Barry Salkin | The Wagner Law GroupThe Wagner Law Group2026-06-08T20:22:13Zhttps://www.wagnerlawgroup.com/feed/atom/WordPress/wp-content/uploads/sites/1101401/2021/06/cropped-wagner-fav-icon-2-32x32.pngby The Wagner Law Group<![CDATA[Department of Labor Proposes New Fiduciary Safe Harbor for Investment Selection in Defined Contribution Plans]]>https://www.wagnerlawgroup.com/?p=680602026-04-01T19:36:31Z2026-04-01T19:37:22ZDemocratizing Access to Alternative Assets for 401(k) Investors (the “Executive Order”), and is expressly designed to reduce litigation risk while reaffirming ERISA’s long‑standing, process‑based fiduciary framework.
Although prompted by concerns surrounding alternative investments, the Proposed Regulation would apply broadly to all designated investment alternatives and would arguably represent one of the most consequential shifts in ERISA fiduciary policy in decades. Comments on the proposal are due by June 1, 2026.
Background and Purpose
The Executive Order directed the DOL to clarify fiduciary obligations when asset allocation funds or other investments include alternative assets - such as investment vehicles that invest in private equity and credit, real estate, commodities, digital assets (such as cryptocurrency), infrastructure - and lifetime income strategies. The Executive Order specifically asked the DOL to consider “appropriately calibrated safe harbors” that would enable fiduciaries to exercise sound judgment without undue fear of litigation.
The Proposed Regulation would go further than the Executive Order requested. Consistent with the DOL’s traditionally investment‑neutral approach, the Proposed Regulation does not favor or disfavor any particular asset class. Instead, it articulates a general, process‑driven standard for prudently selecting any designated investment alternative.
The DOL is candid about its motivation: according to the DOL, the current ERISA litigation environment has chilled fiduciary decision‑making, discouraged innovation, and pushed plans toward defensive menu designs. The proposal is intended to realign ERISA practice with statutory text, trust‑law principles, and decades of judicial precedent.
Three Foundational Principles
The preamble to the Proposed Regulation identifies three principles that underpin the Proposed Regulation:
ERISA is grounded in process, not outcomes. Prudence is evaluated based on the fiduciary’s investigation and reasoning at the time of the decision - not by hindsight or subsequent performance. Indeed, many practitioners colloquially refer to the prudence standard as being one of “procedural prudence.”
ERISA affords fiduciaries broad discretion. The statute neither mandates nor prohibits specific investment types; fiduciaries may select among a wide range of reasonable options.
Courts should defer to fiduciaries who follow a prudent process. When fiduciaries act within a documented, reasonable decision‑making framework, their judgments should receive substantial judicial deference.
The third principle - judicial deference that would be implemented under the Proposed Regulation through a presumption of prudence - is likely to be the focal point of legal challenges. The DOL anticipates this risk and grounds the proposal in existing trust‑law concepts and its statutory authority under Section 505 of ERISA, which the DOL asserts supports its authority to establish fiduciary safe harbors.
The Safe Harbor Framework
At the core of the Proposed Regulation is a process‑based safe harbor. A fiduciary that objectively, thoroughly, and analytically evaluates relevant factors when selecting an investment is entitled to a presumption of prudence and significant judicial deference.
The Proposed Regulation identifies six non‑exclusive factors that would ordinarily be central to the analysis:
Performance: Fiduciaries must consider risk‑adjusted expected returns over an appropriate time horizon, net of fees. The rule expressly rejects any requirement to select the highest‑returning option over short periods.
Fees: There is no requirement to choose the lowest‑cost investment. Fees are evaluated relative to value, services, and expected performance; and fiduciaries are not required to scour the entire marketplace. Performance‑based and incentive fees may be appropriate when justified.
Liquidity: Plans are not required to offer fully liquid investments. Fiduciaries may select investments with liquidity restrictions, including illiquid assets, when liquidity tradeoffs are reasonably balanced against potential diversification or risk‑adjusted returns, so long as participant‑ and plan‑level liquidity needs are responsibly addressed.
Valuation: Designated investment alternatives must be capable of timely and accurate valuation. For non‑public assets, the Proposed Regulation generally anticipates at least quarterly valuation using independent, conflict‑free methods consistent with a certain specified accounting standard (FASB ASC 820).
Performance Benchmarking: Each investment should be evaluated against a meaningful benchmark with comparable strategy, objectives, and risk profile. Importantly, the Proposed Regulation states that new or innovative investments are not disfavored merely because they lack long performance histories.
Complexity: Complexity alone does not render an investment imprudent. Consistently with the notion that ERISA fiduciaries must be “prudent experts” (a phrase informally used by many ERISA practitioners when referring to ERISA fiduciaries), the Proposed Regulation highlights that fiduciaries must themselves understand the investment or must prudently engage qualified professionals to assist with evaluation and oversight.
The proposal includes 20 detailed examples illustrating how fiduciaries may satisfy these factors in practice.
Presumption of Prudence and Judicial Review
If the safe harbor process is satisfied, the fiduciary’s judgment is presumed reasonable. The DOL envisions courts applying a deferential, abuse‑of‑discretion‑type review, with plaintiffs bearing the burden of proof.
It is noted that, in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court rejected the doctrine it had previously adopted in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., and dramatically generally narrowed or possibly even eliminated the extent to which the courts need to defer to agency regulations in interpreting federal statutes. Anticipating questions about judicial authority, the DOL grounded the Proposed Regulation in Section 505 of ERISA and framed the Proposed Regulation as deserving of deference established by the Supreme Court in Skidmore v. Swift & Co, a pre-Loper Bright case under which an agency’s interpretation is entitled to deference by a court in proportion to its power to persuade.
Scope and Limitations
The Proposed Regulation would:
Apply only to the selection of designated investment alternatives.
Not apply to brokerage windows or self‑directed brokerage accounts.
Not address menu construction (which the DOL referred to as “curation”) or ongoing monitoring (although the DOL has signaled forthcoming guidance built on the same principles).
Not alter ERISA’s duty of loyalty or the prohibited‑transaction rules.
Practical Implications
If finalized as proposed and upheld by the courts, the Proposed Regulation would potentially, among other things:
Reduce litigation risk for fiduciaries that document a prudent selection process.
Encourage innovation in plan menus, particularly within professionally managed vehicles such as target-date funds and managed accounts.
Reaffirm fiduciary flexibility to consider alternative assets thoughtfully.
It should be noted that the Executive Order also called upon the Securities and Exchange Commission (the “SEC) to take action with respect to the definitions of accredited investor and qualified purchaser, but the SEC was not given a specific deadline to do so. It is possible that coordination with the SEC could be critical in addressing non-ERISA practical impediments to the use of alternative investments under participant-directed plans, and the Executive Order (which by its nature is at the presidential level), unlike certain previous DOL sub-regulatory guidance, expressly calls for inter-agency coordination in this context. Any SEC guidance would be issued separately, as would any companion guidance from the Department of the Treasury.
Conclusion
The Proposed Regulations represents a decisive shift back towards ERISA’s fundamental underlying principles: discretion, process, and deference. While legal challenges may well be likely, the Proposed Regulation, if finalized as proposed, would materially strengthen fiduciary confidence in making reasoned, well‑documented investment decisions and could meaningfully expand the range of prudent options available to retirement plan participants.
We will continue to monitor developments and provide updates as the rulemaking progresses. If you have any questions about the Proposed Regulation, or any questions about ERISA’s fiduciary provisions, please feel free to contact us.]]>by The Wagner Law Group<![CDATA[Updated United States Postal Service Rules May Affect Employee Benefits Filings]]>https://www.wagnerlawgroup.com/?p=678552026-02-17T17:15:35Z2026-02-17T17:15:35Z asonneberg<![CDATA[A Playbook on the IRS’s Final Regulations on the Roth Catch-Up Contribution Requirement under the SECURE 2.0 Act]]>https://www.wagnerlawgroup.com/?p=680272026-04-01T12:56:44Z2026-01-30T13:52:23ZA Playbook on the IRS’s Final Regulations on the Roth Catch-Up Contribution Requirement under the SECURE 2.0 Act - Marcia Wagner, Jon C. Schultze and Barry L. Salkin, 401(k) Advisor, January, 2026]]>by The Wagner Law Group<![CDATA[Major ERISA Reform Bill Moves Forward]]>https://www.wagnerlawgroup.com/?p=677382026-01-19T17:21:31Z2026-01-19T17:21:31ZProtecting Prudent Investment of Retirement Savings Act (H.R. 2988), which proposes substantial amendments to the Employee Retirement Income Security Act of 1974 (ERISA). If enacted, this legislation would significantly restrict the consideration of non‑pecuniary factors in retirement plan investing. That would include restrictions on the consideration of environmental, social, and governance (ESG)-related factors. It would also impose new nondiscrimination rules for service provider selection, tighten fiduciary obligations with respect to proxy voting, and require enhanced disclosures for brokerage windows. The bill restructures ERISA fiduciary obligations across four major divisions (detailed below), each targeting a different aspect of retirement plan governance.
