Summaries

Fiduciary and Plan Governance

AI Advice Tools Demand Fiduciary Oversight in 401k Vendor Relationships

AI-driven participant advice tools have evolved from minor enhancements in retirement plan platforms to comprehensive robo-adviser services, providing personalized advice, enrollment coaching, claims processing, and predictive savings nudges. While these advancements promise improved efficiency and data-driven insights, regulators caution that fiduciaries cannot relinquish their prudence. Recommendations generated by AI do not inherently imply fiduciary responsibility, increasing the stakes for 401k plan fiduciaries due to potential biases, opaque algorithms, and data privacy risks. This article covers the question, "With AI advice tools embedded in recordkeeping and advice platforms, what due diligence steps must fiduciaries take to evaluate transparency, mitigate bias, and stay compliant under ERISA?"

Source: Fiduciarynews.com

What to Know When Changing Providers

When moving from one retirement plan service provider to another, there are crucial considerations for plan sponsors and new service providers. An increasing number of plans are switching from their existing third-party administrators or bundled providers, according to PenChecks. In a recent webinar, Brian Furgala, Senior Director of Retirement Services Strategy at PenChecks, emphasized the importance of addressing various factors to ensure a smooth transition. This process can help protect both the plan sponsor and the new provider while facilitating effective plan administration for participants.

Source: Psca.org

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Insight: Studies, Research, Analysis, or Papers

Forgotten 401k Assets Hit $2.1 Trillion

The latest analysis by Capitalize reveals a significant increase in lost 401k accounts, with assets rising 30% to $2.1 trillion. According to their updated 2023 report, "The True Costs of Forgotten 401k Accounts," in partnership with the Center for Retirement Research, there are currently 31.9 million misplaced 401k accounts as of July 2025. The report indicates a growing trend, with 3.5 million accounts left behind in 2023, four million in 2024, and an anticipated 4.2 million in 2025.

Source: 401kspecialistmag.com

Gen X Nearing Retirement With Worries About Limited Savings, Allianz Life Study Finds

The 2025 Q3 Quarterly Market Perceptions Study by Allianz Life reveals that Generation X is particularly anxious about inflation and market volatility as they near retirement. Only 19% believe it is a good time to invest, a drop from 30% the previous quarter, making it the lowest among all generations. In comparison, 39% of Gen Z, 36% of millennials, and 29% of boomers see current market conditions favorably. Overall, just 30% of Americans feel it's a good time to invest. Additionally, 54% of both Gen Xers and millennials express concerns about a potential market crash, compared to 47% of Gen Z and 48% of boomers.

Source: Allianzlife.com

Confidence Doesn't Stop Employees From Making Reactive Investment Decisions

The fifth annual Protected Retirement Survey by Nationwide Retirement Institute reveals that while employees express higher levels of financial confidence regarding their retirement savings, many still invest reactively in response to market volatility. Despite optimism, with 79% of workers viewing their savings positively, 48% have moved their investments to more conservative options due to economic instability, particularly younger workers aged 22 to 34, of whom 54% have made similar shifts. Additionally, the percentage of employees on track with their retirement preparedness rose from 65% in 2024 to 71% in 2025.

Source: 401kspecialistmag.com

Retirement Savers Feel Lack of Control Over Their 401ks: Pontera

A new Pontera study reveals that fewer than 20% of Americans feel highly knowledgeable and confident about managing their retirement and college savings accounts. Two-thirds of retirement savers lack a sense of control over critical decisions regarding their workplace retirement plans, often grappling with complex rules and multiple account types. According to Yoav Zurel, CEO of Pontera, this lack of confidence highlights the need for clearer guidance and professional advice tailored to individual needs, as 70% of Americans believe their financial planning requires improvement.

Source: 401kspecialistmag.com

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Items of Special Interest to Advisers or Other Service Providers

Things I Worry About: Pooled Employer Plans and DOL RFI

This series of articles explores the DOL's release from July 29, 2025, which provides interpretative guidance on Pooled Employer Plans. The release seeks input on PEP practices, offers tips for selecting PEPs, and considers a potential fiduciary safe harbor for adopting them. This first article in the series highlights key information about PEPs presented in the guidance. Notably, the preamble includes compelling insights into the development of PEPs.

Source: Fredreish.com

Lessons in Arrogance: What We Can Learn From the Mistakes of Overconfident Plan Providers

The author emphasizes the distinction between confidence and arrogance in business. While confidence is essential, arrogance can be detrimental. It can lead to a lack of awareness of risks, create isolation from peers, and erode the foundational elements of trust and relationships. When professionals become arrogant, they tend to stop listening, which hinders their growth and development. The author identifies common mistakes made by overly arrogant providers, highlighting the importance of maintaining humility and openness in the business world.

