The Rosenbaum Law Firm P.C. Blog

Greetings — Ary Rosenbaum here, gear-shifting through the ERISA/401(k) lane, rubber on the pavement, ready to take you for a ride into what’s ahead for 2026 retirement-plan contribution limits. Think of this as your pit-stop briefing before the Grand Prix. Grab your helmet. (Yes, we’ll drop a Rocky quote or two.)

1. What’s Changing: The Big Bumper of Numbers

We’ve all been watching the inflation ticker and, yes, the engine is revving for new limits in 2026. Based on projections:

· The annual deferral limit for 401(k) and similar qualified plans is expected to climb from $23,500 in 2025 to approximately $24,500 in 2026.

· The “catch-up” contribution for participants age 50+ is projected to increase from $7,500 to about $8,000 in 2026.

· For those age 60-63, the new “super catch-up” could reach around $12,000 in 2026.

· The total contribution limit (employee + employer) for defined contribution plans is projected to move from around $70,000 in 2025 to $72,000–$73,000 in 2026.

· Also starting in 2026, high-earning participants (those with wages above the threshold, roughly $145,000 based on prior years) will face a new rule: catch-up contributions must be Roth (after-tax) instead of pre-tax.

2. Why It Matters in the “Rosenbaum Lane”

If you’re running a plan, advising plan sponsors, or you’re the highly compensated executive who thinks you’re “letting the machine idle” — it’s time to shift gears.

· More room to grow: With higher limits, there’s more tax-advantaged savings potential — but also more complexity. Higher numbers don’t mean “set it and forget it.”

· The race for older drivers: If you’re in the 50+ lane (especially 60-63), the super catch-up is your turbo-boost. But with turbo comes monitoring — making sure your plan document allows it and your payroll system can handle it.

· High earners beware: If you’re over the wage threshold, your catch-ups shift into the Roth lane. That means no more immediate tax deferral, but the chance for tax-free growth. It changes your fuel strategy.

· Sponsor/document risk: For plan sponsors, the infrastructure must adjust — payroll systems, plan amendments, participant communications. Most plans will need to be amended by December 31, 2026, to accommodate the new Roth catch-up requirement.

As I always say: “Time is undefeated.” (Cue Rocky’s bell.) You don’t want to show up for the closed-pit stop at the last minute.

3. Key Actions for 2026 Prep

Here’s your pre-race checklist, Ary-style:

1. Check your deferral limits: Assume $24,500 for under-50s unless IRS finalizes something higher.

2. Communicate with eligible participants: Especially those 50+, 60-63, and high wage earners — let them know the bigger limit and the Roth shift.

3. Coordinate with payroll and recordkeepers: Make sure systems can segregate catch-up contributions, identify high-wage participants, and enforce the Roth requirement.

4. Plan document amendment: Verify that your document accommodates “super” and Roth catch-ups, and plan for amendment by the 2026 deadline.

5. Revise projections and modeling: High-end savers should model the impact of Roth vs. pre-tax for catch-up contributions — tax scenarios matter.

6. Educate sponsors and HCEs: Higher deferrals don’t mean automatic compliance; testing and design still matter.

7. Monitor the final IRS announcement: Official numbers usually come in the fall — be ready to implement quickly.

4. Some Cautions (Because I’ve Seen the Wrecks)

· Don’t assume full employer match: Just because limits go up doesn’t mean the employer match does.

· Roth isn’t always best: For some, especially in high-income years, paying tax now may not be ideal.

· Avoid TPA errors: Mis-applying the new catch-up rules can cause major administrative headaches.

· Plan amendments matter: If your document doesn’t permit the new catch-ups, you’ll be stuck in the pit lane.

· Watch look-back wages: The threshold is based on prior-year wages; misclassify, and you’ll spin out on penalties.

5. Final Take (Ary’s Mic Drop)

If you’re playing retirement-plan strategy like a kid in a bumper car, you’re doing it wrong. Think instead like a seasoned driver in the Indy 500: you’ve got to monitor your gauges, know the turn ahead, anticipate speed changes, and avoid the wall.