Division A - Increase Retirement Earnings Act
This portion of the bill is aimed at limiting the use by retirement plan fiduciaries of non‑pecuniary factors in investment decisions, and would codify a strict pecuniary‑only standard for ERISA fiduciaries.
Key elements of this division include:
Fiduciaries must base investment decisions solely on pecuniary factors, defined as those expected to materially affect risk or return.
Non‑pecuniary factors may only be used as a tiebreaker, and only if the fiduciary documents why pecuniary factors were insufficient; a comparison of alternatives; and how the non‑pecuniary factor being considered aligns with plan participants’ financial interests.
ESG‑themed funds cannot be used as a Qualified Default Investment Alternative (QDIA) if their objectives incorporate non‑pecuniary goals.
This provision reverses Biden-era rules that permitted fiduciaries to consider ESG factors as part of a risk‑return analysis to be used as a tiebreaker when investments were otherwise equal.
This element of the bill would become effective 12 months after enactment and, notably, would significantly narrow the circumstances under which ESG considerations may be used by fiduciaries in plan investment decisions.
Division B - No Discrimination in My Benefits Act
This division of the bill amends ERISA by creating a new fiduciary duty requiring that plan fiduciaries select and retain service providers in accordance with ERISA’s fiduciary standards, and without regard to race, color, religion, sex, or national origin. It would serve to codify nondiscrimination principles governing service provider selection directly into ERISA’s fiduciary framework. The bill does not specify the effective date for this division.
Division C - Retirement Proxy Protection Act
This division sets new standards for retirement plan proxy voting and shareholder rights. It would impose detailed requirements on fiduciaries when exercising shareholder rights on behalf of plan participants and require that fiduciaries act solely in the economic interest of the plan when proxy voting.
The bill would require fiduciaries, when voting proxies, to consider costs, evaluate material facts, and maintain records of all proxy votes and related activities. In addition, fiduciaries would be required to prudently monitor investment managers and proxy advisory firms.
The bill introduces several safe-harbor proxy-voting policies, including voting only on proposals materially related to the issuer’s business, and not voting when plan assets invested in the issuer are below 5%.
The effective date for this provision is retroactive to January 1, 2026.
Division D - Providing Complete Information to Retirement Investors Act
The bill’s final provision amends ERISA to include new disclosure requirements for retirement plans that include a participant self-directed brokerage window. Pursuant to this new requirement, participants must be provided with and acknowledge a four‑part notice before directing investments into or out of a brokerage window.
First, the notice must warn that brokerage window investments are not selected or monitored by plan fiduciaries. It must also notify participants that such investments may involve higher fees, higher risk, and diminished returns. The notice must contain a graphical illustration showing projected balances at age 67 under 4%, 6% and 8% rates of return.
The bill also establishes a definition for the term “designated investment alterative” that specifically excludes brokerage windows, self-directed brokerage accounts and similar arrangements. This is consistent with existing Department of Labor guidance relating to that term.
This provision of the bill is to become effective January 1, 2027.
_________________________
While this bill did have limited bipartisan support in the House, a supermajority of 60 votes would likely be needed in the Senate to overcome a probable filibuster - a reality that makes it unlikely the bill will be enacted, at least in its current form. Consequently, we can expect the Department of Labor to continue active regulatory projects touching on ESG investing and proxy voting under ERISA. Each of these projects appears on the DOL’s semiannual regulatory agenda. The implications of this bill for retirement plan sponsors and other fiduciaries, however, are to expect heightened scrutiny of ESG‑related investment strategies, to prepare for expanded documentation requirements for investment decisions and proxy voting, and to review service provider selection processes for compliance with new nondiscrimination standards.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[Duress]]>https://www.wagnerlawgroup.com/?p=676142025-12-01T20:25:05Z2025-12-01T20:23:51ZDuress - Barry Salkin, Wolters Kluwer Benefits Law Journal, Winter 2025, Vol. 38, No. 4]]>by The Wagner Law Group<![CDATA[DOL Issues Guidance to Encourage Small Employers to Participate in Pooled Employer Plans (PEPs)]]>https://www.wagnerlawgroup.com/?p=680232026-04-22T15:32:06Z2025-10-30T13:41:28ZDOL Issues Guidance to Encourage Small Employers to Participate in Pooled Employer Plans (PEPs) - Marcia Wagner, Camille Castro, Barry L. Salkin and Stephen P. Wilkes, 401(k) Advisor, October, 2025]]>by The Wagner Law Group<![CDATA[Roth Catch-Up ‘Playbook’ Can Guide Advisers Through Compliance]]>https://www.wagnerlawgroup.com/?p=674502025-11-03T17:31:59Z2025-10-29T16:27:15ZRoth Catch-Up ‘Playbook’ Can Guide Advisers Through Compliance - Barry Salkin and Jon Schultze, planadviser, October 29, 2025 (PDF)]]>by The Wagner Law Group<![CDATA[Employer Provided Fertility Benefits: Has the Time Come?]]>https://www.wagnerlawgroup.com/?p=674462025-10-28T18:54:54Z2025-10-28T18:54:54ZIndependent Non-Coordinated Benefit
One type of excepted benefit is an independent non-coordinated benefit, which is a type of benefit provided in the group health insurance market. To qualify as an independent, non-coordinated benefit in the group market (i) the benefit must be provided under a separate policy, certificate or contract of insurance; (ii) there must be no coordination between the provision of such benefit and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and (iii) the benefit must be paid regarding an event whether or not benefits are provided for such event under any group health plan maintained by the same plan sponsor.
In the FAQs, the Agencies have indicated that an employer may offer fertility benefits as an independent non-coordinated excepted benefit. An independent non-coordinated benefit must be offered as a fully insured arrangement: it cannot be self-funded. As such, if an employer offers a group health plan and a specified disease or illness policy that covers fertility benefits, participants will not be required to enroll in the employer’s traditional group health plan for the specified disease or illness policy to qualify as an excepted benefit and generally be exempt from the requirements of the ACA.
An individual who is enrolled in fertility coverage provided under an independent non-coordinated excepted benefit is not disqualified from participating in a Health Savings Account, or HSA.
Limited Excepted Benefit
Another type of excepted benefit is a limited excepted benefit. This is the category under which dental and vision benefits are exempted from most ACA requirements. This category of benefit can be provided separately or in combination with other excepted benefits and can be either fully insured or self-funded. If fully insured, the limited benefit must be offered under a separate policy from the group health plan. A limited benefit must be limited in scope and must not be integrated into the employer’s primary health plan. It must be available to all similarly situated employees or members of the plan and must not be considered an integral part of the plan.
The FAQs allow fertility coverage to be provided as a limited excepted benefit. As such, the Agencies have indicated that a plan sponsor may offer an excepted benefit health reimbursement arrangement, or HRA, that reimburses an employee’s out of pocket costs for fertility benefits. The HRA must be entirely employer-paid, so there can be no employee premium for the coverage, and no employee cost-sharing for the benefit. There must be a dollar cap on the benefit paid: $2,150 for plan years beginning in 2025 and $2,200 for plan years beginning in 2026.
An employer may also offer benefits for fertility coaching, or for a fertility navigator service, to help employees and their dependents understand their fertility options. This assistance may be offered under an employee assistance plan, or EAP, that qualifies as a limited excepted benefit. An employee assistance plan must not provide significant medical benefits; a fertility benefit that consists of treatment for a fertility condition would be a medical benefit for purposes of evaluating the EAP’s compliance with this requirement. However, employers could offer treatment for a fertility condition under its group health plan and just offer coaching or a navigator service under its EAP while preserving the EAP’s limited excepted benefit status.
The Agencies stated that they intend to issue proposed regulations providing additional ways that certain fertility benefits may be offered as limited excepted benefits. They are also considering whether to modify the standards under which supplemental health insurance coverage provided by a group health plan, including a supplemental benefit for fertility coverage, will be considered as satisfying the conditions for an excepted benefit. For example, supplemental coverage excepted benefits currently are limited to 15% of the cost of the plan sponsor’s primary health care coverage, calculated in the same manner as COBRA premiums; the Agencies are considering whether that limitation should be increased.
