One of our Employee Benefits and Tax thought leaders pulled together his top predictions for the new year so that employers can get a running start to 2026.
So-Called "Alternative Investment" Options Are Coming for Your 401(k) Plan
President Trump signed an executive order in August to allow 401(k) plan fiduciaries to include alternative assets – such as private equity, real estate, and cryptocurrency – in their investment portfolios. The administration argues that alternative investment options in defined contribution plans will offer competitive returns and diversification opportunities, but opponents have expressed concerns over illiquidity, volatility, low transparency, and high investment fees. One thing is certain – private assets hitting 401(k) plans on a wide scale will open the door for new liability risks for employers and plan administrators. The DOL is expected to clarify its position on the matter by early 2026, so stay tuned for regulatory updates.
Increased Healthcare Costs, Political Maneuvering Will Keep Employers on Their Toes
A recent Mercer survey found that the average cost of employer-sponsored health insurance will increase by 6.7% in 2026 – the highest increase in 15 years – and surpass $18,500 per employee. We expect this issue to come into the spotlight in a big way this year ahead of the mid-term elections – similar to the current political clashes over the expiration of the ACA’s enhanced premium tax credits at the end of 2025 and the resulting cost increases for marketplace plans.
Flying Blind Over Increasingly Complicated Tax Rules
A depleted IRS will make it even more difficult for employers and employees to get certainty and assistance with the ever-expanding number and complexity of tax compliance issues and obligations.
