Daily Article Digest - Updated Regularly

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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NYC Man Lost $114,000 "His Entire 401k" After His Physical Check From Paychex Was Stolen and Cashed

Dylan Handy, after switching jobs, attempted to roll over his $114,000 401k but faced issues when Paychex sent a paper check instead of an electronic transfer. The check was intercepted and fraudulently cashed, leaving Handy in a predicament where he might owe taxes on the stolen funds. The situation raises concerns about why retirement plan administrators still use physical checks and how individuals can safeguard their money to prevent similar issues.

Source: Yahoo.com, May 2025

DOL Rescinds Biden Administration Guidance on 401k Cryptocurrency Investment

The DOL has issued Compliance Assistance Release No. 2025-01, which rescinds the previous 2022 Release that discouraged 401k plan sponsors from offering cryptocurrencies as an investment option. While the 2022 guidance lacked legal force, it notably deterred plan fiduciaries from considering cryptocurrencies for inclusion in investment options. With the new release, fiduciaries may now evaluate the potential addition of cryptocurrency investments, ensuring alignment with their fiduciary duties under the plan.

Source: Wagnerlawgroup.com, May 2025

Mail vs. Wire Fraud: What's the Bigger Risk to Retirement Plan Balances?

A recent lawsuit involves an employee suing a recordkeeper after their rollover check was stolen in transit. A reporter inquired about the frequency of rollovers and distributions through checks versus electronic methods, questioning why companies still opt for mailing checks given the risks of mail fraud. It's believed that mailing checks is considered safer than electronic transfers due to concerns about wire fraud, although there is no definitive data on this. To gather more insight, the PSCA sought feedback from members with its weekly Question of the Week mailing.

Source: Psca.org, May 2025

UBS Faces Latest 401k Forfeiture Lawsuit

UBS is facing legal action regarding its handling of forfeited funds in its 401k plans, as detailed in a lawsuit filed in the U.S. District Court for the District of New Jersey. The case, Czakoczi v. UBS AG et al, alleges that the investment bank prioritized its interests by using forfeited funds to lower employer contributions instead of applying them toward plan expenses. This mirrors claims made in other lawsuits under ERISA, including a recent case against Cigna Group and a prior settlement involving Intuit Inc.

Source: Plansponsor.com, May 2025

Trump-led DOL to Address ESG Rule Through Rulemaking Process

The Trump-led DOL has filed a Status Report with the U.S. Court of Appeals for the Fifth Circuit regarding the litigation challenging the Biden-era ESG rule. The DOL plans to pursue changes or rescission of the current ESG regulation through a formal notice-and-comment rulemaking process, which will be included in its spring regulatory agenda. However, it remains unclear whether this process will involve rescinding the existing rule to revert to the Trump-era rule or if a new rule will be proposed entirely.

Source: Napa-net.org, May 2025

Another Suit Asserts Fiduciary Forfeiture Breach

A lawsuit has been filed by participant-plaintiff Holly Hendrickson, represented by Lynch Carpenter LLP, against the fiduciaries of the Elevance Health 401k Plan. The suit alleges that the defendants violated ERISA by failing to properly manage the plan's expenses. Specifically, it claims they misused plan forfeitures to offset the company's future contributions instead of using those funds to lower administrative costs for plan participants. The company is accused of benefiting financially from this practice, resulting in millions of dollars in contribution expenses.

Source: Napa-net.org, May 2025

The Power of Small Data for Retirement Plan Sponsors

As a plan sponsor, you likely dedicate a significant amount of time to managing various data processes, whether it's gathering, analyzing, or reporting information. This focus on data is essential, as data-driven decision-making holds immense value. While macro-level data, such as market trends, economic reports, asset manager white papers, and industry benchmarks, is crucial, are you effectively utilizing the "small data" available within your own organization?

Source: Fiduciaryadvisors.biz, May 2025

DOL Rescinds 2022 Guidance Cautioning Against 401k Plan Investments in Cryptocurrencies

On May 28, 2025, the DOL released Compliance Assistance Release No. 2025-01, which rescinds its previous Compliance Assistance Release No. 2022-1. The earlier guidance had cautioned 401k plan fiduciaries against including cryptocurrencies as direct investment options in their plans. By rescinding the 2022 guidance, the DOL adopts a more neutral position on cryptocurrencies, returning to its traditional practice of neither endorsing nor disapproving the inclusion of cryptocurrency investments in 401k plans.

Source: Erisapracticecenter.com, May 2025

401k Plan Investments in "Cryptocurrencies": Compliance Assistance Release No. 2025-01

On March 10, 2022, the DOL published Compliance Assistance Release No. 2022-01, addressing 401k plan investments in cryptocurrencies. This release formally confirms the DOL's decision to fully rescind prior guidance on the matter.

Source: Dol.gov, May 2025

The (Hopefully) Final Chapter in the Intel ERISA Litigation: Implications for Private Market Assets in 401k Plans

On May 22, 2025, the Ninth Circuit Court of Appeals upheld the fiduciaries of Intel Corporation's retirement savings plans regarding the inclusion of private fund investments. The court ruled that ERISA's duty of prudence focuses on a fiduciary's decision-making process rather than evaluating performance in hindsight, emphasizing that comparing returns or fees alone does not prove imprudence. The ruling aligns with the DOL's stance that private funds can be included in a diversified investment portfolio. However, the lengthy litigation and the possibility of differing standards in other circuits may lead fiduciaries to be cautious without clear legal protections for including diversified funds with private market components.

Source: Debevoise.com, May 2025

A Plan Sponsor'S Guide To Navigating Participant Data Cyberthreats

DC plans stand to gain significantly from advancements in technology and improved data sharing among service providers. However, the increasing prevalence of unauthorized data breaches and resulting class-action lawsuits has raised concerns among plan sponsors. A breach of sensitive participant data can have serious consequences for the plan, its fiduciaries, participants, and the sponsoring organization. This paper aims to help plan sponsors navigate today's dynamic data risk landscape by outlining vulnerabilities in participant accounts, reviewing updated regulatory guidance, and providing actionable steps for plan committees, in collaboration with their organizations, consultants, advisors, and legal counsel.

Source: Dciia.org, May 2025

When the Best Offense is a Good Defense: Adding Annuities to 401k Plans

Plan fiduciaries should prioritize managing liability risk over litigation risk when offering annuities in 401k plans. While litigation risk is unavoidable, it can be mitigated through proper insurance, which pools this risk among plan sponsors. In contrast, liability exposure -- such as potential judgments or settlements from adding annuity options -- is more controllable. To effectively manage this risk, fiduciaries should adhere to best practices when selecting and integrating these options into their plans.

Source: Bostonerisalaw.com, May 2025

What to Tell Participants About Tapping Into Their Retirement Savings

It's essential to discuss with participants the consequences of accessing money from their retirement plan, particularly during market downturns when borrowing or withdrawals can worsen financial challenges. While having access to retirement savings may provide reassurance, participants must make informed decisions. Plan sponsors should communicate the rules regarding withdrawals, suggest alternative emergency funds, outline potential financial implications, encourage seeking professional advice, and inform participants that unpaid loans may be considered taxable income.

Source: Blackrock.com, May 2025

Reenrollment Strategies: Ensuring no Participant Is Left Behind

Well-designed defined contribution plans with a suitable default option promote savings, diversification, and retirement security. Most participants lack the expertise to manage their asset allocation effectively and often neglect to review or adjust their investments. Re-enrollment can align participants with current best practices in retirement planning, especially during key events such as introducing a new target-date fund for new hires or following a merger or acquisition, which may lead to inappropriate risk concentrations.