As we move into open enrollment season, employers who are considering increasing coverage for fertility benefits for their employees should be aware of these changes and the possibility of more alternatives to come when designing their 2026 benefit programs. If you are considering increasing fertility benefits for employees, please contact one of the authors to explore the alternatives available for 2026 benefit programs.]]>by The Wagner Law Group<![CDATA[A Playbook on the IRS’s Final Regulations on the Roth Catch-Up Contribution Requirement Under the SECURE 2.0 Act]]>https://www.wagnerlawgroup.com/?p=673862025-10-09T12:10:33Z2025-10-09T11:41:25ZBy Jon Schultze and Barry Salkin
On September 16, 2025, the Internal Revenue Service (“IRS”) issued final regulations providing guidance on changes made by the SECURE 2.0 Act of 2022 to the catch-up contribution provisions of the Internal Revenue Code (“Code”). Under the “Roth catch-up contribution requirement,” catch-up contributions made by plan participants with FICA wages greater than $145,000 (as indexed beginning in 2026) in the preceding calendar year must be made as designated Roth catch-up contributions. The IRS issued proposed regulations in January 2025; the final regulations, as explained in the preamble, provide plans with more flexibility than the proposed regulations in certain respects.
The Roth catch-up contribution requirement is extremely complicated, and plan sponsors will need to carefully coordinate their compliance with their internal resources, payroll provider and the plan’s recordkeeper.
Applicable Employer Plans. The Roth catch-up contribution requirement applies to Code section 401(k) plans, 403(b) plans and eligible governmental 457(b) plans. The requirement does not apply to SEP arrangements, SIMPLE IRA plans, certain governmental 457(b) plans and tax-exempt 457(b) plans.
Applicability Dates. The applicability date of the final regulations depends on the plan:
For plans that are not maintained pursuant to collective bargaining agreements and are not eligible governmental 457(b) plans, the final regulations are effective January 1, 2027.
For plans maintained under one or more collective bargaining agreements, the final regulations apply with respect to contributions in taxable years beginning after the later of the first taxable year beginning after December 31, 2026, or the first taxable year that begins after the expiration date (without regard to any extension) of the last collective bargaining agreement related to the plan in effect on December 31, 2025.
For governmental 457(b) plans, the final regulations apply with respect to contributions in the later of the first taxable year beginning after December 31, 2026, or the first taxable year beginning after the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2025.
The SECURE 2.0 Act originally made the Roth catch-up contribution requirement effective January 1, 2024, but the IRS provided a two-year “transition period” through the end of 2025. The IRS has not extended the transition period. Thus, beginning on January 1, 2026, plans must apply a reasonable, good faith interpretation standard to implement the Roth catch-up contribution requirement until the applicable date by which the plan must comply with the final regulations. Compliance with the final regulations is presumably reasonable good faith compliance, and taking a position that the IRS rejected in the preamble in response to comments would likely be regarded by the IRS as not constituting a reasonable good faith interpretation.
Affected Participants. The Roth catch-up contribution requirement applies to participants:
who are catch-up eligible, i.e., attain or have attained age 50 during a calendar year (not the plan year);
whose FICA wages from the employer in the preceding calendar year exceeded $145,000, as indexed; and
who make salary deferrals that exceed either the Code section 402(g) limit (the “salary deferral dollar limit”), as indexed ($23,500 for 2025), or a comparable limitation or restriction included in the terms of the plan.
The final regulations make several important clarifications regarding the determination of affected participants’ FICA wages.
“FICA wages” are wages for purposes of Social Security taxation as reported in Box 3 of Form W-2. A participant who does not have FICA wages, such as a partner with self-employment income or an employee of an exempt state or local government, will not be subject to the Roth catch-up requirement.
The FICA wage dollar amount is not pro-rated for an employee’s partial year of employment. Thus, for example, an employee who is hired on October 1 at a $200,000 salary will not be subject to the Roth catch-up requirement in the following year because the employee’s FICA wages will total only $50,000 for the calendar year.
The relevant employer is the common law employer of the plan participant. The proposed regulations did not allow FICA wages paid by multiple members of the same controlled group or affiliated service group to be aggregated, even if the group uses a common paymaster (a common paymaster simplifies FICA withholding and reporting for compensation paid by multiple entities). In response to comments received by the IRS, the final regulations allow a plan to aggregate the FICA wages a participant receives from all employers in a controlled group and/or where a common paymaster is used.
Deemed Elections. A plan may provide that an election by a participant subject to the Roth catch-up contribution requirement to make catch-up contributions on a pre-tax basis will be treated as a deemed election to make catch-up contributions as designated Roth catch-up contributions. If a plan will apply deemed elections, the plan document must provide for them and must permit participants to change their deemed elections. For example, a participant who has reached the salary deferral dollar limit with pre-tax dollars can elect to discontinue making catch-up contributions that would otherwise have to be made as Roth contributions. Additionally, a plan must cease to apply a deemed election if an employee is not subject to, or ceases to be subject to, the Roth catch-up requirement, such as when an employee’s FICA wages for the preceding year are determined not to exceed the Roth catch-up threshold or the employee changes employers during the year and remains covered under the same plan. Catch-up contributions that were designated as Roth catch-up contributions pursuant to a deemed election do not need to be recharacterized as pre-tax catch-up contributions.
When Requirement Applies. Different requirements apply to plans that use deemed Roth elections and plans that have separate elections.
For plans using deemed Roth elections, the final regulations provide two methods for determining when the deemed Roth election will be implemented:
When pre-tax salary deferrals reach the salary deferral dollar limit. Because catch-up contributions are made after a participant reaches the salary deferral dollar limit, a plan can count designated Roth contributions made at any point during the year toward the Roth catch-up requirement even if the designated Roth contributions are made before the participant reaches the salary deferral dollar limit, i.e., before the participant’s salary deferrals are made as catch-up contributions. Thus, a participant subject to the Roth catch-up contribution requirement who makes pre-tax salary deferrals during a year that do not exceed the salary deferral dollar limit might not need to have catch-up contributions deemed to be Roth catch-up contributions instead of pre-tax catch-up contributions.
When pre-tax and Roth salary deferrals reach the salary deferral dollar limit. This method, added to the final regulations in response to comments, allows a plan to apply the deemed election when a participant’s total salary deferrals reach the salary deferral dollar limit regardless of whether a portion of the salary deferrals were made as Roth contributions. The plan must permit a participant to make a new election that is different from the deemed election, which can allow such a participant to make additional pre-tax catch-up deferrals, taking into account the designated Roth contributions made earlier in the year, if they are less than the salary deferral dollar limit.
For plans using separate elections, i.e., that do not continue salary deferrals that exceed the salary deferral dollar limit and require participants to make a separate catch-up contribution election, a plan may apply a separate-election deemed Roth catch-up election to a participant’s salary deferrals that the participant elects to treat as catch-up contributions, including separate election plans that make catch-up contributions concurrent with salary deferral contributions. The plan must permit a participant to make a new election different from the deemed election.
One comment suggested that a plan should be permitted to require that all participants’ catch-up contributions be made as designated Roth contributions to avoid the administrative complexity. The final regulations do not include such a rule because, as the IRS explains, participants must be permitted to make pre-tax salary deferrals in order to designate pre-tax salary deferrals as designated Roth contributions. Thus, participants who are not subject to the Roth catch-up contribution requirement would be unable to make pre-tax catch-up contributions as is required under the Code. However, a plan sponsor could remove a catch-up contribution provision from a plan.
Coordination With Other Rules. The IRS also explained how the final regulations relate to other catch-up contribution rules:
Super catch-up contributions made by participants who attain age 60 to 63 during a calendar year are subject to the Roth catch-up contribution requirement.
Special 15-year catch-up contributions to 403(b) plans are not subject to the Roth catch-up contribution requirement. If a participant is eligible to make special 15-year 403(b) plan catch-up contributions and age 50 catch-up contributions, the special 15-year 403(b) plan catch-up contributions may be pre-tax, and any age 50 catch-up contributions would be subject to the Roth catch-up contribution requirement.
Special catch-up contributions to 457(b) plans during the last three years prior to retirement age are not subject to the Roth catch-up contribution requirement. If a participant is eligible to make special pre-retirement 457(b) plan catch-up contributions and age 50 catch-up contributions, the special pre-retirement 457(b) plan catch-up contributions may be pre-tax, and any age 50 catch-up contributions would be subject to the Roth catch-up contribution requirement.
For dual qualified plans, i.e., plans that are qualified under both the Internal Revenue Code and the Puerto Rico Code, the final regulations treat the Roth catch-up contribution requirement for participants subject to the Puerto Rico Code as satisfied for taxable years that begin before the effective date of any future amendment to the Puerto Rico Code that provides for designated Roth contributions.
Correcting failures. The final regulations clarify the correction methods that may be used if participants subject to the Roth catch-up requirement make pre-tax salary deferrals that exceed an applicable limit. The final regulations describe several methods of correction.
Form W-2 correction method. The excess pre-tax amount, adjusted for earnings, is transferred from the participant’s pre-tax deferral account to the participant’s designated Roth account, and the participant’s Form W-2 includes the transferred pre-tax deferral amount as a designated Roth contribution. This correction method cannot be used if the participant’s Form W-2 has already been filed or furnished to the participant, limiting its usefulness for corrections occurring after January 31; thus, if all or a portion of a participant’s pre-tax deferrals are recharacterized as catch-up contributions to correct an ADP test failure, it will generally be too late to use the Form W-2 correction method.
