What Fiduciaries Need to Demonstrate When Investing in "Shiny New Objects"
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Insight: Studies, Research, Analysis, or Papers Court and Legal
Legislative or Washington DC
Cyber and Plan Security Compliance and Regulatory
Marketplace News Summaries Fiduciary and Plan Governance What Fiduciaries Need to Demonstrate When Investing in "Shiny New Objects" New investment options, "Shiny New Objects" (SNO), are on the rise along with marketing campaigns promoting their potential for high returns and low risk. With the removal of certain regulatory restrictions on private equity, bitcoins, and alternative investments, fiduciaries may feel encouraged to explore these options. While investing personal funds in these SNOs may be acceptable, it becomes problematic when managing an investment portfolio that must adhere to a fiduciary standard of care. Source: 401kspecialistmag.com Follow the ERISA Roadmap: Good Governance Leads to Good Decisions Good plan governance is essential for effectively meeting ERISA fiduciary responsibilities, as it outlines responsibilities, deadlines, and accountable parties. The article discusses nine key areas that encompass effective plan governance. Source: Cohenbuckmann.com 401k Forfeiture Litigation: Implications for Plan Sponsors Since 2023, there has been a surge of class-action lawsuits alleging violations of fiduciary duties under ERISA concerning the management of 401k forfeitures. Plaintiffs claim that those responsible for deciding the use of forfeited funds have a fiduciary duty to the plan participants who remain in the plan. They argue that ERISA mandates these decisions prioritize the interests of participants, particularly in reducing administrative costs. Some plaintiffs have had limited success in overcoming motions to dismiss their cases, highlighting the legal vulnerabilities in the handling of 401k forfeitures. Fortunately, if you sponsor a plan that allows discretion in how to use forfeitures, there are several options to reduce litigation risk concerning their use. Source: Bsk.com Is Recency Bias Undermining Your Fiduciary Duty? We've all encountered the financial services tagline, "Past results are no guarantee of future performance." However, wealth management professionals understand that many plan participants often disregard this caution. Steven Abernathy, a leader in wealth management services, delves into the dangers of recency bias and emphasizes the necessity of proactive communication alongside a realistic perspective on market conditions. Source: Corporatecomplianceinsights.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Mutual Fund Expense Ratios Remain at Historic Lows for Retirement Savers Research from the Investment Company Institute published today shows that retirement savers in 401k plans experienced historically low average mutual fund expense ratios for yet another year. The ICI's latest report, "The Economics of Providing 401k Plans: Services, Fees, and Expenses, 2024," highlights a dynamic and competitive market for mutual funds in 401k plans, offering millions of American workers an affordable option for retirement savings. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Court and Legal The Current State of the Law in ERISA Forfeitures Cases As the second anniversary of the initial forfeiture lawsuits approaches, there are encouraging developments in district courts handling these cases. However, with numerous motions to dismiss still unresolved nationwide and two pending appeals in the Ninth Circuit, the legal situation is still uncertain. A chronological list of the rulings on these motions to dismiss is provided in the table here. Source: Mayerbrown.com Forfeiture Case Brought Against WakeMed Hospital System A new lawsuit has been filed by participant-plaintiff Jeanette Tillery on behalf of the 12,000 members of the WakeMed Retirement Savings Plan. The suit challenges how the plan handles forfeitures. Participant argues that the defendants have only used forfeitures to offset the employer's future matching and nonelective contributions throughout the relevant period, rather than following the plan's specified provisions. Source: Psca.org UnitedHealth Group has reached a $69 million settlement regarding poorly performing target date funds in its 401k plan. The attorneys representing the class in the lawsuit have requested $23 million in fees, which includes one-third of the settlement, $735,163 for litigation costs, and a $50,000 service award for class plaintiff Kim Snyder, who dedicated 340 hours to the case over four years. This settlement is noted as the largest ERISA settlement for breach of fiduciary duty related to a failure to remove a poorly performing investment option from the plan. Source: Hallbenefitslaw.com UnitedHealth Faces