Source: Blackrock.com, May 2025

A Big Reason the Vanguard "Crew" Is so 401k Proficient

Karen Hart highlights Vanguard's employee education and credentialing strategy by emphasizing the term "crew," reflecting founder John Bogle's appreciation for naval history. This terminology underscores a collective commitment within the organization, ensuring that all staff are effectively onboarded, well-trained, and equipped with the necessary tools for long-term success.

Source: Asppa-net.org, May 2025

DOL Rescinds Guidance Warning Against Cryptocurrency in 401ks

The DOL's Employee Benefits Security Administration has rescinded a 2022 compliance release that discouraged fiduciaries from offering cryptocurrency options in 401k retirement plans. The previous guidance advised fiduciaries to exercise "extreme care" when adding such investments. EBSA's announcement today stated that this guidance was inconsistent with ERISA and deviated from the department's historically neutral approach to fiduciary investment decisions.

Source: 401kspecialistmag.com, May 2025

Fiduciary Basics for New Plan Sponsors

Retirement plan fiduciaries are individuals or entities responsible for managing and overseeing retirement plans, ensuring they act in the best interests of the plan participants. Under ERISA, fiduciaries must adhere to several key requirements, including acting prudently, diversifying plan investments, and avoiding conflicts of interest. Failure to comply with these requirements can result in legal liability and financial penalties for the organization. Therefore, organizations considering offering a retirement plan must understand fiduciary responsibilities to ensure compliance and protect plan participants.

Source: Plansponsor.com, May 2025

Intel Wins Appeal of "Speculative" Investment Suit

A federal appellate court has upheld a district court's dismissal of a lawsuit by Winston Anderson, a former Intel employee, which challenged the investment strategies of Intel's retirement plans. Filed in 2019, Anderson's suit claimed that the fiduciaries of the Intel 401k and Retirement Contribution Plans breached their duties by investing in speculative target-date funds that included hedge funds and private equity. He argued that these investments were characterized by high costs and poor performance, and were illiquid and opaque. The court found the claims insufficient to constitute a fiduciary breach.

Source: Napa-net.org, May 2025

Don't Stop Fighting for Retirement Security Rule, Financial Planning Coalition Urges DOL

National financial planning organizations are urging the DOL to maintain its proposed fiduciary rule designed to safeguard retirement investors. In a joint letter to Labor Secretary Lori Chavez-DeRemer dated May 22, leaders from the CFP Board, Financial Planning Association, National Association of Personal Financial Advisors, and XY Planning Network expressed their support for the Retirement Security Rule. This regulation would require financial professionals to act in the best interests of clients regarding retirement assets, filling gaps in existing regulations like the SEC's Regulation Best Interest. The letter emphasized that the rule addresses significant regulatory shortcomings and protects Americans from conflicts of interest, aligning with investor expectations for retirement advice.

Source: Investmentnews.com, May 2025

Text, Email and More: Why Employers are Taking a Multi-channel Approach to Benefits Communication

Employers invest considerable resources in employee benefits to attract potential candidates and retain current employees. However, these efforts are ineffective if the benefits are not properly communicated. A recent survey by FinFit and HR Dive's studioID examined how organizations communicate their employee benefits, particularly those related to financial wellness. The findings provided several key insights that organizations can use to enhance their communication strategies regarding benefits.

Source: Hrdive.com, May 2025

Jury Awards Bank Workers $38M in Pentegra 401k Excessive Fee Lawsuit

In a notable case, a New York federal jury awarded over $38 million to more than 26,000 current and former bank employees in a 401k excessive fee lawsuit, Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan. The lawsuit involved the Multiple Employer Defined Contribution Plan for Financial Institutions, administered by Pentegra, which manages over $2 billion in assets covering employees from 250 banks. This jury verdict may represent the highest award in an ERISA excessive fee suit to date. Typically, ERISA cases are resolved through settlements or bench trials, as many courts view them as involving equitable claims appropriate for judges. However, some judges in the Second Circuit have permitted jury trials for these claims.

Source: Hallbenefitslaw.com, May 2025

The ERISA Burden of Causation and Objective Prudence in the Home Depot Case Before the Supreme Court

The Supreme Court has requested guidance from the United States Solicitor General regarding the Home Depot excessive fee case, which involves allegations of fiduciary breaches related to underperforming BlackRock target-date funds and high managed account service fees. The case centers on the need to clarify which party in an ERISA lawsuit is responsible for proving that a fiduciary's breach caused financial losses to a retirement plan. The discussion here includes an examination of why participant-plaintiffs should carry the burden of proof concerning liability, causation, and damages under ERISA, and critiques the historical burden-shifting approach of the Solicitor and the DOL. Additionally, it addresses the often-overlooked issue of objective prudence in ERISA causation analysis.

Source: Encorefiduciary.com, May 2025

Why Don't More 401k Plans Have Lifetime Income Options?

A significant concern among 401k plan participants is the fear of outliving their retirement income, with a recent survey indicating that 93% believe it's important for their plans to offer lifetime income options like annuities. However, many 401k plans still mainly provide lump sum payout options, and installment options are uncommon. Plan sponsors may either be hesitant to include annuities, which can guarantee lifetime income, or lack awareness of their availability. The validity of this fear surrounding annuities raises questions about the lack of options and potential solutions to better incorporate lifetime income guarantees in retirement plans.

Source: Cohenbuckmann.com, May 2025

Embracing AI to More Efficiently Process Retirement Plan Documents

Artificial intelligence is becoming increasingly prevalent across various sectors, showcasing a wide range of applications. Yet, many professionals within the retirement plan industry are still exploring how to effectively incorporate AI into their processes. In a discussion with PLANADVISER, ERISA attorney David Levine shared insights on how he has leveraged artificial intelligence to create a tool for retirement plan administration and offered his predictions on its future implications for the industry.

Source: Planadviser.com, May 2025*

Service: The Essence of the TPA

In a recent Broadridge webinar, industry experts Russell Hooker from NOVA 401k Associates and Matt King from The Standard discussed the vital role of third-party administrators in the retirement plan marketplace. They emphasized that TPAs serve an essential function similar to that of a CPA for retirement plans, focusing on customizing plans to meet the specific needs of plan sponsors. Hooker highlighted the importance of engaging with sponsors to understand their goals and how to effectively design the plan to help them achieve those objectives.

Source: Asppa-net.org, May 2025

401k Rollover Delays Could Cost Nearly $76k in Lost Savings

A report by PensionBee highlights the complications and potential costs associated with 401k rollovers when employees switch jobs, estimating that individuals could lose up to $76,000 in lifetime returns. The rollover process is often burdensome, requiring extensive paperwork, phone calls, and delays in receiving checks, which can be exacerbated during market volatility. The analysis modeled the impact of delaying investments for various amounts ($10,000, $50,000, and $100,000) over three different rollover durations, demonstrating how being out of the market can adversely affect potential returns over 30 years.

Source: 401kspecialistmag.com, May 2025

Converting a SIMPLE IRA to a Safe Harbor 401k

This guide serves as a concise reference outlining the SECURE 2.0 provisions that allow plan sponsors to terminate a SIMPLE IRA mid-year and transition to a safe harbor 401k replacement plan.

Source: Spconsultants.com, May 2025

Fidelity Went Live Last Year With 'Free-Money' 401k, Now Schwab Has Launch Its Own Program

Major 401k recordkeepers are competing to provide plan participants access to billions in cash that employers want to allocate under new regulations from the SECURE Act 2.0. Fidelity Investments has initiated a 401k program designed to offer "free money" to individuals with negative net worth, allowing employers to match contributions that directly pay down student debt. Following suit, Charles Schwab Corp. announced it would implement a similar program in partnership with Candidly, a 2016 startup, aimed at supporting millions of young employees who previously lacked access to such options.