In-plan Roth rollover correction method. The plan can directly roll over the excess pre-tax amount, adjusted for earnings, to the Participant’s designated Roth account, and the amount rolled over is reported on a Form 1099-R for the year of the correction. The contribution and earnings would be includible in the participant’s gross income in the year of the rollover. A plan can use this correction method even if the plan does not permit participant in-plan Roth rollover contributions because the rollover is made by the plan administrator to correct an operational failure and not by the participant.
Distribution method. The plan can distribute the pre-tax catch-up contribution, adjusted for applicable earnings, that was required to be a designated Roth catch-up contribution as an excess contribution.
The advantage of both the Form W-2 correction method and the in-plan rollover correction method is that the incorrect catch-up contributions can remain in the plan. However, these correction methods can only be used if the plan provides for a deemed Roth catch-up election; otherwise, the incorrectly made catch-up contributions would have to be distributed from the plan.
If the amount transferred under the Form W-2 correction method or directly rolled over under the in-plan Roth rollover correction method is the first contribution to a participant’s designated Roth account, the five-taxable-year period begins with the taxable year for which the amount is includible in the participant’s gross income.
The deadline to make correction is the last day of the taxable year following the year for which the catch-up contribution was made. However, if the correction is made after the deadline to correct the type of salary deferral failure that occurred, the consequences of not making a timely correction still apply to the catch-up contributions. The types of failures that may occur generally are:
If a pre-tax salary deferral is a catch-up contribution because it exceeds the salary deferral contribution limit, the deadline to make a correction is April 15 of the calendar year following the calendar year in which the salary deferral was made.
If a pre-tax salary deferral is a catch-up contribution because the participant’s annual additions would otherwise exceed the Code section 415 limit, the deadline to make a correction is the deadline under the Code section 415 regulations for allocating amounts for the limitation year for which the salary deferral was made.
If a pre-tax salary deferral is a catch-up contribution due to an ADP test failure, the deadline to make a correction is the date that is 2-1/2 months (six months for a plan that includes an eligible automatic contribution arrangement) after the close of the plan year for which the excess contribution was made. This deadline would also apply to correct a pre-tax catch-up contribution that is a catch-up contribution because it exceeds an employer-provided plan limit.
Thus, a plan may have different correction deadlines depending on each participant’s particular situation, but the same correction method is required for similarly-situated individuals.
Correction is not required under two circumstances:
The amount of the pre-tax salary deferrals that should have been designated Roth catch-up contributions does not exceed $250.
The employee’s FICA wages are determined to exceed the applicable threshold on account of adjustments made after the applicable correction deadline.
Amendment Deadlines. Plan sponsors will need to amend their plan documents to reflect the manner in which the final regulations were implemented. The deadlines to adopt amendments for these changes depends on the plan:
The amendment deadline is generally December 31, 2026.
Plans maintained pursuant to one or more collective-bargaining agreements must be amended by December 31, 2028.
Governmental plans must generally be amended by December 31, 2029.
The final regulations also clarify that an amendment that applies mid-year is not a prohibited change to a safe harbor plan as described in Notice 2016-16.
* * * * *
This Article addresses issues under the final regulations that will affect a majority of plans. We have not explained every issue under the final regulations which, in many cases, apply to a smaller group of plans. Plan sponsors should seek legal advice regarding their good faith compliance with the new requirements. The Wagner Law Group would be happy to provide guidance on these requirements.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2023/04/Jon-Sc.jpg[/author_image] [author_info]Jon Schultze focuses on Employee Benefits and ERISA.Jon oversees the firm's qualified retirement plan area, which includes ensuring that our clients' retirement plans conform to legal requirements.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[Department of Labor Supports Employers in Forfeiture Allocation Litigation]]>https://www.wagnerlawgroup.com/?p=680182026-03-31T21:32:42Z2025-09-30T13:35:08ZDepartment of Labor Supports Employers in Forfeiture Allocation Litigation - Marcia Wagner, Barry L. Salkin and Stephen P. Wilkes, 401(k) Advisor, September, 2025]]>by The Wagner Law Group<![CDATA[DOL Issues Guidance to Encourage Small Employers to Participate in Pooled Employer Plans (“PEPs”)]]>https://www.wagnerlawgroup.com/?p=672472025-07-30T20:12:00Z2025-07-30T20:12:00ZDelivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis, issued on January 20, 2025, the DOL issued guidance on July 28th on PEPS and a request for information with respect to PEPs. Unlike some agency requests for information and comments, the request was not neutral in tone or content. It was unnecessary to proceed past the title of the document - “Pooled Employer Plans: Big Plans for Small Employers” - to draw that conclusion. Its limited, although important, guidance on minimizing potential fiduciary liability for plan sponsors was intended to help small employers select high-quality, low-cost PEPs. The White House and DOL clearly see PEPs as a way to save money, especially when the savings are compounded over the long period of time that is normally associated with retirement plan operations.
The document detailed the statutory provisions governing PEPs, and then described the current PEP market, based on Form 5500 filings. It then provided interpretive guidance for investment selection and management, as participating employers in PEPs have a fiduciary obligation with respect to both the selection and monitoring of pooled plan providers, as well as the statutory responsibility for the investment of plan assets attributable to its employees. However, the terms of the PEP may grant the pooled plan provider, a named fiduciary under the plan, the authority to delegate investment and management responsibilities to another fiduciary, such as an investment manager described in section 3(38) of ERISA. If the pooled plan provider takes such action, it must prudently select the fiduciary and monitor the selection. In the DOL’s view, this “common sense” arrangement minimizes participating employers’ fiduciary liability risk, if the pooled plan provider, as named fiduciary, expressly assumed full responsibility for and exercised sole discretion and judgment in selecting and retaining the manager, and “did not attempt to reduce its responsibility by relying on the authorization or ratification for the selection and retention, such as an adhesive participation agreement.” Participating employers must still prudently monitor the pooled plan provider.
It next provided fiduciary tips for small employers selecting a PEP, advising them on issues and questions that should be addressed, such as the experience and qualifications of the pooled plan provider, fees and expenses under the PEP, potential fiduciary liability both in joining the plan and with respect to plan investments, available investment options under the plan, and understanding the implications of exiting the plan. It then posed a series of questions for public response as part of the DOL’s examination of whether additional PEP-related guidance is needed. The DOL indicated that it was considering a regulatory safe harbor option for small businesses, based upon its limited guidance on minimizing fiduciary liability with respect to plan investments and its fiduciary tips, and asked for public input on considerations related to such a safe harbor. The document also raised questions about the need for a prohibited transaction exemption, including a prohibited transaction exemption for the pooled plan provider. Public comments to these questions are due no later than September 29.
Occasionally an agency will request and receive comments on an issue, and no further action is taken. It is highly unlikely that will be the case in this instance. This matter is an important initiative for the Trump Administration, and the DOL will be elaborating on this request for guidance and comments in the future. We will keep you informed.]]>by The Wagner Law Group<![CDATA[DOL Supports Employers in Forfeiture Allocation Litigation]]>https://www.wagnerlawgroup.com/?p=671172025-07-16T14:09:42Z2025-07-16T14:09:42Zby The Wagner Law Group<![CDATA[Important Provisions Impacting Businesses in The One, Big, Beautiful Bill]]>https://www.wagnerlawgroup.com/?p=671012025-07-16T14:25:24Z2025-07-14T16:02:36ZPaid Family & Medical Leave Credit
The OBBB permanently extends the TCJA-provided temporary tax credit limited to certain qualifying wages for paid leave and increases the creditable amount to 12.5–25% of paid leave wages or insurance premiums. It also provides for a reduced employee tenure requirement, from 12 months to six months. Generally, to qualify for the credit, a written family leave policy is required. Family leave benefits that are mandated by state or local law or paid for by state or local government are not eligible for the credit. An employer cannot take a business deduction for the cost of insurance premiums and also claim the credit.
Childcare Credit & DCAP Expansion
Under The OBBB, the childcare facility expense credit for employers is increased to 40% of expenses up to $500,000, or 50% up to $600,000 (for small employers), a drastic increase from the prior credit of 25% (up to $150,000). The new law also allows for third-party provider pooling and aggregator participation. In addition, the employee Dependent Care Assistance Program (DCAP) limits are increased to $7,500 (for joint filers) and $3,750 (for single filers) per year, respectively, from $5,000 and $2,500.
Health Savings Accounts (HSAs)
Under The OBBB, ACA Bronze/catastrophic plans will qualify as High-Deductible Health Plans (HDHPs). The new law also provides that HSAs may be used to pay for Direct Primary Care (DPC) services up to $150/month for individuals and $300 for families. Finally, The OBBB makes permanent the safe harbor, originally put in place under the CARES Act in response to COVID-19, allowing pre-deductible coverage of telehealth and remote-care services under HDHPs without disqualifying HSA eligibility.