2026 is offering a slightly longer straightaway — higher deferral limits, bigger catch-ups, but also new curves: the Roth requirement for high earners and the plan amendment turn. You’ll want to shift now, not wait for the final lap.

So, draft your memos, update your plan language, flag your high earners, talk to your advisors, and — most importantly — tell your participants. The potential’s real, but you have to activate it.

Remember: “It’s not how hard you hit — it’s how hard you can get hit and keep moving forward.” When the retirement plan limits move, you want to be in prime condition, gloves off, ready to dance.

Let’s clear something up right away: just because your 401(k) plan isn’t in the Fortune 500 doesn’t mean you get the Fortune Free Pass. ERISA doesn’t have a small-plan exemption for being “nice” or “under the radar.” Whether your plan has $3 million or $300 million, the fiduciary duties are exactly the same.

But you’d be surprised how many small business owners — and even some providers — act like the rules don’t fully apply until the DOL shows up with a clipboard. That’s what I call the $3 Million Myth: the mistaken belief that “we’re too small to get sued or audited.” Spoiler alert — the IRS and DOL audit small plans all the time, and class-action attorneys are working their way down the asset scale faster than a recordkeeper chasing rollover fees.

The “We’re Small, So We’re Fine” Trap

I’ve seen it all. A three-person law firm sponsoring a 401(k) plan where the partner’s nephew picks the funds. A 40-employee construction company that hasn’t benchmarked fees since the Obama administration. A mom-and-pop retailer using a “free” bundled plan that charges participants like they’re financing a private jet.

The problem isn’t that these people are bad — it’s that they think small plans fly below the radar. They don’t. DOL and IRS targeting models specifically love small plans because they’re more likely to make procedural mistakes — late deposits, missing fidelity bonds, unapproved loans, and my favorite: “minutes of the investment committee” that don’t exist because the committee doesn’t either.

Fiduciary Duty Has No Size Chart

The fiduciary duty to act prudently, diversify investments, and ensure reasonable fees isn’t scaled by plan assets. The same standard applies whether you’re Boeing or Bob’s Auto Body.

That means:

· Benchmarking fees still matters, even if your plan has ten participants.

· Documenting decisions isn’t optional, even if “the committee” is just you and your accountant.

· Depositing deferrals timely means timely — not when your bookkeeper remembers.

· Reviewing investments is still required, even if all you own are target-date funds.

Small plans often think, “We don’t need that level of governance.” Wrong. You need it more, because you have fewer layers of protection if something goes sideways.

How Providers Can Help

If you’re a small-plan provider — TPA, advisor, or recordkeeper — your real value isn’t in your technology stack or your PowerPoint pitch deck. It’s in your ability to make a small business feel like a large plan.

That means offering fiduciary education, doing periodic fee reviews, setting up investment committee meetings (even if it’s one guy and a pizza), and documenting decisions. It’s about turning “accidental fiduciaries” into intentional ones.

When small plans adopt the discipline of large ones, they don’t just reduce risk — they gain confidence. And confidence is contagious.

The Ary Rosenbaum Takeaway

The $3 Million Myth dies the moment you realize ERISA doesn’t care about your size — it cares about your process. There’s no “mom-and-pop clause” in the law. The good news is, being prudent isn’t expensive — being negligent is.

So if you’re a small plan sponsor, act like a big one. Benchmark. Document. Review. Repeat. And if you’re a provider, teach your clients that “small” doesn’t mean “simple.”

Because in the world of 401(k)s, the smallest plans often make the biggest mistakes — and fixing them costs a lot more than acting like a grown-up fiduciary from the start.

Here’s a story straight from the trenches of the 401(k) world: the parties in a long-running excessive-fee lawsuit over the $2.6 billion Ferguson Enterprises LLC 401(k) plan have reached a settlement for $1.8 million.

What Happened

Back in 2022, plan participants Tera Bozzini and Adrian Gonzales alleged that their employer’s plan:

· Didn’t use its size to negotiate lower investment and recordkeeping fees.

· Allowed higher-priced investment options when cheaper institutional shares were available.

· Permitted conflicted providers to collect unreasonable compensation for plan services.