Source: Riabiz.com, May 2025

Plaintiff Assessed Court Costs in ERISA Case

A federal judge has approved a request from plan fiduciaries for costs in a dismissed excessive fee lawsuit originally filed in 2022 by participant-plaintiff Guillermina Lopex against Embry-Riddle Aeronautical University, Inc. The lawsuit claimed that the fiduciary defendants included more expensive funds in the $500 million retirement plan than necessary, given the availability of cheaper alternatives. Although it's a positive development for fiduciaries to seek cost recovery after litigation, the judge ultimately reduced their request by half, noting that the lawsuit appeared flawed from the beginning and failed to substantiate its claims after multiple attempts.

Source: Psca.org, May 2025

Plan Fiduciaries Faulted for Proprietary Fund Picks

A lawsuit has been filed by a former participant on behalf of the Teachers Insurance and Annuity Association of America 401k Plan and TIAA Retirement Plan, alleging multiple breaches of fiduciary duty under ERISA. The suit targets TIAA, its Board of Trustees, the Plan Investment Review Committee, and unknown defendants (John Does 1–30). The allegations state that TIAA has retained proprietary in-house managed funds with a higher-cost share class in the Plans, despite the availability of a lower-cost share class, leading to higher fees for the Plans.

Source: Napa-net.org, May 2025

Common Mistakes and Practical Advice When Acquiring a Company With a 401k Plan

Acquiring a company with a 401k plan involves significant risks, especially with recent legal changes and trends. Buyers must understand these developments to avoid harming employees or exposing their 401k plan to prior liabilities. Conducting thorough due diligence on the seller's 401k plan is crucial for making informed decisions and minimizing legal risks.

Source: Foley.com, May 2025

House Panel Advances Bill to Permit CITs in 403b Plans

The U.S. House Financial Services Committee has passed H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act of 2025, with a vote of 43 to 8. This bipartisan bill seeks to permit 403b retirement plans, typically utilized by nonprofit employees, to invest in collective investment trusts, thus bringing their investment choices in line with those offered by 401k plans.

Source: Bpas.com, May 2025

New Voluntary Fiduciary Correction Program

The new Voluntary Fiduciary Correction Program introduces a Self-Correction Component that allows practitioners to use the DOL Calculator for self-correction of errors. In return for the self-correction, plan sponsors will receive an email acknowledgment of receipt rather than a "no-action" letter. The key difference between self-correction submissions and traditional VFCP filings is that self-correction only requires the retention of supporting documents, while filings necessitate the submission of those documents. Despite the difference, self-correctors must still prepare and keep all documentation as if filing a regular VFCP application.

Source: Belfint.com, May 2025

Multiple Retirement Bills -- Including CITs in 403bs -- Being Marked Up in House This Week

The House Financial Services Committee is holding a two-day session to mark up four bipartisan bills aimed at modernizing retirement plans, improving retail investor access to private markets, lessening regulatory burdens, and protecting seniors from financial fraud. Key bills include the Retirement Fairness for Charities and Educational Institutions Act (HR 1013) and the Improving Disclosure for Investors Act (HR 2441), both prioritized by the Insured Retirement Institute and the Investment Company Institute. Additionally, IRI supports the Senior Security Act (HR 1469), and ICI advocates for the Increasing Investor Opportunities Act among the many bills being considered.

Source: 401kspecialistmag.com, May 2025

Senators Introduce Bipartisan Bill to Encourage Automatic Enrollment

U.S. Senators Tim Kaine and Bill Cassidy introduced the Auto Reenroll Act, legislation aimed at increasing enrollment in employer-sponsored retirement plans and the use of employer matches. The bill proposes to amend ERISA, allowing plan sponsors to automatically reenroll non-participating employees every three years unless they choose to opt out again. Sen. Cassidy emphasized that this initiative would help Americans better manage their finances and prepare for retirement.

Source: 401kspecialistmag.com, May 2025

Retirement Savings to Retirement Income 401k Participant Perspectives: Study

Traditional 401k plans have often lacked a mechanism for converting retirement savings into a consistent monthly income for retirees. However, this is starting to change, partly due to the SECURE Act. To better understand 401k participants' views on this issue, Nuveen and the TIAA Institute conducted a survey focused on the conversion of retirement savings into retirement income, particularly the role of in-plan annuities. The 18-page report outlines the key findings from this Participant Sentiment Survey on Lifetime Income.

Source: Tiaa.org, May 2025

What You Need to Know About QDROs: Dividing Retirement Benefits in Divorce

Dividing retirement benefits during a divorce is complex, often requiring a Qualified Domestic Relations Order to ensure proper allocation of benefits between the plan participant and an alternate payee, typically a former spouse or dependent. Understanding QDROs can help prevent delays and protect interests. This guide offers essential information from the DOL, the IRS, and the GAO to assist clients, family law attorneys, and retirement plan administrators in navigating QDROs more effectively.

Source: Sblgllp.com, May 2025

Workers Overwhelmingly Call on Employers to Offer Lifetime Income in 401k Plans

A recent survey by Nuveen and the TIAA Institute reveals a significant shift in attitudes toward retirement income among 401k participants. Nearly all respondents (93%) believe it is essential for their retirement plans to offer options for converting savings into guaranteed monthly income that lasts a lifetime. Additionally, 87% feel that employers should help ensure employees achieve retirement income security. This represents a dramatic rise in interest in guaranteed lifetime income, with only 59% of workers expressing the same view in a 2021 survey.

Source: Prnewswire.com, May 2025

Lawsuit Filed Against UnitedHealth Alleging Misuse of Forfeited 401k Plan Assets

UnitedHealth Group Inc. is facing a federal class action lawsuit, Kotalik et al. v. UnitedHealth Group Inc. et al., filed on April 28 in the District of Minnesota. The lawsuit alleges that UnitedHealth and the administrative committee of its 401k Savings Plan misused forfeited employee retirement plan assets, violating fiduciary duties under ERISA. Four current and former employees represent over 250,000 plan participants, claiming that the company improperly utilized 401k forfeitures to offset its contributions instead of covering plan expenses, which the plaintiffs argue is a breach of ERISA regulations.

Source: Planadviser.com, May 2025

Understanding Student Loan Matching Programs

Student loans can hold your employees back and their retirement savings too. A student loan matching program can change that. This 6-page paper talks about how a student loan matching program works and why these programs are a game-changer.

Source: Pensionplanspecialists.com, May 2025

The Truth About Auto-Portability

Auto-portability, established in 2018 and enhanced by SECURE 2.0, has faced criticism in articles that promote it over automatic rollover IRAs, often misrepresenting its business model and overstating survey results to showcase its advantages. Moreover, there are alternative options that may provide better financial outcomes. This article is the first in a three-part series aimed at clarifying the auto-portability program, its process, responsibilities, and intended outcomes, helping readers assess its suitability for themselves or their clients.

Source: Penchecks.com, May 2025

Terms of Intuit Forfeiture Suit Settlement Unveiled

A settlement has been reached in a lawsuit involving Intuit, filed in the Northern District of California by plaintiff Deborah Rodriguez in October 2023. This case concerns forfeiture reallocation, and after 18 months, including a failed motion to dismiss, Intuit and Rodriguez have notified the court of their settlement, facilitated by mediator Hon. Morton Denlow (Ret.). Court approval is necessary for the settlement, and the parties will provide details on the process leading to the agreement.

Source: Napa-net.org, May 2025

Suit Says Cigna Committed Fiduciary Faults With Stable Value, Forfeitures

A lawsuit has been filed by participants Amanda Reven and Antoinette Argentine, accusing The Cigna Group 401k Plan Retirement Plan Committee of fiduciary breaches related to a stable value option and misuse of plan forfeitures. The plaintiffs, represented by Capozzi Adler PC, claim that the committee failed to properly and adequately review the plan's investment portfolio, both initially and continuously, to ensure that each investment option was prudent in terms of performance.