Student Loan Repayment Benefit
The TCJA provision allowing employer student loan repayments to be excluded from employee income (up to $5,250/year), set to expire after 2025, has been made permanent under The OBBB, with indexing for inflation beginning in 2027.
Fringe Benefits
Since 2009, employers were permitted to offer a tax-free reimbursement of up to $20 per month for bicycle commuting expenses (purchase, repair, storage). This benefit, however, was suspended by the TCJA through 2025 and has now been permanently repealed under The OBBB for civilian employers.
Under the TCJA, the moving expense benefit deduction and income exclusion were suspended through 2025, except with respect to active-duty military. The OBBB permanently repeals the non-military moving expense benefits deduction and the exclusion from taxable wages.
Executive Compensation
Under prior law, executive compensation over $1 million per covered employee was non-deductible under Internal Revenue Code (IRC) § 162, but applied separately to each employer within a controlled group. Under The OBBB, compensation is aggregated across all members of a controlled group of employers, applying a global $1 million deduction cap.
Qualified Small Business Stock (QSBS)
Under The OBBB, the exclusion of gain from the sale of QSBS, is significantly enhanced for stock acquired after the bill’s enactment. These enhancements include:
Tiered Holding Periods: Instead of the current flat five-year requirement for a full 100% gain exclusion, The OBBB introduces a phased-in schedule: 50% exclusion after three years of holding; 75% exclusion after four years; and, 100% exclusion after five years.
Increased Exclusion Cap: The per-stockholder-per-issuer gain exclusion cap rises from $10 million to $15 million, with indexing beginning in 2027.
Higher Gross Asset Threshold: The qualifying corporation size limit increases from $50 million to $75 million, also with inflation indexation starting in 2027, thereby including more companies in the QSBS benefit.
Full Expensing of Research and Development Expenses
Domestic R&D expenditures incurred between January 1, 2025, and December 31, 2029, may now be deducted immediately. Retroactive relief is available for small businesses with average gross receipts of $31 million or less over the prior three years. Foreign R&D expenses remain subject to amortization over 15 years. Previously, under the TCJA, domestic research expenditures generally had to be amortized over five years (and 15 years for foreign research expenses).
Permanent 100% Bonus Depreciation
Bonus depreciation is a tax incentive that allows businesses to deduct a significant percentage (often 100%) of the cost of certain qualified property in the year the property is placed in service, rather than depreciating it gradually over the asset’s useful life. The OBBB reinstates and makes permanent 100% depreciation for qualified property placed in service from January 19, 2025, forward. Prior to enactment of The OBBB, bonus depreciation was in a scheduled phase-down post-2022 (80% in 2024 down to zero in 2027).
Business Interest Expense Limitation
Calculation of the business interest expense limitation, which limits the amount of business interest expense that a taxpayer can deduct in a given taxable year, has reverted to the more lenient “Earnings Before Interest, Taxes, Depreciation, and Amortization” standard for tax years beginning in 2025. Prior to the enactment of The OBBB (since 2022), the interest limitation was calculated using a more stringent “Earnings Before Interest, Taxes” standard, which tightened allowable interest deductions. The definition of business interest expense has been modified to include certain capitalized interest.
Enhanced §179 Expensing Cap
Internal Revenue Code § 179 allows businesses to immediately expense the full purchase price of certain qualifying property, rather than recovering the cost over time through regular depreciation. It is a tax election, not automatic, and is often used by small and medium-sized businesses to accelerate cost recovery and reduce taxable income in the year that property is placed in service. The OBBB increases the expensing limit to $2.5 million, with a phase-out at $4 million, and both are indexed for inflation starting in 2025. Under prior law, there was a $1.25 million cap with a $3.12 million phase-out limit, without adjustment for inflation.
Optional 100% Expensing for Qualified Production Property
Qualified Production Property (QPP) refers to a specific category of tangible property that is used in domestic manufacturing or industrial production activities. This category was expanded and specially designated under The OBBB to encourage U.S.-based industrial investment. The OBBB introduces QPP as a new tax classification designed to target strategic sectors, particularly those tied to manufacturing, advanced technology, national security, and critical supply chain resilience. QPP includes manufacturing equipment, industrial machinery, robotic systems, assembly-line components, and production-related software and control systems (if integrated into tangible assets). Specifically excluded from being categorized as QPP are real estate, office equipment not used in production, general-purpose vehicles and non-depreciable property. The OBBB introduces a new and elective 100% expensing regime for Qualified Production Property, separate and distinct from IRC § 179 expensing and bonus depreciation. Under prior law, similar production property expenses would generally only qualify for bonus depreciation or Modified Accelerated Cost Recovery System (MACRS) depreciation over 3–20 years, depending on asset class. The Qualified Production Property must either be property the construction of which began after January 19, 2025 and before January 1, 2029, or property acquired after January 19, 2025.
Permanent Pass-Through (Qualified Business Income) Deduction
The OBBB permanently extends the deduction for Qualified Business Income (QBI) at the existing 20% rate, which under the TCJA was set to expire at the end of 2025. A proposed increase of the rate to 23% was not included in The OBBB. QBI is certain domestic business income earned by pass-through entities, including sole proprietorships, partnerships, S corporations and some trusts and estates. There is a minimum deduction of $400 for entities with QBI of at least $1,000 and the phase-in limit amounts were increased from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for joint filers.
Permanent Excess Business Loss Limitation
The Excess Business Loss Limitation limits the ability of noncorporate taxpayers (such as individuals, trusts, and estates) to deduct business losses in excess of certain thresholds ($313,000 in 2025) against their nonbusiness income (e.g., wages, interest, dividends, or capital gains). The OBBB repeals the sunset provision for the excess business loss limitation, amends IRC § 461(l) to make the rule permanent for tax years beginning after December 31, 2025, and provides that any disallowed losses are carried forward as net operating losses. In addition, The OBBB codifies technical clarifications from prior IRS guidance, including: the requirement to aggregate all trade or business income and deductions from pass-through entities owned by the taxpayer; and the application of the limit at the individual level (even if losses are passed through from multiple sources).
Enhanced Opportunity Zones
Opportunity Zones are census tracts nominated by states and certified by the U.S. Treasury as low-income communities. The law provides preferential capital gains tax treatment for investments in Opportunity Zones made through Qualified Opportunity Funds (QOFs), designed to spur long-term private investment in economically distressed communities. The OBBB enacts a significant extension and expansion of the Opportunity Zone program, including the extension of the capital gains deferral period from December 31, 2026, to December 31, 2029, and the reinstatement of the 10% basis increase for investments made before December 31, 2026, and held for at least five years (note that the 15% step-up for seven-year holds was not reinstated). The OBBB also authorizes states to designate new Opportunity Zones in 2026, based on updated census and economic data and incorporates reforms to enhance oversight and accountability. The types of businesses excluded from Qualified Opportunity Zone eligibility (“sin businesses”) have also been expanded under The OBBB.
Form 1099 & 1099-K Reporting Thresholds
The OBBB restores the pre‑2021 de minimis threshold for filing Forms 1099. As a result, Forms 1099-K (for third-party network transactions, e.g., Venmo, PayPal) are required only if payments exceed both $20,000 and 200 transactions per payee in a calendar year. The prior threshold for 1099‑K issuance by payment platforms had been reduced to amounts exceeding $600 in aggregate payments, with no transaction minimum.
The OBBB also addresses the threshold for Forms 1099‑NEC and 1099‑MISC (for purposes of business payments reporting) by increasing the reporting threshold to $2,000 per payee per year, indexed for inflation after 2026, effective for payments made after December 31, 2025. Prior to The OBBB, business payments of $600 or more to a non‑employee (e.g., independent contractor, rent, legal services) triggered the requirement to issue a Form 1099‑NEC or 1099‑MISC.
The OBBB mandates new 1099-style reporting to support emerging deductions including tip deductions (not taxed up to designated limit), overtime pay deductions, car loan interest deductions, and excise-taxed remittances.
Tip Income
The tip income provisions in The OBBB introduce critical changes to both the reporting and the deduction of tip income for employees in the service industries in which workers are customarily and regularly tipped, an issue with respect to which the IRS will need to issue guidance, aiming to improve tax compliance, increase tax benefits for individual earners, and provide more relief for employers in tip-heavy sectors. Tips are restricted to cash tips, so the IRS will need to confirm that credit card payments and payments in apps constitute cash tips. Payroll taxes are unaffected by the tip income provisions of The OBBB. The tip income exclusions are temporary and expire at the end of 2028.
The OBBB requires employers to track and report tip income as part of wages for payroll tax purposes, ensuring accurate tax remittance. Employers are also granted a 100% deduction for the tips they report, provided they are properly documented and paid to employees. This allows employers to offset payroll taxes related to tip income.
