Benefits Counselor – April 2026

RETIREMENT PLAN UPDATES

DOL Proposes Process-Based Safe Harbor for Selecting Designated Investment Alternatives in 401(k) Plans

On March 31, 2026, the U.S. Department of Labor (DOL) issued a proposed rule on selecting designated investment alternatives in participant-directed defined contribution retirement plans. The proposed rule establishes a process-based safe harbor to help fiduciaries defend investment selection decisions. It recognizes six non-exhaustive factors (performance, fees, liquidity, valuation, benchmarking and complexity) that may give rise to a presumption that fiduciaries have met their duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA) and that their investment selections are entitled to significant deference. For additional information, please see: DOL’s Proposed Safe Harbor for Retirement Plan Fiduciaries Selecting Designated Investment Alternatives.

DOL Reinstates Five-Part Fiduciary Test After Courts Vacate 2024 Retirement Security Rule

The DOL published a final rule, effective April 20, 2026, that formally removes the Biden-era 2024 Retirement Security Rule. In the new final rule, the DOL restored a 1975 standard for determining whether a person is an investment advice fiduciary under ERISA, known as the “Five-Part Test.” In general, under the Five‑Part Test, an adviser is only considered an ERISA fiduciary if, under a mutual understanding, they give individualized investment advice on a regular basis that is intended to serve as a primary basis for investment decisions. The final rule also republishes Prohibited Transaction Exemption 2020-02, which provides an exemption for certain otherwise impermissible transactions involving plans subject to ERISA.

Sixth Circuit is First Federal Court of Appeals to Weigh Whether ERISA Requires Updated Mortality Tables to Meet Actuarially Equivalent Standard

ERISA and the Code generally require defined benefit plans to provide a qualified joint and survivor annuity (QJSA) as the default benefit option to married participants. QJSAs must be the actuarial equivalent of a single annuity for the life of the participant. Over the past decade, participants have challenged whether the use of outdated mortality tables cause lifetime annuities to fail the actuarially equivalent standard. On March 16, 2026, the U.S. Court of Appeals for the Sixth Circuit became the first federal court of appeals to weigh in on this issue. In Reichert v. Kellogg, the Sixth Circuit reversed lower‑court dismissals and held that ERISA’s “actuarial equivalent” standard prohibits defined benefit plans from using unreasonable or inappropriate actuarial assumptions when making a QJSA conversion. Specifically, the Sixth Circuit ruled that retirees plausibly alleged ERISA violations by claiming their pension plans used decades‑old mortality tables that no longer reflect modern life expectancy. Other courts are not necessarily in agreement, however. Shortly after the Sixth Circuit ruled, a district court in the U.S. Court of Appeals for the Eighth Circuit came to the opposite conclusion, holding that no reasonableness standard applies.

Fourth Circuit Rejects Class Certification in ERISA Defined Contribution Plan Litigation

On March 10, 2026, the U.S. Court of Appeals for the Fourth Circuit, in Trauernicht v. Genworth Financial, reversed and vacated a lower court decision certifying a mandatory class in an ERISA breach of fiduciary duty case. The case involved defined contribution plan participants who alleged that their plan sponsor breached its fiduciary duties under ERISA by selecting and retaining certain target date funds that performed “significantly worse” than other available funds. The plaintiffs sought monetary damages under ERISA, and the district court certified a mandatory class. The Fourth Circuit disagreed with the lower court’s class certification and concluded that the class certification analysis is different for defined benefit and defined contribution plans. Specifically, the Fourth Circuit argued that the nature of defined contribution plans makes participants’ claims inherently individualized, making mandatory class certification improper.

HEALTH AND WELFARE PLAN UPDATES

CMS Finalizes HIPAA Standard for Electronic Signatures in Health Care Claims Attachments Transactions

The Centers for Medicare and Medicaid Services (CMS) issued a final rule establishing standards under the Health Insurance Portability and Accountability Act (HIPAA) for electronic health care documentation to be attached to claims to payers, such as health insurers and group health plans. The final rule is intended to replace manual processes (e.g., faxing and mailing) of these supporting documents with a standardized electronic exchange. The final rule also establishes requirements for electronic signatures to ensure health care claims attachment transactions are secure and authenticated. The final rule goes into effect on May 26, 2026, and covered entities must comply with the new standards by May 26, 2028.

Departments Release FAQ Extending Enforcement Discretion Regarding No Surprises Act QPAs

On April 1, 2026, the U.S. Department of Health and Human Services (HHS), the DOL and the U.S. Department of the Treasury (Treasury) (collectively, the Departments), along with the Office of Personnel Management, released a joint Frequently Asked Question (FAQ) (FAQ ‍Part ‍73) regarding the No Surprises Act. Specifically, the Departments are extending the exercise of enforcement discretion for plans and insurers to calculate the Qualifying Payment Amount (QPA) in accordance with the 2021 methodology amid ongoing litigation in Texas Medical Association v. HHS. The Departments are similarly continuing enforcement discretion under relevant No Surprises Act provisions for providers, facilities or providers of air ambulance services that bill or hold a participant, beneficiary or enrollee liable for a cost-sharing amount based on a QPA calculated with the 2021 methodology. The FAQ guidance is applicable for items and services provided before October 1, 2026.

