At Nixon Peabody’s spring 2026 employee benefits briefing, our Employee Benefits and Executive Compensation attorneys covered the developments that matter most to plan sponsors and fiduciaries right now: a proposed Department of Labor (DOL) safe harbor that could reshape how retirement plan committees select investments, new transparency requirements for pharmacy benefit managers (PBMs), a first look at employer-sponsored Trump Accounts, growing litigation risk in the health and welfare benefits space, and a year-end compliance calendar that’s filling up fast. What follows is a recap of key discussions and practical takeaways for plan sponsors and fiduciaries.
Watch the Employee Benefits Briefing (Spring 2026)
Proposed DOL safe harbor for 401(k) and 403(b) plan investment selection
On March 30, 2026, the Department of Labor proposed regulations that take direct aim at the litigation wave that has been battering 401(k) and 403(b) plan fiduciaries for years. The numbers speak for themselves: more than 500 class actions filed since 2016, over a billion dollars in settlements, and millions spent on a typical defense. The DOL’s concern is that this pressure is pushing committees toward overly conservative investment choices, out of fear of getting sued.
The proposed safe harbor for plan fiduciaries would give fiduciaries a presumption of reasonableness, provided they document their consideration of six factors when choosing an investment option: performance, fees, liquidity, valuation methodology, appropriate performance benchmarks, and complexity. These apply across the board, not just for alternative assets, though they’re particularly relevant there.
Speaking of alternatives, the regulations meaningfully open the door to private equity, private debt, and similar asset classes in participant-directed plans, including through hybrid vehicles like target date funds that could include a sleeve of alternative assets. Cryptocurrency gets less attention, suggesting the DOL may still be working through what appropriate guardrails would look like.
These regulations aren’t final yet, so plan sponsors should treat them as guidance rather than settled law. In the meantime, consider structuring investment review materials and committee minutes around those six factors. Also, be sure that any mutual funds in the investment menu are in the cheapest share class available to the plan.
Health plan transparency: medical and pharmacy cost and fee disclosure requirements
For plan sponsors with self-insured pharmacy benefits, the transparency landscape has shifted considerably, and some obligations are already overdue for attention.
There are several transparency requirements already in effect. First, the CMS Transparency in Coverage final rule requires machine-readable files posted publicly and updated monthly, along with participant-facing price comparison tools. Second, the Consolidated Appropriations Act of 2021 added broker and consultant compensation disclosures when indirect compensation exceeds $1,000. Third, plan sponsors must disclose prescription drug spending report due to Centers for Medicare & Medicaid Services (CMS) each June 1. Plan sponsors should confirm these requirements are being fulfilled through their carrier and third-party administrator (TPA) agreements.
The newer developments center on pharmacy benefit managers. The DOL’s proposed PBM Transparency Rule would require pharmacy benefit managers (PBMs) to disclose detailed pricing information to plan fiduciaries both before entering or renewing an agreement and semi-annually going forward, covering:
- Manufacturer rebates
- Spread pricing
- Copay clawbacks
- Formulary placement incentives
- Price protection arrangements
Annual audit rights are also part of the proposal. The proposed effective date is January 1, 2027, for calendar year plans, though the rule has not yet been finalized.
The Consolidated Appropriations Act of 2026 (CAA 2026) is already law and covers much of the same ground, so the finalization timeline of the proposed rule matters less than it might seem. CAA 2026 requires a full rebate pass-through, meaning PBMs must remit 100% of rebates and related compensation back to the plan quarterly, and it removes contractual barriers that may have limited fiduciary access to information. These requirements generally apply to contracts entered into, extended, or renewed on or after January 1, 2029.