Additionally, under The OBBB, individual employees who receive tip income are provided a new above-the-line deduction from gross income of up to 10% of their reported tips, designed to cover expenses typically incurred by tip earners, such as personal clothing, travel, or business-related costs (not reimbursed by the employer). This new deduction comes with a cap and phase-down:
The tip income deduction is capped at $5,000 annually per individual, regardless of the total amount of tips reported.
For individuals with modified adjusted gross income (MAGI) above $100,000 (single filers) or $200,000 (joint filers), the tip income deduction will phase down gradually.
The deduction begins to phase out for MAGI above these thresholds and is completely eliminated once MAGI reaches $150,000 (single) or $300,000 (joint).
The OBBB also expands the tip credit under the Fair Labor Standards Act (FLSA), allowing service industry employers to apply a larger portion of tips toward meeting the federal minimum wage. This credit is phased out for employers with gross receipts over $5 million, in line with a gradual increase in the federal minimum wage.
Overtime Pay
Under The OBBB qualifying workers can temporarily (until 2028) deduct premium pay received for overtime from their gross income. This deduction is capped at $12,500 per employee, for single filers, or $25,000 for joint filers. For those with modified adjusted gross incomes (MAGI) exceeding $150,000 (or $300,000 for joint filers), however, the deduction is gradually phased out—reduced by $100 for every $1,000 of MAGI.
The deduction is limited to the premium portion (i.e., the amount paid above an employee’s standard hourly rate) of overtime pay. This deduction applies only to the mandatory premium pay under Section 7 of the Fair Labor Standards Act. Overtime pay that exceeds federal requirements due to state laws or union contracts does not qualify for the deduction.
Employers must now separately report qualified overtime compensation on Form W-2. Starting with tax years after December 31, 2025, withholding procedures will be updated to reflect this deduction. For the 2025 tax year, a transition rule under The OBBB allows employers to use any reasonable IRS-approved method to estimate and account for qualified overtime compensation separately. Employers should monitor IRS updates for additional guidance on this reporting and deduction process.
Charitable Contribution Deductibility
The OBBB includes several provisions affecting the deductibility of charitable contributions. Under The OBBB, corporations can deduct only those charitable contributions exceeding 1% of their taxable income beginning with tax years after December 31, 2025 - the 10% cap on deductions remains in place. While corporate contributions exceeding the 10% ceiling can continue to be carried forward for five years, amounts disallowed due to the new 1% floor can only be carried forward if the aggregate corporate contributions exceed 10% of taxable income, including the disallowed amounts. For tax years beginning after December 31, 2025, non-itemizing taxpayers may deduct cash contributions up to $1,000 (single) or $2,000 (joint), but contributions to donor-advised funds are not eligible for deduction. A similar provision was in effect during the pandemic, permitting $300 above-the-line charitable deductions.
The OBBB also provides that itemizing individuals may only deduct contributions to the extent that their qualified contributions exceed 0.5% of their adjusted gross income (AGI). In addition, the TCJA’s temporary increase in the AGI limit for cash contributions to public charities (from 50% to 60%) is made permanent under The OBBB. For high-income donors in the top tax bracket, the value of itemized deductions is reduced, now capped at 35% instead of 37%. As a result, a $1,000 charitable contribution results in a $350 deduction, rather than a $370 deduction. Beginning in 2027, a tax credit of up to $1,700 is available for cash gifts to eligible scholarship-granting organizations, which cannot also be claimed as a charitable contribution. Under The OBBB, the federal estate and gift tax exemption increases to $15 million in 2026 (adjusted for inflation thereafter), and university endowments face a new tiered tax on investment earnings.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[An ERISA Journey for ESG via American Airlines By Way of Utah?]]>https://www.wagnerlawgroup.com/?p=680032026-03-30T21:15:51Z2025-05-30T20:59:24ZAn ERISA Journey for ESG via American Airlines By Way of Utah? - Marcia Wagner, Andrew Oringer, Barry Salkin, Jon Schultze, and Ari Sonneberg, 401(k) Advisor, May, 2025]]>by The Wagner Law Group<![CDATA[Letter to Court Indicates Trump Administration Intent to Upend 2022 DOL Final Rule]]>https://www.wagnerlawgroup.com/?p=665082025-05-29T18:52:04Z2025-05-29T18:52:04Zby Ari Sonneberg and Barry Salkin
On the heels of the Department of Labor’s announcement that it is rescinding the Biden Administration DOL guidance cautioning 401(k) plan sponsors from offering cryptocurrency investment options to plan participants, the Trump Administration has indicated that it will also take action to rescind the final rule issued by the DOL in 2022 providing that fiduciaries can consider environmental, social and governance (ESG) factors, as well as other collateral benefits in making retirement plan investment decisions.
In a May 28th letter submitted to the Clerk of Court for the U.S. Court of Appeals for the Fifth Circuit (the “Court”), Trump Administration attorney Daniel Winik informed the Court that the administration intends to engage in rulemaking, set to appear on the DOL’s spring regulatory agenda, in relation to the 2022 final rule. The letter was sent in connection with the pending challenge to the 2022 final rule in the case of State of Utah v. Chavez-DeRemer, Docket No. 23-11097 (5th Cir. Oct 30, 2023). The DOL had requested an indefinite extension of time from the court to consider what action it should take with respect to the 2022 final rule, but the Fifth Circuit rejected that request. It is not clear whether the DOL intends to rescind the 2022 final rule and restore the rule from the first Trump Administration, or to issue a new rule.
There are currently several active lawsuits by retirement plan participants alleging breach of fiduciary duty by plan sponsors for losses related to investment decisions made in consideration of ESG factors. Perhaps most notably, Spence v. American Airlines, Inc., et al, Docket No. 4:2023cv00552 - Document 143 (N.D. Tex. 2024), in which plaintiffs alleged that plan fiduciaries violated their duties of prudence and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA), by including in the plan funds managed by its primary investment manager that pursued non-financial and non-pecuniary ESG policy goals by way of proxy voting and shareholder activism. The District Court in American Airlines found that while the duty of prudence was not violated because the conduct of the fiduciaries at least met current industry standards, the duty of loyalty had been breached. The case is currently in the damages phase.
Earlier this year, we wrote a Law Alert (available here) discussing the recent rocky history of the concept of considering ESG factors in retirement plan investment decision making. That alert discussed in detail the first Trump Administration final rule that, while not explicitly mentioning ESG, required fiduciaries to justify any decision to take into account non-pecuniary factors in choosing plan investments, as well as the ensuing Biden Administration final rule that deemed ESG factors as just another set of considerations for fiduciaries, no different from pecuniary considerations, and removed the procedural requirements surrounding the consideration of ancillary investment-related factors found in the prior Trump final rule. As the political tides turned, so now, again, has the fate of DOL regulation related to the consideration of ESG factors by fiduciaries in retirement plan investments. Ultimately, however, ERISA’s requirement that fiduciaries act in the best interest of plan participants remains constant, and the results of pending litigation in this area may be the arbiter of how plan fiduciaries approach the consideration of ESG and other ancillary factors in selecting retirement plan investments.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[DOL Rescinds Biden Administration Guidance on 401(k) Cryptocurrency Investment]]>https://www.wagnerlawgroup.com/?p=665012025-05-29T14:15:52Z2025-05-28T17:05:33ZBy Ari Sonneberg and Barry Salkin
Today, the Department of Labor’s Employee Benefits Security Administration issued Compliance Assistance Release No. 2025-01, effectively rescinding Compliance Assistance Release No. 2022-01 (the “2022 Release”), issued under the Biden Administration, concerning 401(k) plan investments in cryptocurrencies. The 2022 Release cautioned plan sponsors against offering cryptocurrencies as an investment option to 401(k) plan participants.
Specifically, the 2022 Release advised plan sponsors to use “extreme care” before offering cryptocurrencies as part of a 401(k) plan’s investment options. Today’s Release notes that, while the fiduciary duty established under the Employee Retirement Income Security Act of 1974 (ERISA) requires that plan fiduciaries act solely in the interest of plan participants, “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims,” it does not impose the standard of “extreme care” that the 2022 Release sought to impose. Today’s Release further states that the recission of the 2022 release should be taken as an indication that the DOL is taking a neutral approach (similar to that historically taken by the DOL) to particular investment types and strategies that might be utilized by plan sponsors, and that it does not endorse or oppose the decision of any plan sponsor choosing to offer cryptocurrencies as an investment option in its 401(k) plan.
