On April 17th, the U.S. Supreme Court unanimously ruled in Cunningham v. Cornell that plaintiffs in ERISA excessive fee cases only need to plausibly allege that a plan fiduciary engaged in a prohibited transaction. The Court clarified that the burden does not lie with plaintiffs to prove that ERISA's Section 408 exemptions (like fee reasonableness) do not apply. Instead, the Court held that these exemptions are affirmative defenses, so plan fiduciaries must bear the burden of proving that the exemption applies. This decision reversed the Second Circuit's prior ruling in the case.
Senator Bill Cassidy, chairman of the Senate Health, Education, Labor and Pensions Committee, released a white paper titled "Portable Benefits" proposing ways to provide workplace benefits to independent workers. His proposals include allowing banks to create escrow or suspension accounts to manage the irregular incomes of independent workers and enabling companies or trade associations to establish Pooled Employer Plans and Safe Harbor 401k Plans for these workers. These plans could automatically enroll workers, provide guidance, and do so without creating an employment relationship that would affect their independent status.
The U.S. Supreme Court has requested the U.S. solicitor general's input on a 401k excessive fee lawsuit against The Home Depot Inc. The case involves a legal conflict between circuit courts about who bears the burden of proof in such cases. The 10th and 11th Circuits place the burden on plan participants, while the 1st, 4th, 5th, and 8th Circuits, along with the DOL under the Biden administration, rule that once a plaintiff shows a fiduciary breach and loss under ERISA, the burden shifts to the fiduciary. The Supreme Court invited Solicitor General John Sauer to submit a brief expressing the U.S. government's views, without setting a deadline.
Plaintiffs represented by Schlichter Bogard LLC won a substantial jury award in Khan v. Bd. of Directors of Pentegra Defined Contribution Plan, a case alleging excessive fees in a multiple employer plan. The suit claimed that the defendants, instead of leveraging the plan's bargaining power for participants' benefit, enriched themselves and Pentegra by allowing unreasonably high administrative fees to be charged to plan participants.
On April 17, 2025, the Supreme Court ruled in Cunningham v. Cornell University that to state a claim under ERISA section 406(a), plaintiffs only need to allege the elements of section 406(a) itself. Previously, courts were divided on whether plaintiffs also had to allege that section 408's exemptions did not apply. The Court clarified that section 408's exemptions are affirmative defenses for defendants to prove, not requirements for plaintiffs to allege. This ruling makes it easier for plaintiffs to overcome early dismissals, proceed to discovery, and potentially reach settlements in section 406(a) prohibited transaction claims, likely leading to an increase in related lawsuits involving 401k and employee stock ownership plans.
The proposed regulations address many of our questions regarding the mandatory automatic enrollment effective January 1, 2025. With this new guidance, it is essential to ensure that affected plans are applying a good-faith interpretation accordingly. This is an overview of the new Mandatory Automatic Enrollment regs.
Many retirement plan sponsors are still unaware that, as ERISA fiduciaries, they have a responsibility to address and mitigate cybersecurity risks to the retirement plan. Ignoring the overlap between fiduciary duties and cybersecurity obligations can lead to serious consequences. This article provides important reminders and practical protection strategies that are relevant for plan sponsors, including those from small businesses.
In January 2025, the IRS issued proposed regulations addressing "catch-up" contributions under the SECURE 2.0 Act of 2022. These changes affect employees age 50 or older who make additional elective deferrals to 401k plans. This article outlines key information plan sponsors and fiduciaries need to understand about these proposed IRS updates.
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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.