Departments Signal Intent to Issue New Proposed Rule for MHPAEA

On March 30, 2026, by way of a joint status report to the court in The ERISA Industry Committee v. HHS et al., the Departments signaled their intent to issue a new proposed rule related to the Mental Health Parity and Addiction Equity Act (MHPAEA) no later than December 31, 2026. The Departments’ decision follows a May 2025 non‑enforcement policy announcement for Biden‑era mental health parity rules issued in September 2024. The 2024 rules amended earlier 2013 rules implementing MHPAEA to address disparities in access to care for mental health and substance use disorder conditions compared to medical/surgical conditions. While awaiting the forthcoming proposed rule, the non-enforcement policy still requires reference to the prior 2013 rules for compliance with the MHPAEA.

Fourth Circuit Holds Late Decision on ERISA Disability Appeal Triggers De Novo Review by Court

In Cogdell v. Reliance Standard Life Ins. Co., the U.S. Court of Appeals for the Fourth Circuit held that a plan administrator’s failure to strictly follow regulatory procedures in deciding an appeal for a disability claim resulted in the loss of deferential review for the administrator’s decision in court. Regulations under ERISA require a disability appeal decision within 45 days, with one 45-day extension permitted only if the administrator provides written notice to the individual identifying the special circumstances justifying the delay and stating an expected decision date. In Cogdell,the plan administrator upheld its initial denial of a long-term disability claim 72 days after the claimant’s appeal was filed. While the plan administrator sent a letter stating it intended to obtain an independent physician review, the letter did not explain the special circumstances justifying the delay or provide an expected decision date. The district court held, and the Fourth Circuit affirmed, that the late-decided appeal was deemed denied, without the exercise of discretion and exhausting the claimant’s administrative remedies. The Fourth Circuit further reasoned that the plan administrator’s failure to timely decide the appeal and strictly follow the procedural rules amounted to a forfeiture of fiduciary action. As such, the lawsuit warranted de novo review by the court and not review under a lower standard to determine if the plan administrator abused its discretion. Applying de novo review, the Fourth Circuit affirmed the district court’s award of benefits.

District Courts Take Opposite Positions on Standing in Excessive Prescription Drug Lawsuits

On March 3, 2026, in Navarro v. Wells Fargo, the U.S. District Court of Minnesota dismissed a lawsuit alleging Wells Fargo breached its fiduciary duties under ERISA by paying excessive fees to its pharmacy benefits manager (PBM) and inflated prices for prescription drugs with regard to its self-funded health plan, causing plan participants to overpay for health benefits. The court found that the plaintiffs had, for a second time, failed to establish a causal connection between the alleged PBM pricing practices and participant premiums or cost‑sharing. Accordingly, the court held that the plaintiffs lacked necessary Article III standing.

Meanwhile, on March 9, 2026, in Stern v. JPMorgan Chase & Co., the U.S. District Court for the Southern District of New York allowed an ERISA class action to proceed in part, holding that plan participants had standing to assert prohibited transaction claims against JPMorgan arising from its engagement of CVS Caremark as the PBM for JPMorgan’s health plan. The plaintiffs alleged that CVS Caremark engaged in practices that increased costs and inflated prescription drug prices, giving rise to breach of fiduciary duty and prohibited transaction claims. Although the court dismissed the breach of fiduciary duty claims, it permitted the prohibited transaction claims to proceed. The court reasoned that JPMorgan acted as an ERISA fiduciary when selecting CVS Caremark, renewing the PBM arrangement and authorizing related payments, and that the plaintiffs plausibly alleged a prohibited transaction. Relying on the U.S. Supreme Court’s recent decision in Cunningham v. Cornell, the court held that, to state a prohibited transaction claim, plaintiffs generally only need to allege that a fiduciary caused the plan to transact with a service provider, after which the burden shifts to the fiduciary to demonstrate that the services were necessary and the compensation reasonable.

Due to a continued increase in the number of class action lawsuits, health plans, like retirement plans, need to monitor service providers, perform requests for proposals, review fee disclosures and document their fiduciary process. Accordingly, fiduciaries should document PBM selection/renewal decisions, understand sources of PBM compensation (rebates, spreads and fees) and review performance and pricing terms on an ongoing basis.

GENERAL UPDATES

IRS Issues Proposed Rules on Trump Accounts and Contribution Pilot Program

On March 9, 2026, the Internal Revenue Service (IRS) published two separate notices of proposed rulemaking relating to Trump Accounts. The first addresses the establishment and operation of Trump Accounts, as relevant for individuals and entities that may serve as Trump Account trustees. The second notice concerns the $1,000 Trump Accounts Contributions Pilot Program and how to receive this contribution from the Treasury. For employers’ interest in contributing to Trump Accounts, please see Employer Contributions to Trump Accounts.

PBGC Relaunches Opinion Letter Program to Expand ERISA Compliance Assistance

The Pension Benefit Guaranty Corporation (PBGC) announced the reopening of its Opinion Letter Program, a process for it to give written guidance on how the agency interprets and applies Title IV of ERISA to specific fact patterns. While not binding precedent, opinion letters provide insight into PBGC’s interpretive approach and serve as a resource for navigating complex pension issues. Opinion letters may be requested by employers, plan sponsors, unions, and supporting practitioners such as attorneys or actuaries. PBGC’s website provides instructions for requesting an opinion letter and interested parties can also see all opinion letters in a searchable database.

COMPLIANCE DEADLINES AND REMINDERS

Retirement Plan Deadlines

Annual Funding Notice: Calendar year-defined benefit plans with more than 100 participants must provide the Annual Funding Notice by April 30, 2026.