For plan sponsors, the practical priorities are:
- Reviewing existing PBM and TPA contracts for compliance with both new and existing requirements
- Establishing a disclosure calendar to track ongoing obligations
- Engaging an independent auditor to monitor vendor performance
- Considering formation of a dedicated Health and Welfare Benefits Committee to formalize governance in this increasingly scrutinized area
Trump Accounts: Employer sponsorship, tax treatment, and open questions
Trump Accounts are a new employer-sponsored child savings vehicle that functions similarly to a health savings account (HSA). Eligible children must have a social security number and must not have turned 18 before the close of the calendar year. Only one Trump Account may exist for a given child at any time. The Department of Treasury has designated the Bank of New York Mellon as the initial custodian and Robinhood as the initial broker, with an online account-opening tool expected in mid-2026.
On contributions, the federal government will make a one-time $1,000 pilot contribution to accounts for children born between 2025 and 2028. Under a new Section 128 of the Internal Revenue Code, employers may contribute up to $2,500 per employee per year without the contribution being included in the employee’s gross income. This limit is per employee, not per dependent, so an employee with multiple children reaches the cap at $2,500 regardless of the number of accounts. Employees may also make pre-tax contributions of up to $2,500 through their employer’s Section 125 cafeteria plan. The overall annual cap from all sources is $5,000. Contributions are taxed upon distribution to the child after age 18. Investments are limited to approved index funds below an expense threshold still to be designated by Treasury, and contributions cannot begin before July 4, 2026.
Employers wishing to sponsor Trump Accounts must adopt a written program. Guidance is expected to follow the model of dependent care programs, including non-discrimination rules that have historically posed compliance challenges. Significant open questions remain, including how Trump Accounts will interact with cafeteria plan rules and whether the IRS will issue guidance exempting these accounts from ERISA in a manner similar to HSAs. Plan sponsors interested in early adoption should stay closely attuned to guidance as it develops.
AI in employee benefits administration
Artificial intelligence is now embedded in benefits administration across the board, being used by carriers, record keepers, and TPAs to verify eligibility, adjudicate claims, reconcile payroll, and draft participant communications. The efficiencies of AI in benefits administration are real, but so are the risks, and plan sponsors retain ultimate fiduciary responsibility regardless of which tools they deploy.
AI systems make mistakes. Participant communications generated by AI do not always strike the right tone and can introduce inaccuracies that create compliance exposure. Sensitive plan and participant data should never be transmitted through systems that operate outside the organization’s secure environment.
A question that has arisen with increasing frequency concerns the use of AI-powered recording and note-taking tools during plan committee meetings. Recordings expand the potential scope of discovery in litigation and can lead to statements being misinterpreted or taken out of context. Until thinking on this issue evolves, manually drafted minutes remain the safer approach.
Vendor agreements present the most immediate practical challenge. Plan sponsors should ensure that agreements with record keepers, TPAs, and other service providers address how AI is being used, include appropriate indemnification provisions, establish data protection standards, and define the scope of permissible AI use. The standard of fiduciary care applies regardless of whether humans or machines are making decisions.
ERISA healthcare litigation: Rising risk for health and welfare plan fiduciaries
The litigation trends that reshaped retirement plan governance over the past 20 years are now making their way into the health and welfare space. Plan sponsors who understand that history have a real opportunity to get ahead of the risk.
The structural conditions are familiar. Healthcare costs are among the largest line items on most employers’ balance sheets, vendor compensation structures have historically been opaque, transparency tools are expanding rapidly, and governance practices in this space have lagged behind what is now standard for retirement plans. Courts have consistently focused on process rather than outcomes, and plaintiffs have learned to ask pointed questions about what fiduciaries understood about their arrangements and when.
A notable new front emerged near the end of 2025, when a series of lawsuits began targeting voluntary benefits programs. The argument is that employers who promote voluntary benefits with enough prominence in open enrollment materials or employee handbooks may cross a line from facilitating enrollment into endorsing those benefits, which can bring the programs within ERISA’s reach. No rulings have issued yet, but a favorable precedent for plaintiffs in this area would have broad implications.