Source: Napa-net.org, May 2025

What is an Improper Use of Forfeiture Case Worth? Intuit Settlement Provides Perspective

On Friday, May 16th, the plaintiff's counsel in the Rodriguez v. Intuit Inc. case submitted a motion to approve a settlement of $1,995,000. The motion suggests that this settlement represents a reasonable compromise between the parties involved; as the saying goes, a fair compromise often leaves no one entirely satisfied. The resolution raises questions about the implications for other ongoing cases and retirement plans that have historically used forfeitures to adjust employer contributions.

Source: Mmmlaw.com, May 2025

AI in 401k Plans: Cool, But Who's Getting Sued When It Goes Wrong?

The concept of Artificial Intelligence can seem intimidating, often resembling themes from sci-fi movies like Terminator. However, AI is making inroads in the 401k industry, particularly in areas such as participant engagement, plan analytics, and investment management. Despite its capabilities, many 401k plan sponsors lack a deep understanding of both their plan documents and AI's underlying technology. While AI offers useful solutions, it also introduces significant legal and compliance challenges that can put a strain on plan sponsors, raising concerns about fiduciary responsibilities.

Source: Jdsupra.com, May 2025

How AI Is Transforming 401k Education for the Next Generation

Incorporating AI into 401k education marks a substantial advancement over current digital employee education platforms. The era of relying solely on quarterly enrollment meetings for employee education is over. Thanks to online delivery systems, employees can now access information on demand, eliminating the need to wait for scheduled meetings.

Source: Fiduciarynews.com, May 2025

Pizarro v. Home Depot and the Future of ERISA Litigation

Following its landmark ruling in Cunningham v. Cornell University, the Supreme Court is now addressing another significant ERISA case, Pizarro v. Home Depot, Inc. The central question in Pizarro is which party carries the burden of proof regarding causation after the plaintiff has plausibly presented their case and demonstrated a loss. Unlike in Cunningham, the Pizarro case does not involve prohibited transactions or exemptions, suggesting that its ruling could have wider implications for future ERISA litigation.

Source: Fiduciaryinvestsense.com, May 2025

Documentation and Review: Reminders for the ERISA Plan Fiduciaries

This article highlights specific actions that plan sponsors should take to enhance their compliance measures. These include: implementing a systematic approach for selecting and monitoring service providers, regularly reviewing and updating service provider contracts to ensure reasonable fees and transparency, ensuring that plan documents adhere to relevant state and federal regulations, gaining a clear understanding of the fees associated with administration, consulting, and plan networks, and updating contracts and procedures to address cybersecurity responsibilities.

Source: Barran.com, May 2025

Forfeiture Litigation: Treat It As a Nothing Burger at Your Own Peril

Forfeiture lawsuits are emerging as a significant trend in ERISA litigation, eliciting varied reactions, often filled with frustration or dismissal. While some may downplay the importance of these lawsuits, advisors are encouraged to recognize their significance. Emotional responses can hinder plan sponsors and fiduciaries, while also obscuring an opportunity for retirement plan advisors to provide a more informed and nuanced understanding of the issue.

Source: Wealthmanagement.com, May 2025*

Benefits Council Proposes New Ways to Use Retirement Surpluses to Boost Benefits, Raise Revenue

The American Benefits Council has proposed changes to allow employers to better utilize surplus assets in retirement plans. The first proposal seeks to enable surplus assets from defined benefit pension funds to be transferred to participants' defined contribution plans without having to terminate the defined benefit plan, a change that is currently restricted. The second proposal would allow surplus assets from retiree health accounts to be transferred to cover other benefits, such as active employee health benefits. These changes aim to benefit employees while also increasing revenue for the federal government.

Source: Plansponsor.com, May 2025

Cigna Hit With Forfeiture Lawsuit; Intuit Reaches Settlement

As lawsuits persist against companies accused of mishandling forfeited funds in 401k plans in violation of their obligations under ERISA, Cigna Group has become the latest firm to be sued regarding its management of forfeitures. In contrast, software giant Intuit Inc. has reached a settlement after the court approved the case to proceed into 2024.

Source: Plansponsor.com, May 2025

The Part-Time 401k Plan Participant

The SECURE Act and SECURE 2.0 have enhanced access to employer-sponsored retirement plans for many part-time employees. To improve these workers' retirement readiness, sponsors must recognize the unique challenges they face compared to full-time employees. This includes focusing on onboarding, education, communication, and plan design tailored to part-time workers. By addressing their distinct needs, employers can foster inclusivity and create a more cohesive workforce.

Source: Fiduciaryadvisors.biz, May 2025

Selecting a Qualified Default Investment Alternative (QDIA)

As an employer, you have the opportunity to provide a range of benefits that support your employees in achieving financial security, particularly regarding retirement. One valuable option is a Qualified Default Investment Alternative. A QDIA serves as the default investment choice within an employer-sponsored retirement plan. If an employee makes contributions to the plan without indicating their preferred investment strategy, their funds will be automatically directed to the QDIA. This is a brief overview of its function and importance.

Source: Captrust.com, May 2025

Many Small Biz Owners Not Saving for Retirement: Survey

A recent report from WealthRabbit highlights a significant retirement crisis among small business owners, revealing that one in five have no retirement savings, and most have saved less than $50,000. Many may rely on the sale of their business for retirement funds, but one in three respondents doubt they will ever be able to retire. The 2025 WealthRabbit Small Business Retirement Report indicates that the traditional retirement system is failing this demographic, with women particularly affected, being twice as likely as men to have no savings.

Source: 401kspecialistmag.com, May 2025

CPA Guide: What Exactly Do TPAs Do?

The retirement industry can be complex and filled with numerous acronyms, making it challenging to navigate. What is a TPA? TPAs specialize in administrative operations for plan sponsors, ensuring compliance with relevant laws and regulations, primarily those from the IRS and DOL. Their role involves various tasks to assist in managing retirement plans effectively.

Source: Spconsultants.com, May 2025

New Law Firm Brings Forfeiture Case Against W.W. Grainger

A lawsuit has been filed against W.W. Grainger's 401k plan, which has over 30,000 participants and approximately $3.45 billion in assets, for alleged breaches of fiduciary duties under ERISA. The plaintiffs claim that the plan's fiduciaries misused forfeitures to benefit the company by reducing future employer contributions. This practice is said to violate the responsibilities of loyalty and prudence mandated by ERISA.

Source: Psca.org, May 2025

How Much Do Companies Typically Match on 401k

Employee matching contributions are a prevalent feature in employer-sponsored retirement plans, with 98% of employers offering some form of match to enhance employee savings. Beyond being a benefit, matching contributions serve as a strategic tool for employers to attract and retain top talent, boost productivity, and increase engagement. By linking matches to vesting schedules, employers can incentivize employees to remain with the company longer, resulting in increased savings for employees and better utilization rates for employers.

Source: Myubiquity.com, May 2025

Timely Use of Forfeitures

The IRS mandates that forfeitures in defined contribution plans must be utilized within 12 months after the end of the plan year in which they occur. Failure to comply with this timeline is deemed a compliance issue. Many plan sponsors unknowingly violate this requirement, leading to potential problems. However, the IRS is currently providing a temporary reprieve for affected plan sponsors, allowing them to resolve these compliance failures if they take action promptly.

Source: Legacyrsllc.com, May 2025

Giant Eagle Settles ERISA Class Action Suit Alleging Failure to Control 401k Plan Costs

Giant Eagle, a grocery store chain, has settled a class action lawsuit that claimed it violated ERISA by not adequately managing administrative and recordkeeping costs for its 401k plan. The lawsuit, led by a former employee, alleged that this negligence resulted in significant financial losses for plan participants. The details of the settlement reached through mediation, have not been disclosed. The case is Cheryl Kehrer v. Giant Eagle Inc. et al., in the U.S. District Court for the Western District of Pennsylvania.

