representatives of, or removable by, the other. A management company that runs a nonprofit's operations on a continuing basis can also tie the organizations together under separate affiliated service group rules. Getting the answer right matters more now because Congress amended the excise tax on nonprofit executive compensation in 2025 to cover a broader group of employees, with the IRS's initial reading in [Notice 2026-36](https://www.irs.gov/pub/irs-drop/n-26-36.pdf). Because pay counts across related organizations, identifying the full group is the first step, and the same analysis drives combined plan testing and the reporting of related entities on Form 990.

A year-end checklist for the nonprofit and governmental slice of the audience. It covers amendment deadlines (December 31, 2026 for most qualified plans; governmental plans get until 2029), the Roth catch-up requirement for employees with more than $150,000 in prior-year FICA wages from the sponsoring employer, the new paper benefit-statement requirement for ERISA plans, and year-end tax decisions for certain deferred compensation arrangements. One distinction to carry into the review: amendments documenting optional changes already in use are on the year-end clock, while required amendments may have later deadlines.

The actuarial-equivalence cases keep converting into pension increases. In Whetstone v. Howard University, No. 1:23-cv-02409 (D.D.C. Sept. 18, 2026), Judge Loren L. AliKhan preliminarily approved a $1.3 million class settlement covering roughly 1,788 retirees and beneficiaries of Howard's frozen pension plan affected by annuity conversions computed with a 1984 unisex mortality table and a 7 percent interest rate. The named plaintiff's numbers show the theory in miniature. His single life annuity was $680.50 a month, the plan's conversion paid $584.73, and he alleged that Treasury-based assumptions would have produced $602.72, a difference of $17.99 every month. If finally approved, the settlement would provide permanent monthly increases and retroactive payments. The settlement reflects uncertainty about how the legal claims would fare. Whether ERISA's actuarial-equivalence requirement imposes a reasonableness test remains unsettled, with the Sixth Circuit's Kellogg decision on one side and a district-court split behind it. The parties must propose dates for a final fairness hearing on or after December 18.

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.

Boutwell Fay's FAQ on the section 4960 excise tax for tax-exempt employers: who counts as a covered employee, how the $1 million threshold and parachute rules interact, and the traps for organizations with related entities.

Groom examines integral part trusts, a lesser known vehicle that tax-exempt organizations can use to fund employee benefits in a tax efficient, flexible way.

The IRS recently announced its intention to propose regulations relating to the 21 percent tax imposed with respect to any “excess” executive compensation paid by certain tax-exempt organizations.

Key Takeaways: The OBBBA significantly expanded Code §4960 for taxable years beginning after Dec. 31, 2025, broadening the scope of employees that tax-exempt organizations must evaluate for potential