For plan sponsors, the practical priorities are:
- Forming a Health and Welfare Benefits Committee with a clear charter and board reporting structure
- Documenting governance decisions rigorously
- Developing a working understanding of how compensation flows through the healthcare vendor ecosystem
- Resisting the tendency to treat annual renewals as a binary choice between incumbent vendors
The goal is not perfect decision-making but a demonstrably thoughtful and well-documented process.
SECURE ACT plan amendments and restatements: 2026 deadline
Emily Pellegrini, Kelly Hathorn, Lena Gionnette
For most non-governmental retirement plans, December 31, 2026, is the deadline to amend plan documents to reflect operational changes made under the SECURE Act, the CARES Act, and SECURE 2.0. Many of these changes have been effective for years, but the IRS has permitted sponsors to defer the corresponding paperwork. That grace period is now ending.
Key items requiring attention include changes to required minimum distribution (RMD) ages, the long-term part-time employee eligibility rules (which SECURE 2.0 extended to 403(b) plans), the 10-year distribution rule for non-spouse beneficiaries, CARES Act coronavirus-related distributions and loan modifications, and the Roth catch-up requirement for high earners. A range of optional features that plans may have adopted, including increased cash-out limits, super catch-ups, emergency distributions, and terminal illness distributions, also need to be reflected in plan documents by year-end.
The IRS’s 2025 Required Amendments List provides an extended deadline of December 31, 2027, for RMD-related amendments, and the Roth catch-up amendment deadline is expected to fall in 2029. Even so, there are practical reasons to complete all amendments in 2026: post-deadline amendments may not be entitled to anti-cutback relief, and pre-approved plan document providers may elect to process everything together this year regardless.
Sponsors relying on pre-approved plan documents face a separate restatement obligation. 403(b) plans and 401(k) plans, among others, must be restated onto an updated IRS- approved document form by year-end. Sponsors who have not yet initiated this process should contact their record keeper or document provider now, well ahead of end-of-year bottlenecks.
Recommended steps include inventorying which SECURE Act and SECURE 2.0 features have been adopted operationally, consulting with benefits counsel on timing and approach, getting into the document provider’s queue early, and ensuring signed, dated amendments are in place before December 31.
Required disclosures: deadlines to calendar now
Year-end compliance encompasses far more than plan amendments, and several disclosure deadlines are approaching that plan sponsors should be tracking now.
Key obligations vary by plan type. For all ERISA plans, these include summary plan descriptions, summaries of material modifications, and Form 5500 filings and audits. For health and welfare plans, the list includes summary of benefits and coverage documents, COBRA notices, Medicare Part D credible coverage notices, CHIP and Medicaid premium assistance notices, Women’s Health and Cancer Rights Act notices, and Affordable Care Act (ACA) reporting on Forms 1094 and 1095. For retirement plans, the list includes summary annual reports (SARs), participant fee disclosures under Section 404(a), pension benefit statements, annual funding notices, and safe harbor, qualified default investment alternative (QDIA), and automatic contribution notices.
Several 2026 dates require immediate attention:
- July 29: Summary of material modifications (SMMs) for plan changes adopted during the 2025 plan year
- July 31: Form 5500 filing deadline (even sponsors intending to extend to October 15 must affirmatively request that extension)
- September 30: Summary annual reports for calendar year plans, or December 15 if a Form 5500 extension has been filed
- October 15: Medicare Part D credible coverage notices
- December 2: Safe harbor, QDIA, and automatic contribution notices for the 2027 plan year
Penalties for missed disclosures accumulate quickly. Beyond the financial exposure, missed deadlines invite DOL and IRS audit scrutiny and erode participant trust.
Now is the time to audit 2025 plan amendments for SMMs not yet distributed, confirm Form 5500 preparation is underway, review summary plan descriptions (SPDs) for the five-year restatement requirement, and assign clear internal responsibility for each upcoming obligation.