While the 2022 Release did not have the force of law, it clearly had a chilling effect on the addition of cryptocurrencies and other digital assets to a 401(k) plan’s investment platform or availability under a brokerage window. Plan fiduciaries who had been reluctant to consider adding cryptocurrency as an investment option in light of the DOL’s 2022 guidance may now wish to consider whether the addition of a cryptocurrency investment option in some form would be consistent with their fiduciary obligations under the plan. As always, we advise plan sponsors to carefully weigh the risks and benefits of any investment option offered to plan participants.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[Department of Labor Updates Voluntary Fiduciary Correction Program]]>https://www.wagnerlawgroup.com/?p=679932026-03-30T20:40:16Z2025-03-30T20:30:58ZDepartment of Labor Updates Voluntary Fiduciary Correction Program - Marcia Wagner, Barry L. Salkin, Seth F. Gaudreau and Stephen P. Wilkes, 401(k) Advisor, March, 2025]]>by The Wagner Law Group<![CDATA[An ERISA Journey for ESG Via American Airlines by Way of Utah?]]>https://www.wagnerlawgroup.com/?p=661152025-03-04T20:01:10Z2025-03-03T15:11:57ZBy Andrew Oringer, Barry Salkin, Jon Schultze and Ari Sonneberg
Both supporters and opponents of the consideration of environmental, social and governance (“ESG”) goals can point to decisions by U.S. district courts in 2025 that are consistent with their positions on the permissibility of ESG-motivated investing in plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Supporters of the consideration of ESG factors may point to State of Utah v. Micone which upheld the validity of the approach of the U.S. Department of Labor (the “DOL”) established in 2022 to the so-called “tiebreaker” approach under ERISA’s general fiduciary rules. Opponents of ESG-motivated investing may cite to Spence v American Airlines, finding that the defendants breached their duty of loyalty in how they handled proxy voting by the plan’s investment manager in support of ESG activities that allegedly focused on factors other than the financial interests of plan participants and beneficiaries.
However, even though the two cases involve many of the same underlying legal principles, they did so in very different legal contexts. As discussed below, it may well be the private litigation, rather than the litigation determining the legitimacy of the DOL’s regulation, that will have the greater practical impact on future fiduciary conduct.
BACKGROUND
ERISA fundamentally requires a fiduciary to focus on financial considerations in managing plan assets. Over the years, the pendulum has swung back and forth, as presidential administrations go between Democratic and Republican party affiliations, regarding the extent to which ancillary factors may be taken into account, particularly in the so-called tiebreaker scenario where a plan fiduciary can decide between investments that would be equally beneficial to plan participants and beneficiaries by looking to ancillary considerations. While the basic premise that financial considerations are paramount is immutable absent a statutory change, Democratic administrations have generally sought to make it easier to take ancillary considerations into account, and Republican administrations have generally sought to make it more difficult.
The swings of the pendulum by hypothesis had to occur against the statutory backdrop that focuses on financial considerations. But the tonal shifts from administration to administration have been unquestionably significant. Thus, for example, a fiduciary with a so-called “green” agenda may have felt emboldened, or at least more comfortable, in taking ESG into account where there’s the sense that the federal government is supportive thereof. Conversely, there may have been a chilling effect in taking into account ESG factors where there was a sense that the federal government was hostile thereto.
For years, these swings of the pendulum took place in the world of what is referred to as sub-regulatory advice - interpretive guidance that does not rise to the level of a regulation. Generally, such guidance has been considered to be less authoritative than a regulation, and is not subject to the detailed notice and comment procedures that apply to regulations.
The first Trump administration significantly altered the path of ESG-related regulatory activity when it addressed these questions in both substantive and procedural ways. On the substantive side, the administration's hostility to ESG in the ERISA context was palpable. While the text of the Trump-era final regulation (the “Trump Regulation”) did not explicitly mention ESG, the regulation effectively forced fiduciaries expressly to justify any effort to take into account non-pecuniary factors in making investment decisions.
The tiebreaker scenario was identified as at best a theoretical (almost “black swan”) possibility, as a practical matter. (The first Trump Administration had a substantially similar tiebreaker rule, although its triggering event - two economically indistinguishable investments - could be treated as a black swan only if the investments were completely indistinguishable). The Trump Regulation can arguably be characterized as reflecting a concern that, unlike some other investment strategies, an ESG-centric strategy could be motivated in whole or in part by considerations other than the best financial interests of plan participants and beneficiaries; in particular, by a desire to protect, improve or otherwise arise out of a concern for what is best in a political or otherwise non-economic sense. Moreover, process-wise, the Trump administration promulgated an actual regulation, thereby forcing any future administration that might want to swing the pendulum back to make another actual (as opposed to sub-) regulatory change.
However, to the extent that those who opposed the consideration of ESG factors were buoyed by the Trump Regulation, it is important to note that the regulation did not prohibit the consideration ESG factors. While ERISA focuses on the financial consequences of investment decision-making, it does not contain a general laundry list of prohibited factors that a fiduciary may not consider. The Trump Regulation likewise does not do so.
The Biden administration was decidedly less hostile to ESG, and took the bait of having to change the regulatory language in order to effectuate the next swing of the ESG pendulum. The Biden-era regulation (the “Biden Regulation”), as it had to, was promulgated against a backdrop of the paramount nature of economic considerations, but may arguably be characterized as viewing ESG considerations as just another set of considerations, no different from traditional economic considerations. Thus, the Biden Regulation stripped out the Trump-era special procedural requirements surrounding the consideration of ancillary investment-related factors, and the DOL, in promulgating the regulation, expressly declined to cast aspersions on the potential validity of the tiebreaker scenario.
Here again, though, there may have been an overreaction on the part of those in favor of pursuing ESG goals that belied the technical underpinnings of the Biden Regulation. Some may have believed that the regulation countenanced the consideration of ESG goals even where there could be an adverse impact on the plan’s financial results, and there may have been conflicting signals from the administration itself. But the DOL has been clear that financial considerations must always be paramount. For example, in a brief in the Utah case, the DOL stated that “[t]he [DOL’s] guidance recognized that fiduciaries . . . can consider collateral factors only in tightly limited circumstances consistent with prioritizing the plan’s financial interests....,” and then proceeded to state affirmatively that the Biden Regulation did not “license[] fiduciaries to defy their statutory obligations by taking actions that are not in the financial interests of plan beneficiaries. . . . To the contrary, a fiduciary engaging in such conduct would defy the clear text of the rule.”
Thus, as noted above, the pendulum swings not with changes to the fundamental rules but with tonal shifts around the edges. While the tonal shifts may be critical to the manner in which fiduciaries behave, the basic rules are what they are. It is noted that ERISA’s dogmatic focus on financial returns presents special challenges for international money managers in a global economy. Elsewhere in the world there may not always be such a focus on the financial and a sublimation of the non-financial, and the contract can serve to accentuate the extent to which ERISA requires a focus on the financial. (It is noted in this regard that Presidential Memorandum of January 20, 2025 on “America First Trade Policy” may also have an impact on global investing under ERISA plans.)
In this context, it may be argued that a lasting effect of the first Trump administration's efforts, regardless of ongoing ESG-related pendulum swings, has been and will be to cause fiduciaries who wish to consider ESG to focus on how ESG factors may affirmatively improve investment returns, rather than on whether the case can be made that the consideration of ESG factors do not adversely affect returns.
Two other observations are worthy of note. First, even when a pro-ESG administration is in place and there is encouragement of the consideration of ESG factors, a fiduciary might be wary of the possibility that a subsequent administration may not be supportive of the consideration of ESG factors (as we have seen, when the Trump administration took over from Biden’s), thus resulting in the consideration of a possible unwinding of previous ESG-centric initiatives. That kind of later unwinding could result in such consequences as the unwinding of prior investment approaches and even (fairly or unfairly) the drawing into question of prior fiduciary choices. Second, excessive focus on a current administration’s level of support for ESG can unduly deflect from valid concerns that private litigation may or may not result in judicial decision-making that conforms to the politics of the day.
UTAH
The latest Utah decision is limited to one narrow legal determination. The District Court for the Northern District of Texas had previously held, applying the then-required doctrine established by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. for determining the validity of an agency’s regulatory enactments, that the tiebreaker rule as applied in the Biden Regulation was a permissible regulatory interpretation by the DOL under ERISA. While a full discussion of the Chevron doctrine is outside the scope of this Alert, the view from 30,000 feet is that the doctrine, born in 1984, required federal courts to afford significant deference to federal agencies’ interpretations of federal statutes.
After the District Court’s decision in State of Utah, in a groundbreaking decision of wide-ranging significance to regulations generally, the Supreme Court in Loper Bright Enterprises v. Raimondo reversed Chevron and held that it was for a court to exercise its independent judgment in deciding the validity of an agency regulation interpreting a federal statute. In the interim between the first Utah decision and Loper Bright, the plaintiffs had appealed Utah to the U.S. Court of Appeals for the Fifth Circuit. In light of Loper Bright, the Fifth Circuit remanded the case to the District Court for the limited purpose of determining whether the DOL’s tiebreaker regulation was consistent with the statutory text of ERISA,
The Fifth Circuit’s approach to its remand had been almost apologetic, stating (footnotes omitted; emphasis in original): “Judicial humility . . . entails not only the occasional recognition of a wrong decision, as the Supreme Court’s opinion in Loper Bright readily illustrates, . . . but also when to make that decision in the first place. . . . Whatever efficiency or economy is gained by taking up the parties’ invitation to decide their dispute in light of the intervening changes, . . . we . . . would be better served by the slight delay occasioned by remanding to the district court for its reasoned judgment.” To some, the approach of remanding out of a sense of “judicial humility” highlighted that the Fifth Circuit was remanding not so much out of a concern that the District Court’s result was incorrect, but perhaps more in order to allow the District Court to consider the critical intervening development of the Loper Bright decision.