Source: Hallbenefitslaw.com, May 2025

Mandatory Automatic Enrollment for New 401k/403b Plans Gets Much Needed Guidance

SECURE 2.0 mandated, for the very first time, a special automatic enrollment arrangement be added to all new 401k and 403b plans. In this comprehensive article, Groom principals Elizabeth Thomas Dold and David Levine explore essential facets of the IRS proposed regulations covering this new mandate. They discuss which plans fall under the regulations, the functioning of automatic enrollment features, and any applicable exceptions. Additionally, the article details the necessary compliance steps and highlights specific considerations regarding mergers, acquisitions, and multiple employer plans.

Source: Groom.com, May 2025

Callan 2025 DC Trends Survey: Continued Focus on Fees and Fund/Manager Due Diligence

The 2025 Defined Contribution Trends Survey analyzes key aspects of DC plan management, including governance, investments, fees, and plan design. As the 18th annual edition, it offers benchmarks for plan sponsors to compare their plans with peers and provides actionable insights to enhance plan effectiveness and participant outcomes. Conducted online at the end of 2024, the survey gathered responses from 89 DC plan sponsors across various industries, primarily from financial services and government. This article highlights the significant findings from the survey.

Source: Callan.com, May 2025

Employers Prioritize Fees and Investment Structure in DC Plans

In 2024, plan sponsors were prioritizing investment management fees, fund and manager due diligence, and evaluation of investment structures, according to Callan's 2025 Defined Contribution Trends Survey. The survey, involving 89 plan sponsors, reveals that over 90% of the plans have assets exceeding $200 million, with 58% serving more than 10,000 participants. The findings aim to identify key trends affecting defined contribution workplace plans.

Source: 401kspecialistmag.com, May 2025

Sixth Circuit Ruling Shows Toughening on ERISA Fiduciary Suits

A recent decision by the Sixth Circuit upheld the dismissal of a proposed class action against Denso International America, highlighting a trend among appellate courts to raise the standards for cases alleging breaches of fiduciary duty under federal benefits law. The three-judge panel supported a Michigan federal court's July 2023 ruling that rejected former employee Martha D. England's ERISA lawsuit for lack of a valid claim. This ruling has prompted defenses from attorneys representing employers in similar 401k excessive fee cases in other courts, including Florida and the Eighth Circuit.

Source: Wagnerlawgroup.com, May 2025

Supporting the Sandwich Generation: A Guide for 401k Plan Sponsors

Employees in the sandwich generation -- those balancing the financial demands of caring for aging parents while raising dependent children -- often find it challenging to concentrate on their long-term financial objectives. Plan sponsors have a distinct opportunity to support this demographic by providing tailored financial wellness resources and plan features aimed at alleviating their financial burdens. Here’s how employers can better assist this crucial segment of the workforce and guide them toward a more secure retirement. This overview outlines key strategies plan sponsors can implement to make a difference.

Source: Savantwealth.com, May 2025

DOL May Not Have the Authority Over IRAs It Thinks It Has

Critics of the Retirement Security Rule argue that the DOL should not regulate rollovers between individual retirement accounts. They view these rollovers as a weak point in the rule, finalized in April. Legal experts generally agree that the DOL likely lacks the authority to impose fiduciary responsibilities under ERISA's Title I on IRAs. Kendra Isaacson, a former Senate pension policy director, notes that the DOL's jurisdiction is particularly questionable for rollovers not involving employer-sponsored plans, such as those between IRAs or from IRAs to annuities.

Source: Plansponsor.com, May 2025

SEC Guidance Clarifies Insider Trading Rules for 401k Brokerage Windows

The SEC has clarified that when a 401k plan participant sells company stock through a self-directed brokerage window, the transaction must comply with all aspects of Rule 10b5-1(c)(1) to ensure protection against insider trading liability. A self-directed brokerage window allows participants to independently trade a wider range of investments beyond the standard offerings of the plan. As a result, participants subject to insider trading rules face the same trading restrictions on company stock in their 401k accounts, regardless of whether the shares are part of the plan's core investments or obtained through the brokerage window.

Source: Planadviser.com, May 2025

Sixth Circuit Stands by Plausibility Standard in 401k Excessive Fee Suit

The court rejected the plaintiffs' claims that the Commonspirit case was not relevant, noting that comparisons based solely on industry surveys are insufficient. It also disagreed with the Seventh Circuit's ruling in Hughes v. Northwestern University, stating that it lacks the context-specific details needed to demonstrate that fees are "excessive relative to the services rendered." In summary, in the Sixth Circuit, plaintiffs are required to provide plausible arguments that include both a comparison of fees and the services provided, rather than relying solely on fee comparisons.

Source: Napa-net.org, May 2025

Bill Would Lower Retirement Plan Eligibility Age to 18

Senators Bill Cassidy and Tim Kaine have reintroduced the Helping Young Americans Save for Retirement Act, which aims to lower the participation age for ERISA-governed plans from 21 to 18 years old. The bill seeks to encourage retirement savings among younger workers, while still allowing plans to establish a minimum age younger than 18 if they choose. This legislation was previously introduced in November 2023.

Source: Napa-net.org, May 2025

Big Win for Savers: Reconciliation Bill Spares Retirement Plans

The influential House Ways and Means Committee ensured that retirement plans remain unaffected by its reconciliation proposal. "The real story here is what's absent from the proposal, any negative implications for retirement plans," said ARA CEO Brian Graff. He described this outcome as a significant victory for both plan sponsors and participants, as well as for the integrity of the nation's retirement plan system overall.

Source: Napa-net.org, May 2025

Remember That Your 401k Plan Is an Employee Benefit

This article emphasizes the importance of remembering the original purpose behind implementing 401k plans, as many plan sponsors tend to lose sight of this over time. With 27 years of experience as an ERISA attorney, the author has observed numerous sponsors who no longer recall the foundational reasons for their plans, highlighting the need for intent and clarity in managing retirement benefits.

Source: Jdsupra.com, May 2025

Employers Say Their Benefits are Modern, Employees Don't Agree: Study

A study by Prudential reveals a significant gap between employers and employees regarding the perception of benefits, with 86% of employers deeming their benefits modern, while only 59% of workers agree. Workers face challenges such as saving for retirement (45%), rising everyday costs (44%), housing expenses (29%), and living paycheck to paycheck (26%). Notably, 1 in 10 workers rank financial survival as their primary concern. The findings highlight a disconnect between the benefits companies provide and the actual needs of employees.

Source: Hrdive.com, May 2025

Using 401k AI to Close Savings Gaps With Fiduciary Fixes

Using 401k AI to address retirement savings gaps shows significant potential but also brings increased fiduciary responsibilities. Many participants are unprepared for retirement, with savings disparities often tied to demographic factors that may go unnoticed without detailed analysis. AI can help identify these hidden gaps, and fiduciaries are increasingly tasked with utilizing these insights to implement targeted solutions that ensure equitable retirement outcomes for all employees.

Source: Fiduciarynews.com, May 2025

SECURE 2: What Service Providers Need to Do Now to Support Plan Sponsors and Participants

To maximize the benefits of SECURE 2.0 for plan sponsors and participants, service providers like recordkeepers, financial advisors, and third-party administrators need to adapt their services to comply with new regulations. They face challenges in maintaining compliance, improving implementation efficiency, and facilitating connections among recordkeepers, plan sponsors, and participant outcomes. This article highlights three key provisions that will have significant impacts starting in 2025.

Source: Enterpriseiron.com, May 2025

Considerations for Plan Sponsors in the Wake of Cunningham v. Cornell

ERISA-related lawsuits, particularly those involving excessive fees, have significantly increased over the past decade, with newer strategies like forfeiture litigation gaining traction. While lawsuits were once primarily aimed at billion-dollar plans, smaller plans are now also being targeted. In 2024, there were a record 53 settlements totaling over $200 million, with an average settlement of $4.6 million. However, there are strategies that plan sponsors can implement to reduce their risk of litigation.

Source: Carltonfields.com, May 2025

It's Time to Restate Your 403b Plan: Deadline Looms

Organizations sponsoring 403b retirement plans must heed the IRS deadline for plan restatements. Ignoring this deadline could lead to compliance risks and penalties. Non-profits, public school districts, and government entities utilizing pre-approved plan documents should ensure timely restatement of their plans to avoid potential issues.

Source: Brickergraydon.com, May 2025

Navigating Generational Shifts: Tailoring 401k Communication Strategies Across Age Groups

It's crucial to tailor communication strategies to engage effectively with different generations: Baby Boomers, Gen X, Millennials, and Gen Z. Using a one-size-fits-all approach may hinder engagement with plan sponsors and participants. Customized messaging is essential for fostering stronger connections and improving outcomes for diverse age groups in the workplace.

Source: 401k-marketing.com, May 2025

Fiduciary Duty in the Digital Age: Cybersecurity Best Practices for ERISA Plans

Cybercriminals target ERISA retirement plans due to their vulnerabilities in access and opportunity. They exploit weaknesses in systems, software, and human behavior, such as compromised credentials, to steal information. The digital nature of plan administration and reliance on third-party services create a wide attack surface for cyber threats. A breach of fiduciary duty occurs when plan fiduciaries, like administrators or trustees, fail to protect plan assets or participant data from these threats. This responsibility includes implementing adequate cybersecurity measures, addressing data breaches, and managing cybersecurity risks effectively. This article offers an in-depth analysis of these issues.

Source: Woodruffsawyer.com, May 2025*

Universal Savings Account Proposal Reintroduced

U.S. Sen. Ted Cruz has introduced the Universal Savings Account Act, which aims to create tax-advantaged savings accounts that allow American families to save without the usual restrictions and penalties of traditional accounts. Rep. Diana Harshbarger has introduced companion legislation in the House. USAs would enable participants to save, invest, and withdraw funds freely for any purpose.

Source: Senate.gov, May 2025

Intuit Reaches Settlement in Forfeiture Case

Intuit has chosen to settle a lawsuit related to a fiduciary breach concerning the use of plan forfeitures after unsuccessful attempts to dismiss the case. Filed in October 2023 in the Northern District of California, the lawsuit highlighted that the Plan allowed forfeited nonvested accounts to be used for administrative expenses or to lower future Company matching contributions. Eighteen months later, following a failed motion to dismiss, Intuit and the plaintiff, Deborah Rodriguez, reached a settlement with the help of mediator Hon. Morton Denlow (Ret.) and are seeking court approval for their agreement.

Source: Psca.org, May 2025

2025 PLANADVISER Adviser Value Survey

The 2025 PLANADVISER Adviser Value Survey reveals that 46.3% of plan sponsors using an adviser value "evaluation and monitoring of investment lineup" the most. This finding highlights the key influence advisers have on retirement plan outcomes. The survey analyzes responses from the PLANSPONSOR Defined Contribution Survey, focusing on aspects like investment lineups, plan governance, fiduciary guidance, and plan design.

Source: Planadviser.com, May 2025

Schlichter Bogard Files Second 401k Forfeiture Reallocation Suit

The law firm Schlichter Bogard LLC has filed a lawsuit against Northrop Grumman, focusing on a fiduciary breach related to the reallocation of plan forfeitures. The lawsuit claims that the defendants unlawfully charged plan administrative expenses to participants' retirement accounts, violating ERISA. The suit includes a demand for a jury trial, addressing a growing area of litigation in this context.

Source: Napa-net.org, May 2025

Empower Escapes Swiss Re 401k Fiduciary Suit

A recent ERISA fiduciary breach lawsuit against the fiduciaries of the $1.45 billion Swiss Re Group U.S. Employees' Savings Plan and service provider Empower has ended quickly in favor of the recordkeeper. The lawsuit, filed just weeks ago, included multiple allegations of fiduciary breaches. The likely reason for its abrupt conclusion is that recordkeepers, like Empower, are generally not considered fiduciaries, which weakens the chances of success for such lawsuits.

Source: Napa-net.org, May 2025

DOL Issues Temporary Enforcement Policy for Small Amount Transfers to State Unclaimed Property Funds

The DOL recently released Field Assistance Bulletin 2025-01, which offers a temporary enforcement policy concerning the transfer of small retirement plan benefits to state unclaimed property funds. This guidance aims to assist fiduciaries in meeting their ERISA obligations to locate participants and ensure they receive their retirement benefits, especially regarding uncashed checks and amounts that have been involuntarily distributed. However, plan fiduciaries are advised to carefully consider and consult legal counsel on the appropriateness of escheatment in different situations.

Source: Morganlewis.com, May 2025

SEC Adds 10b5-1 Guidance for 401k Plans With Company Stock Investment Options

The SEC's Division of Corporation Finance has introduced a new Exchange Act Compliance and Disclosure Interpretation that clarifies the rules for 401k plan participants who are subject to insider trading regulations. According to the CDI, when such a participant sells company stock through a self-directed brokerage window, the transaction must comply with all requirements outlined in Rule 10b5-1(c)(1), which pertain to both the purchase and sale of the issuer's securities in the open market.

Source: Haynesboone.com, May 2025

Prepare Now for Mandatory Roth Catch-Up

In January 2025, proposed Treasury regulations regarding catch-up contributions were released, offering guidance on the mandatory Roth catch-up requirement introduced by section 603 of Division T of the SECURE 2.0 Act of 2022. Under this rule, individuals aged 50 and older must make catch-up contributions to eligible plans on a Roth basis if their prior year's wages exceeded $145,000 (adjusted for inflation). This requirement applies to 401k, 403b, and governmental 457b plans. This article specifically discusses the implications of the mandatory Roth catch-up rule for 401k plans.

Source: Bclplaw.com, May 2025

Texas Federal Court Allows an ERISA Fiduciary Challenge Against Alleged "ESG Investing" Without Any ESG Funds

On January 10, 2025, the Texas federal district court ruled in Spence v. American Airlines that both American Airlines and the committee managing its 401k plans violated their fiduciary duty under ERISA. This breach was primarily related to proxy voting of securities within specific investment funds in the 401k plans. The decision is noteworthy as it may pave the way for new types of ERISA fiduciary litigation targeting 401k plans, emphasizing proxy voting rather than traditional concerns like investment performance or administrative costs. This article discusses the court's findings, legal implications, and key considerations for 401k plan sponsors and fiduciaries in light of this ruling.

Source: Troutman.com, May 2025

Plan Sponsors Beware: The U.S. Supreme Court Just Eased Requirements to File ERISA Prohibited Transaction Suits

In the case of Cunningham v. Cornell University, many ERISA retirement plan sponsors and fiduciaries hoped the U.S. Supreme Court would establish new pleading standards to mitigate the increase in litigation against such plans. However, the Court ruled that plaintiffs are not responsible for proving that ERISA Section 408 exemptions do not apply; instead, plan sponsors and fiduciaries must assert these exemptions as affirmative defenses. This ruling is expected to lead to a new surge of lawsuits targeting ERISA plans related to essential transactions with service providers.