Source: Jdsupra.com

Court and Legal

The Supreme Court Prohibits ERISA

In the case of Cunningham vs. Cornell University, the U.S. Supreme Court clarified the pleading requirements for prohibited transaction claims under ERISA section 406(a)(1)(C). The Court ruled that a plaintiff only needs to allege facts showing that a fiduciary caused an employee benefit plan to receive services from a party in interest, without having to demonstrate the inapplicability of ERISA section 408(b)(2)(A). The author argues that the court's ruling is fundamentally flawed because the definition of "party in interest" encompasses all plan fiduciaries. This interpretation allows for lawsuits concerning all transactions where a plan receives services, including those that ERISA mandates fiduciaries to provide. Consequently, the Court's reading creates a contradiction, as it simultaneously requires fiduciaries to perform certain actions while prohibiting them from engaging in those same actions.

Source: Ssrn.com

Schlichter Looking for $17.5 Million Payday in Pentegra Suit

Schlichter Bogard LLC is seeking what could be the largest attorney fee award following a significant jury verdict in an ERISA class action case, which totaled $38,760,232 for excessive administrative fees. Subsequently, on May 1, 2025, the parties settled the case for $48,500,000, surpassing the jury verdict amount. Schlichter argues that, in accordance with the common fund doctrine, the Court should grant Class Counsel attorney fees amounting to $16,513,179, which represents one-third of the common fund or "Gross Settlement Balance." Additionally, they are requesting reimbursement for reasonable litigation expenses totaling $1,044,209.46, the majority of which pertains to the costs incurred for essential experts that contributed to the jury's verdict.

Source: Napa-net.org

Class Action Over 401k Forfeitures and Fees Against Energy Co. Survives Dismissal

A federal judge in Florida has denied NextEra Energy's motion to dismiss a class action lawsuit filed by employee John Stewart under ERISA. Stewart alleges that the company misappropriated forfeited funds and that a recordkeeper profited unfairly from plan earnings. The judge found Stewart's claims detailed enough to proceed, rejecting NextEra's defense that its use of forfeited funds was authorized by plan documents. This ruling referenced a similar case involving JPMorgan Chase & Co., where a court ruled that prohibitive language in the plan prevented the use of forfeited funds to reduce plan expenses.

Source: Hallbenefitslaw.com

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Legislative or Washington DC

What Might Top EBSA's Priority List Under Aronowitz?

Daniel Aronowitz, recently confirmed as the head of the Employee Benefits Security Administration, is expected to prioritize streamlining retirement plan oversight and reducing litigation in his new role. During his confirmation hearings, he also expressed a commitment to ending the "war" on employee stock ownership plans. However, an executive order from President Trump on August 7, which calls for a reevaluation of guidance on alternative investments in defined contribution plans, may quickly become a top priority for Aronowitz.

Source: Plansponsor.com

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Compliance and Regulatory

DOL Advisory Opinion 2025-04A: Don't Be Stupid

DOL Advisory Opinion 2025-04A highlights a concerning point regarding default allocations in retirement plans, specifically noting that when participants do not select an allocation, the plan sponsor defaults to a percentage. This raises red flags since it suggests active involvement by plan sponsors in making allocation decisions, particularly when the annuity product in question may not meet fiduciary prudence standards. Although participants can adjust the allocation later, the product's complexity and potential for confusion may lead to fiduciary litigation risks. Given that there is no legal requirement to offer the product, the author suggests that it is prudent for plan sponsors to avoid including it in the plan to protect against unnecessary fiduciary liability.

Source: Fiduciaryinvestsense.com

Forfeiture Accounts: Why Strong Oversight From Plan Sponsors Matters

Employers sponsoring 401k and 403b retirement plans should be vigilant about plan forfeitures that occur when employees leave before becoming fully vested. It's crucial to manage these funds effectively, as allowing forfeiture accounts to accumulate can lead to complications. ERISA plan documents typically include provisions for managing forfeiture accounts, influenced by IRS proposed regulations from February 2023. Plan fiduciaries need to not only be aware of these rules but also understand how to apply them to their specific situations. This article provides essential insights for managing forfeiture accounts, emphasizing the importance of understanding the relevant regulations.

Source: Bdo.com

IRS Elects to Contribute Complex Final Regulations on Super and Roth Catch-ups

On September 16, 2025, the IRS released final regulations regarding two new catch-up contribution provisions from the SECURE 2.0 Act of 2022. The provisions allow participants aged 60 to 63 to make increased catch-up contributions and require higher-income participants' catch-up contributions to be made as Roth contributions. These final regulations confirm that plan sponsors must implement the Roth catch-up requirement starting with the 2026 taxable year. While the final regulations largely follow the proposed regulations from January, they include clarifications and offer plan sponsors more flexibility in their administration.

Source: Eversheds-Sutherland.com

$1k Boost Projected for 2026 401k Employee Contribution Limit

According to a Milliman forecast, the IRS is expected to increase the maximum 401k contribution limit for employees by $1,000 in 2026, raising it from $23,500 to $24,500. Moreover, the Milliman forecast stated, "If the change in CPI in September is 0.7% or greater, the compensation limit for 2026 will be set at $365,000 instead of $360,000, and the maximum annual contribution for defined contribution plans will rise to $73,000 instead of $72,000."

Source: 401kspecialistmag.com

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Marketplace News

Five Retirement Plan Firms Making the 2025 Inc. 5000

This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted.