Benefits Monthly Minute
The November Monthly Minute brings you up-to-date retirement plan limits and the latest trend in tobacco surcharge litigation.
New Year, New Retirement Plan Limits
On November 13, 2025, the IRS released Notice 2025-67, setting forth the annual adjustments to qualified retirement plan limits for cost of living increases, as noted below:
KMK Comment: Plan administrators should work closely with vendors and legal counsel to ensure the new limits are implemented and clearly communicated to participants. This may involve updating enrollment materials and summary plan descriptions, along with fine-tuning plan operations.
The House Always Wins: Gaming Company Prevails in Tobacco Surcharge Case
The case of Williams v. Bally’s Management Group, LLC involved an employee's challenge to her employer’s self-insured health plan, which imposed a tobacco surcharge of $65/month. The plaintiff alleged that the surcharge violated long-standing wellness program regulations by not offering a "full reward" (including retroactive reimbursement of the surcharge) upon completion of a smoking cessation program, and that the employer breached its fiduciary duty by using the surcharge to offset its own plan contributions. The Rhode Island district court dismissed the case, finding plaintiff failed to state a plausible claim under the wellness rules and also lacked Article III standing to pursue the fiduciary breach claim.
KMK Comment: This decision stands in contrast to the trend set by several other district courts that allowed similar cases to proceed, often resulting in substantial monetary settlements against employers. Interestingly, the court rejected plaintiff's argument that the regulations require employers to refund tobacco surcharges retroactively once the reasonable alternative standard is met. By granting a full dismissal and affirming the employer's prospective-only wellness reward framework, this case may give plan sponsors more leverage to defend their wellness program designs against ERISA class-action plaintiffs.
The KMK Law Employee Benefits & Executive Compensation Group is available to assist with these and other issues.
Lisa Wintersheimer Michel
513.579.6462
lmichel@kmklaw.com
John F. Meisenhelder
513.579.6914
jmeisenhelder@kmklaw.com
Antoinette L. Schindel
513.579.6473
aschindel@kmklaw.com
Kelly E. MacDonald
513.579.6409
kmacdonald@kmklaw.com
Rachel M. Pappenfus
513.579.6492
rpappenfus@kmklaw.com
KMK Employee Benefits and Executive Compensation email updates are intended to bring attention to benefits and executive compensation issues and developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.
