After nearly 30 years in the industry, the author has witnessed numerous challenges faced by plan sponsors, including legal issues, missed opportunities, and poor fund selections. A common problem is that many plan sponsors are inattentive, despite wanting the best for their employees. Their tendencies to cut costs, exert excessive control, and become complacent create significant risks, leading to fiduciary liability and potential failure. The author views this negligence as a slow-motion disaster waiting to unfold.
The key benefits-related provisions of OBBB are summarized in this chart. Key benefits of the OBBB include several provisions related to employee benefits. Notably, both the initial House-passed version and the final version maintain the existing tax incentives for retirement savings and do not cap employer-sponsored health insurance exclusions. However, the final version introduces changes to Health Savings Accounts, fringe benefits, and executive compensation. It also establishes new tax-preferred "Trump Accounts" for children and allocates $100 million to the Office of Management and Budget for deregulatory efforts.
The U.S. Supreme Court is soliciting the U.S. Solicitor General's opinion on a case involving Parker-Hannifin Corp.'s 401k plan, which has been accused of retaining underperforming target-date funds that charged high fees. The lawsuit, filed in 2021 by five current and former participants on behalf of approximately 32,000 members, claims that Parker-Hannifin violated its fiduciary duties under ERISA by mismanaging the retirement plan. A federal judge initially dismissed the case in December 2023, but the 6th U.S. Circuit Court of Appeals later reversed this decision.
In early May, a settlement was announced regarding a lawsuit that began in September 2020. A jury had previously awarded the plaintiffs nearly $39 million, although they had sought damages between $33 million and $115 million. Additionally, the plaintiffs had a second claim alleging the defendants engaged in prohibited transactions related to the retention of PSI, with potential damages of up to $157 million, along with requests for equitable relief for the plan's future management. The terms of the settlement have now been disclosed, though they fall short of the original amounts sought.
The House Financial Services Committee has approved legislation (H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act of 2025) that aims to expand investment options for participants in retirement plans maintained by universities and hospitals. Currently, 403b plan participants have fewer investment choices compared to those in Section 401k plans. The proposed act would allow certain 403b plans to include collective investment trusts as an investment option, helping to address this disparity and improve the investment opportunities for 403b participants.
The management of retirement funds is influenced by changing political dynamics, particularly concerning ERISA, which mandates fiduciaries to prioritize participants' interests. Recent discussions have revolved around new investment approaches like environmental, social, and governance criteria and emerging products such as cryptocurrency. In May 2025, the DOL initiated actions that reversed the previous Biden administration's policies on ESG and cryptocurrency. These shifts are significant for fiduciaries of ERISA plans, including private sector and union pension plans, as they must navigate compliance in an evolving financial landscape.
The DOL is shifting its approach to environmental, social, and governance investing and cryptocurrency with qualified retirement plans governed by ERISA. In a letter to the U.S. Court of Appeals for the Fifth Circuit regarding the Utah v. Walsh case, the DOL indicated it will issue a new rule that aligns with the Trump Administration's view, which deems the use of individual ESG factors as inconsistent with ERISA fiduciary duties. This move will replace a 2023 rule from the Biden Administration. Additionally, the DOL has rescinded Biden-era regulations that discouraged cryptocurrency investments in defined contribution plans, removing previous warnings and easing the way for plan sponsors to incorporate digital asset options.
The IRS has made its stance clear: if you have plan forfeitures from 2024 or earlier, you must use them by December 31, 2025, or you could face compliance issues. Acknowledging that many plan sponsors may be unaware of this requirement -- whether due to lack of knowledge or oversight -- the IRS is providing a one-time grace period.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
