Experts Suggest Additional Year-End Plan Sponsor Considerations

While plan sponsors have time-sensitive SECURE 2.0 and IRS deadlines to pay attention to before the end of the year, there are other priorities that should not stay on the back burner for long.

Find out more about plan sponsor action items.

Restatement Cycle

To start with, Bonnie Treichel, the founder of and chief solutions officer at Endeavor Retirement, says plan sponsors should consider how they can plan for the new restatement period. Every six years, the IRS requires plans relying on preapproved documents to be completely amended and rewritten.

The fourth amendment cycle for pre-approved defined contribution plans is currently open, and the deadline for adopting any plan amendment made pursuant to the SECURE 2.0 Act of 2022 is December 31, 2026.

Because many new amendments related to compliance with the SECURE 2.0 Act of 2022 are expected during this restatement period, Treichel offers a “word of caution” that there could be “operational failures” if plan sponsors are not careful.

If the definition of compensation for employees is published incorrectly in the restatement cycle, for instance, plan sponsors will need to make corrections and may be subject to thousands of dollars in penalties. There is no such thing as a “scrivener’s error,” Treichel explains—plan sponsors must act in accordance with their plan documents.

Decisionmaking Documentation

Treichel also says plan sponsors should be mindful of whether a decision is most appropriately made by the business or a fiduciary.

A settlor establishes or designs a plan, making business decisions for the sponsor’s benefit. A fiduciary administers the plan and makes decisions in the best interests of the participants and beneficiaries. As a best practice, companies should document into what category each decision falls, according to Treichel.

A related word of advice, for “good plan governance,” is to make sure plan committees report back to the board of the organization—or its owner, if it is privately held—that issued the plan committee its fiduciary authority. It is also a good idea for a committee to create a brief update on what it has accomplished this year, she adds.

Alts in Defined Contribution Plans

Plan sponsors should also keep an eye out for guidance regarding President Donald Trump’s August 7 executive order encouraging the inclusion of private equity, cryptocurrency and other alternative investments in 401(k) plans, say both Treichel and Elizabeth Goldberg, a partner in and deputy leader of the fiduciary task force at law firm Morgan, Lewis & Bockius LLP.

According to the order, the Department of Labor is tasked with reexamining fiduciary duties under the Employee Retirement Income Security Act with respect to offering such funds, and it is expected to offer guidance within 180 days of the order. It is not clear how the federal government shutdown will affect that timeline.

There’s no “rush of activity,” but plan sponsors’ conversations about including alternative investments in their lineups and vendors’ corresponding thoughts about bringing new products to DC plans are “starting to percolate,” Goldberg says.

Health and Wellness Review

On the health and welfare front, Rachel Mann, an associate at Morgan Lewis, says a good practice for companies is to “perform an annual review” of their health and wellness notice templates each fall. Plan sponsors should make sure their open enrollment and plan distribution packets contain the most recent versions of their model notices. Sponsors should also retain documentation demonstrating the use of a current model notice—or something based on a current model—to demonstrate good-faith compliance in the event of an audit.

Mann says a notice probably worth plan sponsors’ attention this year is one mandated by a U.S. Department of Health and Human Services final rule, issued in 2024, requiring that entities regulated by the Health Insurance Portability and Accountability Act of 1996:

• ensure that each disclosure of substance use disorder records is accompanied by a copy of the patient’s consent or a clear explanation of its scope;
• adopt HIPAA’s Breach Notification Rule for breaches of unsecured substance use disorder records; and
• give patients the right to opt out of fundraising communications.

Health plans, healthcare providers and treatment centers have a deadline of February 16, 2026, to modify their privacy practices to reflect these updates.