The court eventually dismissed many of the claims for lack of specific factual detail and rejected an attempt to expand the case to include forfeiture-related allegations. But before the next round of motions, both sides agreed to settle.

The Settlement

· Settlement amount: $1,800,000

· Estimated maximum damages: ~$7.37 million

· Recovery rate: about 24 percent of potential losses

· Named-plaintiff awards: $7,500 each

· Attorneys’ fees requested: about $600,000 (one-third of the settlement)

Why It Matters for Plan Providers and TPAs

1. Fee vigilance matters. Even billion-dollar plans can get hit with “you should have paid less” lawsuits. Size doesn’t grant immunity. 2. Document reasonableness. Benchmark, negotiate, and document every step. The court noted the plaintiffs’ failure to include specific facts — a reminder that your records are your defense. 3. Settlements are business decisions. The plaintiffs chose a sure $1.8 million over the risk of chasing a larger but uncertain verdict. For providers, it shows that even if you believe you’re right, litigation costs can outweigh pride. 4. Distraction costs real money. Even when you “win,” discovery, expert witnesses, and reputational damage can drain far more than the check you write to close the case.

My Take

In the 401(k) world, we don’t just manage plans — we manage risk perception. If a plan is big enough to demand institutional pricing but doesn’t, that silence can look like negligence in court. Whether you’re an advisor, TPA, recordkeeper, or ERISA counsel, the question to ask is simple: Can you prove you acted prudently if someone looks under the hood?

This $1.8 million settlement isn’t about scandal — it’s about process. It’s a reminder that documentation beats memory, prudence beats guesswork, and, as always, time is undefeated.

Here’s a story straight from the trenches of the 401(k) world: the parties in a long-running excessive-fee lawsuit over the $2.6 billion Ferguson Enterprises LLC 401(k) plan have reached a settlement for $1.8 million.

What Happened

Back in 2022, plan participants Tera Bozzini and Adrian Gonzales alleged that their employer’s plan:

· Didn’t use its size to negotiate lower investment and recordkeeping fees.

· Allowed higher-priced investment options when cheaper institutional shares were available.

· Permitted conflicted providers to collect unreasonable compensation for plan services.

The court eventually dismissed many of the claims for lack of specific factual detail and rejected an attempt to expand the case to include forfeiture-related allegations. But before the next round of motions, both sides agreed to settle.

The Settlement

· Settlement amount: $1,800,000

· Estimated maximum damages: ~$7.37 million

· Recovery rate: about 24 percent of potential losses

· Named-plaintiff awards: $7,500 each

· Attorneys’ fees requested: about $600,000 (one-third of the settlement)

Why It Matters for Plan Providers and TPAs

1. Fee vigilance matters. Even billion-dollar plans can get hit with “you should have paid less” lawsuits. Size doesn’t grant immunity. 2. Document reasonableness. Benchmark, negotiate, and document every step. The court noted the plaintiffs’ failure to include specific facts — a reminder that your records are your defense. 3. Settlements are business decisions. The plaintiffs chose a sure $1.8 million over the risk of chasing a larger but uncertain verdict. For providers, it shows that even if you believe you’re right, litigation costs can outweigh pride. 4. Distraction costs real money. Even when you “win,” discovery, expert witnesses, and reputational damage can drain far more than the check you write to close the case.

My Take

In the 401(k) world, we don’t just manage plans — we manage risk perception. If a plan is big enough to demand institutional pricing but doesn’t, that silence can look like negligence in court. Whether you’re an advisor, TPA, recordkeeper, or ERISA counsel, the question to ask is simple: Can you prove you acted prudently if someone looks under the hood?

This $1.8 million settlement isn’t about scandal — it’s about process. It’s a reminder that documentation beats memory, prudence beats guesswork, and, as always, time is undefeated.

If you’ve been to one of That 401(k) Conferences before, you already know it’s not your typical industry event. No fluorescent hotel ballroom, no generic panel on “fiduciary best practices,” and definitely no dry chicken lunch while someone reads PowerPoint slides word for word. We do things differently — and this year, we’re taking the show to two of my favorite cities: Chicago and Denver.