On remand, the District Court has now held that the remand from the Fifth Circuit did not require it to reconsider its holdings with respect to the other challenges to its earlier decision that the regulation was arbitrary and capricious and violated the major questions doctrine. The District Court on remand rejected the plaintiff’s arguments regarding the regulation’s consideration of ESG factors, including the curious arguments that it would be preferable to decide between two financially equivalent benefits by a coin flip rather than ESG considerations, or if two investment options are financially equivalent, then invest in both. (While it generally may not be surprising that a judge would rule on remand in the same fashion as was ruled in the initial decision, it is notable that Judge Kacsmaryk had previously authored decisions striking down several Biden-era actions, including a decision overturning the Biden administration’s healthcare nondiscrimination policies under the Patient Protection and Affordable Care Act.)
So the Biden Regulation has thus far survived judicial challenge, to the approval of some in the pro-ESG camp and to the consternation of those opposed to considering ESG. However, is this result really where the rubber hits the road (or runway)? As indicated above, the tiebreaker scenario has been part of the ERISA world for years, and exists in the context of a fiduciary’s need to consider financial factors as being paramount. A critical question then becomes: assuming arguendo that a tiebreaker scenario is theoretically cognizableunder ERISA, is that the end of the inquiry for those fiduciaries seeking to rely on ESG factors in their decision-making? Which brings us to the cautionary tale of the American Airlines case, which came after the initial upholding of the Biden Regulation in the first Utah decision.
AMERICAN AIRLINES
In contrast to the issue addressed in Utah, the issue in American Airlines was whether the plan fiduciaries violated their fiduciary duties of prudence and loyalty by including funds managed by its primary investment manager that pursued non-financial and non-pecuniary ESG policy goals through proxy voting and shareholder activism. The District Court reached the unusual conclusion that, although the duty of prudence was not violated because the conduct of the fiduciaries at least equaled current industry standards (putting aside for the moment whether industry standards were flawed), the duty of loyalty was breached. The court found that the fiduciaries disregarded the manager’s ESG-related investment philosophy, which was consistent with the plan sponsor’s own corporate interests, particularly with respect to climate change, and did not sufficiently focus on financial considerations by failing to monitor and evaluate the manager’s non-pecuniary ESG investing. (In reaching this conclusion, one of the factors that the District Court focused on was that the manager was a 5% shareholder of the plan sponsor and had also provided debt assistance to it.) The calculation of damages is to follow.
CONCLUSION
ERISA fundamentally requires that investment decisions made by fiduciaries generally regard financial considerations as paramount. Tonal shifts from administration to administration, which presumably will continue over time, may have emboldening or chilling effects on the consideration of ancillary factors such as ESG factors (or even anti-ESG factors) as the pendulum continues to swing, but the underlying statutory construct remains constant. In addition, even focusing just on the level of governmental support could be treacherous, as, someday, as we have just seen, a Democratic administration is bound to give way to a Republican one, thereby raising the specter of whether it may be desirable, even focusing only on the regulatory environment, to unwind previously implemented ESG-centric investment strategies. All of these considerations seem to have come home to roost in the Utah and American Airlines cases.
As to Utah, for now, the relatively neutral approach of the Biden Regulation remains in effect. However, even assuming that the Fifth Circuit is given the opportunity to and does affirm the District Court, the ultimate fate of the Biden Regulation under the second (and current) Trump administration is unclear. Additional tonal shifts may yet be on the horizon.
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2022/12/andrew-oringer.png[/author_image] [author_info]Andrew Oringer heads the firm’s New York office and serves as its General Counsel. His expertise extends to a broad array of issues relating to ERISA and executive compensation. He advises clients regarding their pension and welfare plans and arrangements, benefits-related tax matters and fiduciary issues arising in connection with the investment of plan assets, and has extensive experience with executive compensation representing employers as well as individual executives.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2023/04/Jon-Sc.jpg[/author_image] [author_info]Jon Schultze focuses on Employee Benefits and ERISA.Jon oversees the firm's qualified retirement plan area, which includes ensuring that our clients' retirement plans conform to legal requirements.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]]]>by The Wagner Law Group<![CDATA[The Unclean Hands and In Pari Delicto Doctrines]]>https://www.wagnerlawgroup.com/?p=659492025-02-19T12:42:26Z2025-02-19T12:42:26ZThe Unclean Hands and In Pari Delicto Doctrines - Barry Salkin, Wolters Kluwer Benefits Law Journal, Spring 2025, Volume 38, No. 1]]>by The Wagner Law Group<![CDATA[Corporate Transparency Act Litigation Continues to Induce Whiplash]]>https://www.wagnerlawgroup.com/?p=657732025-01-24T14:17:11Z2025-01-24T14:15:27ZTexas Top Shop, Inc. v. Garland, prohibited enforcement of the CTA and its beneficial ownership interest (“BOI”) reporting rule on the grounds of violations of the Constitution’s Ninth and Tenth Amendments, exceeding Congressional power under the Commerce Clause, Taxing Power, and Necessary and Proper Clauses. (Texas Top Shop had alleged other constitutional violations, but the District Court did not address them in its decision). The CTA requires covered companies to report information about the individuals who, directly or indirectly, own or control at least 25% of the company, or exercise substantial control over the company. More detailed information about the BOI reporting rule may be found in our Law Alert here.
In its brief opinion, the Supreme Court, Justice Alito opining for the majority, simply stated that the stay of the injunction would remain in place pending the outcome of a ruling by the Fifth Circuit on the merits of the case or the outcome of a petition for a writ of certiorari, should one be timely sought. Justice Gorsuch, in his concurring opinion, indicated that he would support the Court taking on the case now to determine whether the District Court was within its authority to issue a nationwide injunction in the first place. In her dissenting opinion, Justice Jackson stated that she would not have issued the stay and would have let the appellate process take its course as the government did not, in her opinion, show any exigent circumstances warranting the emergency relief granted by the majority. She pointed to the four-year delay between the enactment of the CTA and the deadline for BOI compliance as evidence that a further delay would not likely result in any additional harm pending the Appeals Court decision on the merits.
As of the writing of this Alert, FinCEN has not yet issued guidance on a new deadline for complying with the CTA’s BOI reporting requirement in light of the Supreme Court’s stay. FinCEN’s most recent update, from January 2, in the wake of the December 26 resurrection of the injunction, indicated that businesses are not required to submit the BOI “while the order remains in force.” Consequently, and in consideration of the significant penalties that come with non-compliance, the safest course of action for those companies who have not yet completed the beneficial ownership form would be to do so as soon as possible. The more daring should, at the very least, be checking the FinCEN website for updates on a new compliance deadline.
Prior Law Alerts on this Topic:
No Rest for the Weary: Department of Justice asks Supreme Court to Issue a Stay of Nationwide Injunction Against Corporate Transparency Act (CTA) – January 2, 2025
Pencils Down: Corporate Transparency Act (CTA) Injunction Back in Effect – December 27, 2024
Fifth Circuit Court of Appeals Lifts Nationwide Preliminary Injunction Against Enforcement of Corporate Transparency Act Pending Ruling on the Merits – December 24, 2024
Texas District Court Issues Nationwide Preliminary Injunction Against Enforcement of Corporate Transparency Act (CTA) – December 4, 2024
FinCEN Beneficial Ownership Reporting Requirements Due by Year End for Many Organizations – November 18, 2024
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Ari-Sonneberg.jpg[/author_image] [author_info]Ari Sonneberg specializes in the fields of ERISA and employee benefits. Ari advises and represents clients with respect to design, compliance and all other aspects of qualified and non-qualified employee benefit plans. He has extensive experience in drafting, designing, amending, and restating qualified and non-qualified employee benefit plans and related trusts, including money purchase pension plans, profit sharing plans, 401(k) plans, defined benefit plans, welfare benefit plans, medical expense reimbursement plans, 403(b) plans, and nonqualified deferred compensation plans.[/author_info] [/author]
[author] [author_image timthumb='on']https://www.wagnerlawgroup.com/wp-content/uploads/sites/1101401/2021/07/Barry-Salkin.jpg[/author_image] [author_info]Barry Salkin concentrates his practice in ERISA and employee benefits law. He has significant expertise drafting, amending and negotiating various ERISA and employee benefit plans, including defined benefit pension plans, profit sharing plans, 401(k) plans, as well as qualified and non-qualified deferred compensation programs.[/author_info] [/author]]]>