Congress failed to reach an agreement on a short-term patch to fund the government by September 30, the start of the new fiscal year (FY 2026). As a result, as of October 1, large swaths of the federal government are closed. The shutdown impacts federal agencies and programs that are funded through the annual appropriations process (discretionary spending). So, programs and agencies that operate under mandatory spending, or through fees or advance-year appropriations can and will keep operating during the shutdown.

The ongoing government shutdown has already begun to have an adverse impact on the National Flood Insurance Program (NFIP). Both authorization and funding for the NFIP expired on September 30, the end of fiscal year (FY) 2025.

The currently-pending (and now multiple times defeated) continuing resolutions (CRs) would extend authorization and funding for the NFIP, but until a CR (or, more unlikely, an actual funding bill) is enacted, the NFIP is stopped in its tracks.

Pending regulatory initiatives on such issues as the fiduciary rule, worker classification, noncompete agreements, and the white-collar exception to overtime rules could be delayed due to the government shutdown, and/or to budget cuts that might be imposed by Congress.

On September 16, the Internal Revenue Service (IRS) and Treasury released final regulations implementing the SECURE 2.0 new rules for catch-up contributions to retirement savings plans. The final regulations (TD 10033/RIN 1545-BR11) implement the SECURE 2.0 rule that requires high-paid retirement savers to make their catch-up contributions on a Roth basis.

The Center for Consumer Information and Insurance Oversight (CCIIO) has rescinded its controversial 30-minute time-out rule after an outcry from NAIFA and other agent organizations pointed out how disruptive the rule was. The rule had required advisors helping people sign up for Affordable Care Act (ACA) health insurance to re-sign in with their federally facilitated marketplace account credentials after a 30-minute period of inactivity. And that inactivity was determined by background computer programming rather than by action being taken by the person using the website.

On September 17, the House Education & the Workforce Committee favorably reported H.R.5169, a bill that allows a fiduciary to use publicly-available evaluation methods when valuing ESOP assets. The bipartisan vote was unanimous. The bill is now ready for a vote by the full House of Representatives.

The Department of Labor (DOL) has signaled its intention to rescind the 2024 worker classification rule, which uses a six-part economic realities test to determine whether a worker is an employee or an independent contractor. The announcement came via the Trump Administration’s unified agenda.

Three senior members of the tax-writing House Ways & Means Committee have introduced legislation aimed at promoting use of Individual Choice Health Reimbursement Arrangements (ICHRAs) by small businesses that want to provide health insurance to their workers. The “Small Business Health Options Awareness Act” (SBHOAA) focuses on enhanced outreach and information about the availability of ICHRAs.

In Advisory Opinion 202504A, the Department of Labor’s DOL’s Employee Benefits Security Administration (EBSA) approved a lifetime income structure involving a variable annuity. The advisory opinion, issued on Sept. 23, involved a lifetime income strategy (LIS) offered by AllianceBernstein that approved a request by AllianceBerstein that their LIS program qualifies as a qualified default investment alternative (QDIA) under ERISA.

On October 1, the Senate Finance Committee held a hearing on how crypto assets should be taxed. Senators from both parties acknowledged that crafting tax rules for digital assets will be a complicated undertaking.

Based on testimony and questions from committee members at the hearing, a key issue that has yet to be resolved is what to do about small crypto transactions. Witnesses at the hearing argued that some kind of de minimis rule for small crypto transactions is necessary. Committee members questioned that, though. It was clear from the hearing interactions that determining what a “small transaction” is could be a fraught issue.

A slew of indexed tax limits and benefits adjust each year for inflation. The Internal Revenue Service (IRS) has released Rev.Proc.2025-32, which lists many of these adjustments. Generally, the adjustments amount to about two percent for 2026.

On September 18, on a 51 to 47 vote, the Senate confirmed President Trump’s nominee, Dan Aronowitz, to head the Employee Benefits Security Administration (EBSA). EBSA is the Department of Labor (DOL) agency that oversees the ERISA provisions applicable to retirement savings plans.

On October 7, the Senate confirmed Janet Dhillon to head the Pension Benefits Guaranty Corporation (PBGC). The vote was 51 to 47.

The PBGC oversees defined benefit (DB) pension plans’ ERISA rules. (Treasury has jurisdiction over DB plan tax rules.) Some 30 million American workers and retirees are covered by DB plans. The former Republican EEOC chair will lead the PBGC as it is more than halfway through administering a Biden-era bailout of some of the nation’s most severely underfunded multiemployer pension plans.

Chief among a raft of high-profile and controversial issues facing Congress this month is the need to fund the government before the end of fiscal year (FY) 2025 (so, by October 1). Failure means a government shutdown. It is unclear whether a shutdown could benefit either party, but some members on both sides may see some political value in a shutdown.

Congressional Republicans are working on a new tax package. It could include an increase in the section 199A qualified business interest (QBI) deduction, and improvements to health savings account (HSA) rules. It could happen as part of another bill (government funding), or as a second all-GOP reconciliation bill.

In a nod to the political potency of the risk that enhanced Affordable Care Act (ACA) premium tax credits will expire at the end of 2025, a group of 10 House Republicans—joined by several Democrats—have offered legislation to extend the premium tax credits as they were enhanced in 2021 (during the COVID pandemic) for one year.

Senate Democrats have introduced legislation, S.2556, that would repeal the health care cuts, including those to Medicaid, that were enacted this past July in the tax and spending cuts reconciliation bill. S.2556 would also permanently extend the enhanced ACA premium tax credits.

On September 4, the Department of Health and Human Services (HHS) issued new guidance on expanded eligibility for Affordable Care Act (ACA) catastrophic health insurance plans. The guidance provides that individuals who cannot get premium tax credits or cost-sharing reductions via a health insurance exchange can now qualify for hardship exemptions under the ACA that allow them to purchase catastrophic health insurance. The expanded eligibility takes effect November 1, according to HHS.

In Rev.Proc. 2025-2026, the Internal Revenue Service (IRS) announced inflation adjustment increases in the Affordable Care Act employer mandate penalties. The penalties are based on whether an applicable large employer (ALE) fails to offer affordable health insurance to at least 95 percent of its full-time employees and at least one of those employees receives a premium tax credit to buy individual health insurance. An ALE is an employer with 50 or more full-time equivalent employees. Affordability is measured by employee contributions to the cost of their employer-provided health care—penalties attach if those contributions exceed maximum percentages of their compensation.

Pursuant to a court request for information on timing, three government agencies said their intention is to release new regulations to extend the time permitted to short-term limited duration (STLD) health insurance. STLD health insurance—which currently can be in place for only four months—does not have to comply with most Affordable Care Act (ACA) requirements, including consumer protections and minimum essential benefits.