Benefits Counselor - October 2025

Retirement Plan Updates

IRS Issues Final Rule Addressing Catch-Up Contributions Under SECURE 2.0

On September 16, 2025, the Internal Revenue Service (IRS) published final regulations regarding changes to catch‑up contributions under the SECURE 2.0 Act of 2022 (SECURE 2.0). The regulations address implementation of SECURE 2.0's "super catch‑up" contribution limits and the requirement that catch‑up contributions for certain higher‑income participants be designated as Roth contributions. Most plans have until January 2027 to comply (later for certain collectively bargained or government plans). Prior to 2027, a reasonable, good‑faith interpretation standard applies with respect to administration. For additional detail, see our article, Final IRS Regulations Address Catch‑Up Contributions under SECURE 2.0.

DOL Clarifies Availability of Guaranteed Lifetime Income Products as QDIAs

The U.S. Department of Labor (DOL) recently issued Advisory Opinion 2025‑04A, which confirms how a guaranteed lifetime income product can qualify as a Qualified Default Investment Alternative (QDIA). The Opinion clarifies that including annuity purchase rights, death benefit guarantees or other ancillary features within a QDIA is permissible under the Employee Retirement Income Security Act of 1974 (ERISA), provided all QDIA regulatory requirements are met. The Opinion also notes the availability of two annuity selection safe harbors.

Third Circuit Enforces Withdrawal Liability Agreement, Upholds PBGC Rules

In In re Yellow Corp., the U.S. Court of Appeals for the Third Circuit upheld Pension Benefit Guaranty Corporation (PBGC) regulations that limit the immediate inclusion of special financial assistance (SFA) funds in withdrawal liability calculations for multiemployer pension plans. Additionally, the court enforced a contractual agreement between the parties in which an employer agreed to pay higher withdrawal liability than the statutory minimum. Specifically, the court held that PBGC approval was not required because the pension plan did not use a "completely different method" by which it calculated the employer's withdrawal liability.

Health and Welfare Plan Updates

Eleventh Circuit Rules Denial of Gender‑Affirming Surgery Is Not Discriminatory

Recently, in Lange v. Houston County, Georgia, the U.S. Court of Appeals for the Eleventh Circuit sitting with the full bench of judges, en banc, ruled that a health plan's exclusion of coverage for gender‑affirming surgery does not violate Title VII of the Civil Rights Act (Title VII). The en banc court reasoned that the exclusion applied uniformly, regardless of a person's gender identity or sex, based on the type of treatment rather than protected characteristics. The court noted that that the Supreme Court has not "held that transgender status is separately protected under Title VII apart from sex," instead only answering "whether an employer who fires someone simply for being ... transgender" has violated Title VII.

District Court Allows MHPAEA Violation Claim Regarding 24‑Hour Nursing Requirement to Move Forward

In Brady K. v. Health Care Serv. Corp., the U.S. District Court for the Northern District of Illinois refused to dismiss a claim that Blue Cross Blue Shield of Texas improperly denied coverage for residential mental health treatment. In this case, Blue Cross's denial was due to a lack of 24‑hour on‑site nursing care at the treatment facilities. The Mental Health Parity and Addiction Equity Act (MHPAEA) requires that health plans not disfavor mental health or substance use disorder benefits, as written or in operation. Blue Cross argued that it effectively imposed the same 24‑hour on‑site nursing care requirement on medical and surgical facilities because it required such facilities to meet state licensing or federal requirements, which require 24‑hour nursing. However, the court considered an expressly written limitation to be different than incorporating extrinsic standards. The court further found that the 24-hour nursing requirement, combined with the plan's medical necessity requirement, may be more restrictive in operation for mental health benefits than for medical and surgical benefits.

Compliance Deadlines and Reminders

Retirement Plans

• Year‑End SECURE 2.0 Deadline. December 31, 2025, remains the deadline for Internal Revenue Code section 457(b) plans sponsored by tax‑exempt entities to make necessary amendments to incorporate the legislative and regulatory changes related to the SECURE Act and SECURE 2.0. Absent future guidance, these plans must be amended by the end of this year to avoid compliance issues and to keep plan language aligned with current law and IRS requirements.
• QDIA Notice. Plan sponsors of defined contribution retirement plans that utilize a qualified default investment alternative (QDIA) must provide an annual notice to all participants at least 30 days, but not more than 90 days, before the beginning of the plan year. Plan sponsors of calendar year plans must provide this notice between October 3, 2025, and December 2, 2025.
• Retirement Plan Automatic Enrollment Notice. Plan sponsors of retirement plans with an eligible automatic contribution arrangement or a qualified automatic contribution arrangement must annually notify all participants, on whose behalf contributions may be automatically made to the plan, between 30 days and 90 days before the beginning of the plan year. Plan sponsors of calendar year plans must provide this notice between October 3, 2025, and December 2, 2025. Plan sponsors may combine the automatic enrollment notice with the QDIA notice.
• Safe Harbor 401(k) Plan Notice. Plan sponsors of safe harbor 401(k) plans must provide participants with an annual safe harbor notice that describes the safe harbor contribution and other material plan features at least 30 days, but not more than 90 days, before the beginning of the plan year. Plan sponsors of calendar year plans must provide this notice between October 3, 2025, and December 2, 2025. Plan sponsors may combine the safe harbor notice with other required notices, such as the QDIA notice.

Health and Welfare Plans

• Gag Clause Prohibition Compliance Attestations Due December 31, 2025. To comply with the Consolidated Appropriations Act (CAA), group health plans and insurers must annually attest that their contracts do not include prohibited "gag clauses" that restrict the disclosure of provider‑specific costs, quality of care information and electronic access to claims. The gag clause prohibition applies to ERISA plans, nonfederal governmental plans, church plans and grandfathered plans.
• Health Plan Open Enrollment Requirements. Plan sponsors of group health plans must issue a new Summary of Benefits and Coverage (SBC) to individuals covered under the plan in conjunction with open enrollment. Group health plans without open enrollment must issue the SBC no later than 30 days before the beginning of the plan year (December 2, 2025, for calendar year plans). Plan sponsors of health reimbursement arrangements (HRAs) must offer participants an annual opportunity to opt out of and waive all future reimbursements from their HRA. This notice of opt‑out can be provided with open enrollment materials.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.