Source: Ropesgray.com, May 2025

Impact of Forfeiture Lawsuits on Plan Sponsors

Companies have discretion on how to use forfeitures -- unvested company contributions when an employee leaves -- provided the policy is clearly stated in the plan document. Common uses for these forfeitures include reducing contribution obligations to existing participants, covering plan fees, or reallocating funds to other participants. According to PSCA's 67th Annual Survey, historically about 60% of plans reduce company contributions with forfeitures, around 50% use them to offset expenses, and about 10% reallocate them. As lawsuits related to forfeitures increase, there is interest in whether companies are maintaining or changing their forfeiture policies.

Source: Psca.org, May 2025

Strategies to Help Employees Maximize Retirement Benefits

Participation in company-sponsored retirement plans is gradually increasing, but employers still face pressure to enhance participation. Recent surveys reveal that 83% of employees regret their retirement plan decisions, 41% intend to work longer than expected, and 83% plan to continue working after retirement. While the current investment environment contributes to this anxiety, the lack of retirement readiness has been an ongoing issue, even during times of strong market performance. The challenge lies not only in creating effective retirement plans but also in encouraging employee engagement and participation.

Source: Planpilot.com, May 2025

Emergency Savings Linked to Less 401k Loan Use, Stronger Retirement Outcomes

A February survey by National Debt Relief reveals that substantial debt is affecting Generation X and Baby Boomers, leading some to postpone retirement. Among 1,000 surveyed individuals, 45% reported carrying an average credit card balance of nearly $9,000, with monthly payments of around $418. Additionally, T. Rowe Price's annual Reference Point report highlights trends in retirement planning, showing a 4% increase in average loan sizes in 2024, slightly outpacing inflation, across all age groups. While loan usage among 401k participants grew by two percentage points from 2023, it remains lower than the peaks seen between 2015 and 2019.

Source: Planadviser.com, May 2025

Settlement Reached in Principle in Pentegra Fiduciary Breach Case

Parties involved in an ERISA fiduciary breach lawsuit concerning Pentegra's multiple employer retirement plan have reached a settlement in principle, as noted in a court order on May 2, filed in the U.S. District Court for the Southern District of New York. The case was poised for further court proceedings to address prohibited transaction claims. Recently, a jury awarded a class of plan participants over $38 million for fiduciary breaches under ERISA. U.S. District Judge Philip M. Halpern stated that all remaining deadlines are paused while the parties finalize the settlement terms, and they are required to seek preliminary approval of the settlement or provide a status update by May 16.

Source: Planadviser.com, May 2025

Judge Finds in Favor of Knight-Swift in 401k Forfeiture Case

A federal judge in Arizona has dismissed a class action lawsuit against Knight-Swift Transportation Holdings, which was accused of improperly using forfeited assets from its 401k retirement plan. The lawsuit claimed that the company violated ERISA by using these funds to offset company contributions instead of covering plan expenses. A key point of contention was whether Knight-Swift was obligated by its annual Form 5500 filings to the DOL, which stated that forfeited assets "shall be used" for plan expenses.

Source: Planadviser.com, May 2025

Hardship Distributions: Tapping Into Retirement Savings, a Last Resort

A 401k plan is a crucial part of retirement savings for many Americans. In times of financial emergencies, individuals may consider hardship distributions, which are early withdrawals permitted under certain conditions. While these distributions can provide immediate financial relief, they involve specific rules and tax implications that both plan sponsors and individuals need to be aware of before requesting a hardship withdrawal from their company 401k plan.

Source: Newfront.com, May 2025

Kaiser Prevails in Motion to Dismiss 401k Forfeiture Reallocation Suit

A fiduciary defendant, Kaiser Foundation Health Plan, along with related entities, has successfully dismissed a lawsuit filed by Stacey M. Madrigal. The suit claimed a fiduciary breach concerning the use of plan forfeitures to offset employer contributions, alleging violations of ERISA.

Source: Napa-net.org, May 2025

High Court Sets Low Bar for ERISA Prohibited Transaction Claims

The U.S. Supreme Court's unanimous ruling in Cunningham v. Cornell University has made it easier for plaintiffs in excessive fee lawsuits against ERISA plans to advance their prohibited transaction claims. The decision establishes a low pleading standard, which may hinder fiduciaries' ability to dismiss such claims at the early stages of litigation. While the ruling could lead to an increase in these lawsuits and settlements, the Court acknowledges that lower courts have mechanisms to mitigate baseless claims. The impact on sponsors and fiduciaries will largely depend on how proactively lower courts utilize these tools.

Source: Mercer.com, May 2025

Supreme Court Clarifies ERISA Prohibited Transaction Pleading Standards

On April 17, 2025, the U.S. Supreme Court issued a unanimous ruling in Cunningham v. Cornell University, establishing a more favorable pleading standard for plaintiffs in ERISA-prohibited transaction claims. Authored by Justice Sonia Sotomayor, the decision reversed the Second Circuit's ruling, clarifying that plaintiffs do not need to preemptively state that ERISA's exemptions are not applicable. Instead, it is the responsibility of plan fiduciaries to assert and prove these exemptions as affirmative defenses.

Source: Erisalitigationadvisor.com, May 2025

Controlled Group or Affiliated Service Group? What That Means for Your 401k Plan Compliance

If your business is part of a Controlled Group or an Affiliated Service Group, it may face compliance issues concerning its 401k plan. Misunderstandings about these affiliations can lead to severe consequences, including plan disqualification, costly corrections, IRS penalties, and employee dissatisfaction. The positive aspect is that many of these issues can be resolved if addressed promptly. The article outlines the potential consequences, corrective actions, and strategies to safeguard your plan against audit risks.

Source: Employeebenefitslawgroup.com, May 2025

Fiduciary Update: May 2025

Every quarter, CAPTRUST Financial Advisor Drew McCorkle assesses the latest legislation and litigation pertinent to the fiduciary responsibilities of retirement plan sponsors. In this quarter's review, you'll find insights on the Supreme Court's ruling concerning prohibited transaction claims, a Presidential Action aimed at banning retirement plan investments in companies deemed foreign adversaries, an unusual ERISA jury verdict, and additional key updates.

Source: Captrust.com, May 2025

ERISA Fidelity Bonds: Myth Busting Five Common Misconceptions

Fidelity bonds are essential for protecting employee benefit plans against financial wrongdoing, as they cover first-dollar losses without a deductible. ERISA mandates that most retirement plans maintain such coverage, regardless of participant count or asset value. However, misconceptions about these bonds can create compliance challenges for plan sponsors. This article seeks to clarify common myths about ERISA fidelity bonds and guide sponsors toward ensuring compliance.

Source: Bdo.com, May 2025

Trends in ERISA Litigation: What Plan Sponsors Should Consider Now

This article focuses on five trends in ERISA litigation that plan sponsors should consider in their risk mitigation efforts: Forfeiture Accounts, Health Plan Fee Litigation, SECURE 3.0?, Health Plan Cost and Fee Transparency, and Health Plan Regulation.

Source: Barran.com, May 2025

Extending Retirement by 5 Years Skyrockets Chance of Depleting Retirement Savings

New research from Nationwide and The American College of Financial Services highlights a significant risk associated with extending retirement by just five years: it increases the likelihood of depleting savings by 41%, especially among healthy, higher-income retirees. This concern is further emphasized by Allianz Life's 2025 Annual Retirement Study, which found that 64% of Americans are more afraid of running out of money than dying. The study reveals a disconnect between rising lifespans, which now often exceed 90 years, and inadequate financial planning, leading many to face an increasing risk of outliving their savings.

Source: 401kspecialistmag.com, May 2025

Where Will the Trump Admin Take Retirement Policy?

