This year has been especially challenging for plan sponsors and those who advise them with sudden changes in policy coming overnight and complicated new plan rules taking effect. The current 2026 deadline for making plan amendments to comply with the Cares Act and SECURE Acts and the expanding reach of plaintiffs filing fiduciary breach claims suggest that 2026 may be even more challenging. For that reason, the first three entries on this year’s wish list were easy choices. Here is my benefits wish list for the coming year:
1. More time to amend plans for statutory changes. There are still many individually designed plans in effect and guidance has been coming out more slowly than anticipated. A delay would give Treasury more time to issue more guidance and to release model language that sponsors of all plans can use. Getting the document right has become more important now that IRS doesn’t issue determination letters on plan amendments.
2. Repeal or amend the Roth catch-up requirement. This new rule that certain highly-paid employees may make catch-up contributions only on a Roth basis is among the most complicated of the new requirements and seems to have been drafted without any thought as to how it would affect plan administration. Applying the rule only to employees who had FICA wages over $150,000 in 2025 requires tracking a number not previously used for any purpose in plan administration and coordination with payroll providers. Policywise, targeting older employees seems backwards anyway, since older employees get a smaller potential benefit from Roth contributions than younger employees. Older employees have less time to accumulate tax free earnings. In addition, using only FICA wages to determine who is subject to the requirement creates a situation in which partners in a law firm may be exempt from the Roth catch-up requirement while their staff is not.
If repeal isn’t possible, let’s make this rule manageable and consistent by substituting the highly compensated employee compensation amount to determine who must make Roth catch-up contributions. Let’s also eliminate the distinction between those who earn FICA wages and those who do not.
3. Amend ERISA to level the playing field in litigation. ERISA litigation serves an important role by enabling participants to pursue fiduciaries who have not fulfilled their plan responsibilities. However, in recent years responsible plan fiduciaries have increasingly become targets of litigation based on questionable legal theories filed by attorneys seeking a quick settlement. The result is that judges struggle to focus on meritorious cases. Responsible fiduciaries are afraid that they will be sued no matter what they do.
We need stricter rules on what plaintiffs must plead in order to survive a motion to dismiss and on standing in all ERISA litigation. Plaintiffs should be required to show that they have been harmed by the policies or practices they are challenging. For example, plaintiffs have challenged pension risk transfers without showing any current threat to continued payment of their benefits and challenged tobacco smoker surcharges in litigation in which they don’t even allege that they have enrolled in tobacco cessation programs. And lawsuits suddenly alleging without authority that practices long permitted by the IRS such as those challenging the use of plan forfeitures to reduce employer contributions to 401(k) plans should be dismissed for failure to state a valid claim. The Department of Labor has recently started to file amicus briefs supporting plan sponsors in significant cases and we can expect this trend to continue. However, my wish for targeted reform requires overruling the Supreme Court’s 2025 Cunningham decision (145 S.Ct. 1020) which made all plan service arrangements subject to challenge as prohibited transactions, and shouldn’t stop there. Judges alone can’t control this problem; we need comprehensive ERISA litigation reform. Passing the recently introduced ERISA Litigation Reform Act (H.R. 6084), which would overrule Cunningham, would be a start.
4. The Supreme Court should clarify whether or when ERISA fiduciary breach claims may be subject to mandatory arbitration and/or class action waivers. This is a perennial item on the list as the Supreme Court has still not accepted a case in which it could provide national guidance on these questions. Lower courts have been pushing back against arbitration and class action waiver provisions, but that may not be consistent with the Supreme Court’s prior decisions. If mandatory arbitration and class action waivers are permissible under even some circumstances, that could also rein in ERISA lawsuits.
5. Give us more fiduciary safe harbors. Courts may not have to give these automatic deference, but they provide a roadmap for fiduciaries to fulfill their responsibilities in a way that will not be challenged on audit.
6. Let’s keep politics out of plan investments. This problem exists on both sides of the aisle and when the rulemakers and judges substitute politics for financial and legal analysis it complicates life for plan fiduciaries. On the Republican side, there is a blanket rejection of ESG factors and holding more actors in the benefits space to a fiduciary standard. A glaring example on the litigation side is the American Airlines litigation in which a Texas judge found that American Airlines’ so called ESG investments, which were not even ESG funds, were not imprudent and did not result in losses, but nevertheless injected himself into the mechanics of investment selection and proxy voting in a relief order. Too many on the Democratic side have a tendency towards a paternalistic mentality in which participants and fiduciaries are assumed to be unable to make their own informed decisions and whole classes of investments with different risk profiles and ways to invest such as alternative investments are presumed suspect and dangerous.
ERISA’s drafters established general fiduciary standards. They didn’t intend to micromanage plan investments, and neither should judges, Congress and the regulators.
7. End “kitchen sink” SPDs This has been a problem for many years and shows no signs of improving. The drafters of ERISA intended SPDs to provide participants with information about the specific plan provisions that applied to them, and language such as “Your plan may permit additional discretionary matching contributions. Ask your Plan administrator whether this applies to you”, which is sprinkled throughout SPDs produced for pre-approved plans, violates the spirit if not the letter of the regulations. The Department of Labor should make clear that no SPD or notice should mention provisions that are not in the plan being described or refer participants constantly to the plan administrator to get information that is supposed to be in the SPD.
8. Make electronic disclosure easier, not harder. SECURE 2.0 requires defined contribution plan participants to get at least one paper benefit statement per year. Defined benefit plan participants would get paper statements once every three years. Employees hired on and after January 1, 2026 must get notices about their right to get paper copies of disclosures before they can receive any electronic disclosures. In connection with that change, the DOL is reviewing a popular “notice and access” disclosure method that allowed documents to be posted on a plan website unless the participant opted out and has requested input on whether plan sponsors should be required to show that participants actually accessed the documents provided electronically. Regulations are expected soon.
This is a solution in search of a problem and the law ought to be changed. The system was working well before SECURE 2.0 and we should be moving towards electronic disclosure as the automatic default as more and more people have access to the internet. We should not be moving backwards by requiring sponsors to incur copying and postage charges for paper copies that are easily lost.
9. Pass a SECURE 3.0. Many of us had hoped that Congress would get around to considering a SECURE 3.0 with further needed changes in 2025. That didn’t happen, but next year’s Congress will have another opportunity to move forward on changes that would increase plan coverage, such as lowering the minimum age for participation, making automatic enrollment mandatory for more plans, and expanding the availability of lifetime income options in defined contribution plans. SECURE 3.0 could also address clarifications or changes to SECURE 2.0 provisions including the Roth catch-up and paper statement requirements and allow 403(b) plans in invest in collective investment trusts, a change that was intended to be made in SECURE 2.0 but couldn’t be implemented. Another long-sought change would be allowing 401(k) plans to accept rollovers from Roth IRAs.
It isn’t realistic to expect all or most of these wishes to come true, but if even a few come to fruition the work of fiduciaries, plan sponsors, recordkeepers and advisers will be easier and less stressful going forward.