6-7 employee benefit compliance priorities for year end

Retirement Plans

1. Mandatory Roth Catch-Up Contributions – Plan sponsors should be collaborating with their payroll vendors and recordkeepers to understand how mandatory Roth catch-up contributions will be processed for high wage earners, as generally required beginning in 2026. Depending on vendor flexibility, plan sponsors may be able to elect a “deemed” Roth catch-up contribution process and/or “optimization” processes that aim to maximize pre-tax contributions available for high wage earners. Many plan sponsors have provided catch-up eligible participants with a generic notice of the Roth catch-up requirements, while intending to make targeted communications for catch-up eligible high wage earners in early 2026. For more information on Roth catch-up contributions, see our alert. 

2. Code Section 457(b) Amendments – Notice 2024-2 did not extend nongovernmental 457(b) plan amendment deadlines for the SECURE Act and SECURE 2.0 Act. As a result, these amendments are recommended by the end of 2025, retroactive to the effective date of these plan design changes.

3. Controlled Group Catch-Up Elections – A plan may permit “super” catch-up contributions for participants who attain ages 60-63 during the year in an amount that is the greater of (i) $10,000, or (ii) 150% of the regular catch-up limit ($11,250 for 2025 and 2026) under 401(k), 403(b), and governmental 457(b) plans. However, many plan sponsors have been surprised to learn that this additional catch-up contribution must be implemented consistently across all applicable retirement plans within a controlled group. This means that if at least one applicable retirement plan within a controlled group permits super catch-up contributions, all controlled group retirement plans must also permit super catch-up contributions. 

Health and Welfare Plans

4. Notice of Privacy Practices – By February 16, 2026, each HIPAA covered entity and business associate must update its Notice of Privacy Practices (NPP) to reflect the final rule issued in February 2024 by the Department of Health & Human Services regarding substance use disorder (SUD) records (2024 Final Rule). The 2024 Final Rule requires entities that handle SUD records to revise their NPPs to explain how these records may be used and disclosed, with or without patient consent. The 2024 Final Rule also included strengthened reproductive health privacy, but these provisions were vacated by a federal court ruling in June 2025. As a result, the previously mandated reproductive health language is on hold pending further agency action. Covered entities and business associates should monitor reproductive health developments closely but, for now, focus on implementing the required NPP updates for SUD records.

5. High Deductible Health Plan Updates – IRS Notice 2026-5 provided helpful clarification regarding high deductible health plan (HDHP) terms and participant eligibility to contribute to health savings accounts (HSAs). For example, it clarifies which benefits can be treated as “telehealth” and therefore provided at no-cost before an HSA participant reaches their HDHP deductible. Telehealth benefits are generally those included on the list of telehealth services payable by Medicare that is published by the Department of Health and Human Services each year. Importantly, in-person services, medical equipment and prescription drugs provided in connection with a telehealth service are not considered telehealth for purposes of HSA eligibility (unless otherwise included on the published list of telehealth services). 

6. Dependent Care Increase – Beginning in 2026, the One Big Beautiful Bill Act increased the dependent care FSA limit to $7,500 per household ($3,575 for married filing separately). Although this increased limit is a welcome tax benefit for many employees, some plan sponsors have been hesitant to adopt the increase, because dependent care FSA plans frequently face ongoing nondiscrimination testing concerns, which could be exacerbated by the higher contribution limit. Employers electing increased dependent care FSA limits for 2026 have likely already communicated the increased limit to participants during open enrollment, but they should also review their plans by year end. Similarly, employers who do not plan to implement the increase should review their plan documents to confirm that there is no language that would automatically apply a future statutory increase. 

Seven Routine Year-end Reminders

• Annual required minimum distributions are due by December 31, 2025.
• Year-end discretionary amendments for operational changes during the 2025 plan year must be adopted by December 31, 2025 (except to the extent that deferred amendment is otherwise permitted by the SECURE Act and SECURE 2.0 Act).
• Certain discretionary amendments for 2026 must be adopted prospectively, particularly in the case of reduced benefits and certain changes to safe harbor plans.
• Annual safe harbor notices, automatic enrollment notices, and qualified default notices were required by December 2, 2025.
• Certain pre-approved plan documents contain language that requires a plan sponsor to communicate its declared discretionary employer contribution within certain timeframes. Plan sponsors that utilize this employer contribution structure should check their plan documents for participant notice requirements and timing.
• Annual Gag Clause Prohibition Compliance Attestations are due by December 31, 2025, which are done electronically via a Centers for Medicare & Medicaid Services website.
• Some section 409A corrections under Notice 2008-113 must be completed by year-end, making now the ideal time to identify and finalize correction of any lingering errors.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.