At the NAPA 401k Summit in Las Vegas, ARA CEO Brian Graff posed a question to former Assistant Secretary for Labor for the Employee Benefits Security Administration, Preston Rutledge, about the extent of White House involvement in ERISA matters. Rutledge confirmed, "When it comes to 401ks? Yes, he genuinely cares about them." He noted that the key players in the White House, particularly within the National Economic Council led by Kevin Hassett, are actively engaged in these issues. Graff further inquired whether the fiduciary rule would be a priority for the department. Rutledge affirmed, "It will indeed be a priority. The real question is how they choose to approach it."

Source: Psca.org, May 2025*

How Fiduciary Duty and Cognitive Decline Intersect

Plan sponsors have a fiduciary duty to protect participants and their retirement assets, a responsibility that becomes particularly challenging as workers face cognitive decline in later years. The National Institutes of Health projects a significant increase in dementia cases, with 42% of Americans over 55 expected to develop dementia by 2060, and two-thirds experiencing cognitive impairment by age 70. Compounding this issue, the Federal Trade Commission reported that U.S. consumers lost over $12.5 billion to fraud in 2024, a 25% increase from the previous year. As more participants retain their assets in their plans after retirement or job termination, plan sponsors must navigate the complexities of safeguarding these assets, especially for individuals who may be vulnerable to cognitive impairments and financial fraud.

Source: Plansponsor.com, May 2025

Supreme Court Declines to Hear AT&T ERISA Case

The U.S. Supreme Court declined to hear AT&T's appeal regarding a prohibited transaction in a defined contribution plan, allowing the case Bugielski et al. v. AT&T Services Inc. et al. to return to the district court for further proceedings. The case, which focuses on prohibited transactions under ERISA, has been in litigation since 2017. Several industry groups had submitted an amicus brief requesting the Supreme Court to take up the appeal, but the justices did not comment on their decision.

Source: Planadviser.com, May 2025

GOP House Bills Target DOL Audit Process

Two bills proposed by Republican representatives in the U.S. House aim to increase transparency regarding Department of Labor audits. Representative Lisa McClain introduced the Employee Benefit Security Administration Investigations Transparency Act, which mandates annual reports to Congress on the status of DOL audits and ongoing investigations over 36 months. Additionally, Representative Michael Rulli's bill requires the EBSA to report annually on "adverse interest agreements." Both measures seek to amend the Employee Retirement Income Security Act of 1974 to enhance oversight of investigations.

Source: Planadviser.com, May 2025

How 401k Auto Portability Boosts Women's Retirement Savings

Income inequality significantly affects women's financial security, particularly regarding retirement benefits. In 2023, women earned, on average, 21.8% less than men, according to the Economic Policy Institute. A 2024 study by the TIAA Institute and Ipsos further revealed that women typically retire two years earlier, live three years longer, and have 30% less retirement income than their male counterparts, highlighting a critical disparity in financial preparedness for retirement. But, the Auto Portability Simulation by Retirement Clearinghouse suggests that if auto portability is widely adopted by retirement plan sponsors and recordkeepers, it could help preserve the retirement savings of 2 million women annually. Over a generation, this could lead to 111 million women preserving $753 billion in retirement savings in the U.S. system.

Source: Kiplinger.com, May 2025

UWM Faces Class-Action Lawsuit Over Alleged Misuse of 401k Plan Assets

United Wholesale Mortgage is facing a class-action lawsuit in a Michigan district court, alleging misuse of assets in its 401k retirement plan. The suit claims UWM violated ERISA by using plan assets to offset future employer contributions instead of addressing plan expenses. Allegations include breaches of fiduciary duties and violations of ERISA's prohibited transaction rules. UWM has dismissed the claims as "baseless," stating that it is among many publicly traded companies challenged by similar lawsuits regarding 401k plan practices.

Source: Housingwire.com, May 2025

New VFCP on Late Deposits

The issue of timely deferral deposits remains a contentious topic in the industry, largely due to the vague language used in regulations that leaves room for interpretation. According to DOL Regulation, deferral deposits should be made at the "earliest" reasonable time but must be completed by the fifteenth business day following the month of withholding. This regulation also applies to loan repayments withheld from employee pay. After discussions with regulators, it appears that most pension professionals avoid delaying deposits until the mandated deadline. However, the debate continues regarding whether there can be some flexibility for late deposits.

Source: Belfint.com, May 2025

Retirement Savings for Americans Act Reintroduced, Again

Senators John Hickenlooper and Thom Tillis and Representatives Lloyd Smucker and Terri Sewell have introduced the Retirement Savings for Americans Act of 2025. This is the third time the RSAA has been introduced, having previously been introduced in the last two sessions of Congress.

Source: Ascensus.com, May 2025

Unanimous Supreme Court Decision Makes It Easier for Prohibited Transaction Claims to Survive a Motion to Dismiss

Lawsuits against retirement plans for allegedly overpaying service providers, like recordkeepers, continue to rise. Previously, some courts required plaintiffs to provide detailed allegations that the arrangement was improper or involved unreasonable compensation. However, on April 17, 2025, the U.S. Supreme Court's unanimous ruling in Cunningham v. Cornell University determined that these requirements were too stringent. This new permissive pleading standard could lead to an increase in excessive fee litigation.

Source: Winston.com, May 2025

Supreme Court Decision on Prohibited Transactions Will Increase ERISA Lawsuits, DC Plan Costs

The retirement industry criticized the recent unanimous Supreme Court ruling in Cunningham et al. v. Cornell University et al., arguing that it will lead to increased lawsuits, higher costs for retirement plans, and stifle innovation in plan design. Trade groups expressed concern that the decision encourages litigation against plan fiduciaries for engaging service providers at reasonable fees, which is allowed under ERISA. They stated that only Congressional action can amend ERISA to address the legal complexities regarding prohibited transactions and their exemptions. Tim Rouse, executive director of the SPARK Institute, emphasized that the ruling could burden fiduciaries unnecessarily.

Source: Wagnerlawgroup.com, May 2025

Supreme Court Addresses Prohibited Transaction Lawsuits

In the case of Cunningham v. Cornell University, participants in the university's 403b plan contended that they should not have to prove that certain exemptions to ERISA's prohibited transaction rules do not apply when alleging excessive recordkeeping fees. The U.S. Supreme Court unanimously sided with the plan participants, making it easier for them to sue retirement plans over routine transactions with service providers.

Source: Segalco.com, May 2025

DOL Updates Voluntary Fiduciary Correction Program to Add a New Self-Correction Option

The DOL has updated its Voluntary Fiduciary Correction Program to introduce a new Self-Correction Component. This allows plan sponsors and fiduciaries to self-correct certain prohibited transactions, such as delinquent contributions and loan repayments, without submitting a full VFCP application, under specific circumstances. They can do this by providing a notice and required information to the DOL. Additionally, the DOL has amended the related Prohibited Transaction Exemption to broaden the excise tax relief available for transactions corrected under the SCC.

Source: Robertsandholland.com, May 2025

Investment Menus: What to Expect from Your Retirement Plan Investment Advisor

As a plan sponsor, a key responsibility -- perhaps the most critical one -- is ensuring that your organization's retirement plan is subject to adequate investment oversight. However, how can you determine whether your investment advisor is meeting the expected standards of service? This article highlights the essential functions of investment advisors and identifies potential red flags to watch for.

Source: Retirementplanology.com, May 2025

How Does Your 401k Plan Stack up Against the Industry?

The ninth annual 401k Plan Benchmark Report by Judy Diamond Associates highlights the performance of 401k plans in 2023, showcasing both high and low performers across various industries and company sizes. The top five industries with the best 401k plans include financial advice/investment activities, certified public accountants, legal services, financial and insurance services, and engineering. The report analyzed around 640,000 active 401k plans with minimum asset levels, representing about 74 million eligible workers and $8 trillion in assets across 27 industry categories. The data is derived from Form 5500 filings for the 2023 plan year, reflecting the latest available information.

Source: Napa-net.org, May 2025

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