Another Lawsuit Concerning Misused Forfeited 401k Funds Employees have filed two lawsuits against UnitedHealth Group, alleging the company misused forfeited 401k funds to reduce its employer contributions, violating ERISA. The first lawsuit, Kotalik et al. v. UnitedHealth Group Inc. et al., claims UHG used these funds for employer contributions instead of administrative expenses. The second lawsuit, Holly Hendrickson v. UnitedHealth Group, alleges similar improper retention of forfeited funds. This follows a previous class action lawsuit, Snyder v. UnitedHealth Group, which UHG settled for $69 million after litigation revealed the company prioritized low-performing target-date funds to maintain relationships with Wells Fargo. Source: Hallbenefitslaw.com Fiduciary Breach Suit Results From Beneficiary Disclosures A lawsuit questioning whether providing information about designated beneficiaries on a participant statement could result in a fiduciary breach has been dismissed by the U.S. Court of Appeals for the Fifth Circuit. The case, LeBoeuf v. Entergy Corp., involved claims that the quarterly plan statements sent to participant Alvin Martinez contained "materially misleading information" about his beneficiary designations following his remarriage. Ultimately, the court ruled in favor of the defendants, dismissing the allegations. Source: Asppa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC House Committee Clears Bill to Curb ERISA Plans' ESG Investing The House Committee on Education and Workforce has voted along party lines to advance the Protecting Prudent Investment of Retirement Savings Act (HR 2988), which seeks to limit ERISA fiduciaries from considering environmental, social, and governance factors in investment decisions and proxy voting. The legislation includes new notice requirements for defined contribution plans with brokerage windows and prohibits fiduciaries from using diversity criteria when hiring service providers. While the bill may pass in the House, it is expected to struggle in the Senate due to the need for bipartisan support and 60 votes. Source: Mercer.com Unpacking the One Big Beautiful Bill's Employee Benefit Provisions On July 4, 2025, President Trump enacted the One Big Beautiful Bill Act, a comprehensive tax and spending package that introduces significant changes to employee benefit plans. Key provisions include adjustments to health savings account eligibility, updates to telehealth services, modifications to dependent care assistance limits, and other fringe benefits. The changes to telehealth services will take effect in 2025, while the remaining changes will start in 2026. Here's a recap. Source: Benefitsnotes.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security 401k Cybersecurity Compliance Creates These New ERISA Duties The article emphasizes the importance of 401k cybersecurity compliance in light of modern threats such as phishing, ransomware, and deepfakes. Given that cybersecurity poses significant risks to retirement plans, fiduciaries can no longer regard it solely as an IT issue; it is now considered an integral part of prudent plan management and an implied fiduciary duty under ERISA. The article outlines practical measures that fiduciaries can take to ensure cybersecurity compliance and protect participants' savings from potential breaches. Source: Fiduciarynews.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory IRS Issues Guidance on Uncashed Retirement Plan Checks The IRS has issued Revenue Ruling 2025-15, providing important clarification on the federal tax withholding and reporting obligations of retirement plan administrators when a distribution check is issued but not cashed, and a subsequent check is later issued to the participant. This guidance is especially significant for plan administrators managing situations involving missing participants or unclaimed distribution checks. The article highlights the main aspects of the ruling. Source: Huschblackwell.com Guide to Dealing With DOL Investigations of Retirement Plans: Updated The DOL frequently investigates fiduciaries and service providers of plans under ERISA to ensure compliance with Title I of ERISA. Understanding the DOL's enforcement authority and investigative procedures can help alleviate the administrative burden, costs, and stress associated with such investigations. The article provides guidance on what to expect during a DOL investigation and offers practical tips for effectively managing the process. Source: Groom.com »» Click here for more Compliance and Regulatory Material Marketplace News JPMorganChase Unveils New Retirement Solution for Solo Entrepreneurs Principal Partners With FuturePlan to Meet Rising PEP Demands Blue Owl Entering 401k Market in Collaboration With Voya
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