Benefits Monthly Minute
The August Monthly Minute reminds plan sponsors of the upcoming SECURE 2.0 plan amendment deadline and highlights a 4th Circuit decision reflecting the litigation impact of a delayed ERISA appeal determination.
Ready or Not, Here it Comes: SECURE 2.0 Amendment Deadline
Sponsors of most qualified retirement plans generally must adopt plan amendments reflecting the provisions of the SECURE 2.0 Act no later than December 31, 2026, for calendar-year plans (with certain extensions for governmental and collectively bargained plans). Although plans must already be operating in compliance with many of these provisions, the formal amendment deadline was initially delayed, but is now fast approaching. Below is a summary of certain key SECURE 2.0 changes that plan sponsors should confirm are addressed in plan documents:
- Long-Term, Part-Time Employee (LTPT) Eligibility. Under SECURE 2.0, the LTPT eligibility threshold to make elective deferrals drops from three consecutive years of at least 500 hours of service to two consecutive years. (SECURE 2.0 § 125)
- Enhanced Catch-Up Contributions for Ages 60–63. Participants age 60 through 63 are permitted a higher catch-up contribution limit — the greater of $10,000 (indexed) or 150% of the regular catch-up limit. (SECURE 2.0 § 109)
- Mandatory Roth Catch-Up Contributions for Higher Earners. Employees whose prior-year wages exceed $145,000 (indexed) must make catch-up contributions on a Roth (after-tax) basis only. (SECURE 2.0 § 603)
- Increased RMD Age. The required beginning date for Required Minimum Distributions shifted from age 72 to age 73, and will increase to age 75 beginning in 2033. (SECURE 2.0 § 107)
- Elimination of Pre-death RMDs for Designated Roth Accounts. Elimination of pre-death RMDs from designated Roth accounts aligning employer plan Roth account treatment with Roth IRAs. (SECURE 2.0 § 325)
- Automatic Enrollment Mandate for New Plans. 401(k) and 403(b) plans established on or after December 29, 2022 must include automatic enrollment and automatic escalation features, subject to certain exceptions (e.g., for small businesses, church plans, and governmental plans). (SECURE 2.0 § 101)
- Emergency Withdrawal Provisions. Plans may permit penalty-free distributions of up to $1,000 per year for unforeseeable personal or family emergency expenses. (SECURE 2.0 § 115)
- Student Loan Matching Contributions. Employers may elect to treat qualifying student loan repayments as elective deferrals for purposes of matching contributions. (SECURE 2.0 § 110)
- Higher Mandatory Cash-Out limit. The involuntary cash-out (force-out) threshold increased from $5,000 to $7,000 for distributions made after December 31, 2023. (SECURE 2.0 § 304)
KMK Comment: Plan sponsors should act promptly to work with ERISA counsel and service providers to adopt SECURE 2.0 amendments before the year end deadline. Proactive compliance efforts now will help avoid a holiday rush and costly correction programs later.
Appeals Court Highlights Consequences of Missed ERISA Deadline
In Cogdell v. Reliance Standard Life Insurance Co., 169 F.4th 238 (4th Cir. 2026), the Fourth Circuit held that an ERISA plan administrator that fails to timely decide a participant’s appeal of a disability benefit denial may ultimately forfeit the deferential standard of review that is ordinarily available. As background, ERISA’s claims procedure regulations generally require a disability appeal to be decided within 45 days, subject to certain permissible extensions under special circumstances. However, in this case, Reliance issued its decision denying participant’s appeal 72 days after it was originally filed. In light of this delayed adverse benefit determination, the district court refused to apply a deferential standard of review and ultimately awarded Cogdell $210,769.49 in benefits and $22,544.95 in interest. On appeal, the Fourth Circuit upheld the district court’s determination and found that no special circumstances existed that supported an extension of the 45-day review period. Accordingly, there was no exercise of discretion by the insurer to which deference should be owed.
KMK Comment: Cogdell underscores that ERISA claims procedures are not merely administrative guidelines—they directly affect a plan’s litigation posture. Plan sponsors should work with third party administrators and insurers to ensure that claims and appeals are tracked against the applicable regulatory and plan deadlines – both in writing and in operation. A missed deadline not only delays a benefit determination, it may also eliminate the deferential standard of review.
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.