First up: Chicago – Wrigley Field – April 16, 2026. There’s something about that ballpark that never gets old. The ivy, the bleachers, the skyline — and this time, we’re bringing the 401(k) world to the Friendly Confines. Advisors, TPAs, and plan-providers will join us for a day of sessions, networking, and Cubs nostalgia. Gold sponsors get a 30-minute presentation slot, Silver sponsors join the stadium tour and Cubs legend meet-and-greet, and Bronze sponsors get the elevator speech spotlight. And yes, the hot dogs taste betterat Wrigley.

Then later: Denver – Tuesday, May 5, 2026. We’ll bring the same energy, humor, and insider industry talk that’s made these events the most fun you can legally have while discussing fiduciary compliance. Expect great speakers, great venue, and even better networking with the people who actually get this business.

So whether you’re a TPA, advisor, record-keeper, or provider who’s tired of stale conferences that feel like a punishment — join us. That 401(k) Conference is where the industry meets the ballpark — where learning and laughter share the same lineup card.

️ Chicago – Wrigley Field | April 16, 2026

️ Denver – Tuesday, May 5, 2026

Sponsorships available: Gold, Silver, Bronze. Visit That401kSite.com for details.

Because in this game, everyone talks fiduciary — but That 401(k) Conference makes it fun.

So the 401(k) world just dropped an episode of “Corporate Spy vs. Corporate Spy” (with a splash of fiduciary funk). Human Interest is accusing Guideline, plus two former HI employees, of scooping up insider trade secrets — leads, client data, sales metrics — the kind of stuff you don’t send home in a résumé attachment.

Think about it: you’ve spent years building a book of business, an inside track for employer leads, a hot list of prospects. Then you turn around and someone walks off with your secret playbook. And they think 401(k) providers won’t notice? That’s like trying to sneak a box of donuts into the ERISA safe-harbor room and thinking no one will smell glaze.

Here’s what the complaint claims: On December 20, 2024, Guideline’s CEO personally met with two HI employees. The next day, one of them shared a screenshot of HI’s internal “Units Sold or Assisted This Week” metric — essentially a key that unlocks years of competitive advantage. Then a request came for “total lead flow” numbers, client contact names, Slack-channel treasure troves — all the things you guard like gold in our world.

What does this mean for you, the plan-provider, the TPA, the advisor who bleeds compliance ink? A few takeaways (with my usual sprinkling of Brooklyn wisdom):

1. Protect your data like you protect your advice. If someone asked you for “just the numbers,” assume they want your secret sauce. Keep your leads, your flow metrics, your productivity sheets locked down.

2. Employment transitions matter. When key people leave, especially into competitors, there should be non-compete guardrails, data-transfer audits, exit interviews. You can’t assume loyalty.

3. Documents say it’s serious. This isn’t just a “we caught someone in a slip” case — HI alleges violations of the Defend Trade Secrets Act, the Uniform Trade Secrets Act, the Racketeer Influenced and Corrupt Organizations Act, even the Computer Fraud and Abuse Act. These aren’t buzzwords — they’re nuclear options in our regulatory world.

4. Reputational risk is real. I know we’re used to talking about fiduciary optics (forms, notices, audits). But when you get entangled in high-stakes litigation, your brand takes the hit. Your trust level drops. In this business, trust is the currency.

5. Oversight matters even when you’re “just doing business.” Every handshake, every “friendly conversation” about “what we’re gonna do together” should have a document trail. Because when things go sideways, the paperwork becomes your ally or your enemy.

At the end of the day: if you’re in the trenches of the 401(k) plan-provider world and you think “that kind of drama happens over there,” think again. This is your industry. Your clients, your leads, your operations. And it’s not just forms and schedules anymore — it’s data, it’s movement, it’s the intersection of tech, fiduciary duty, and competitive pressure.

Stay sharp. Guard your data. And remember — time is undefeated, but sloppy data protection can make the knockout come a lot faster.

fter 401(k)’d, The Greatest 401(k) Book Sequel Ever, and Full Circle, I figured it was time to get back to the nuts and bolts — the real world of being a 401(k) plan provider.

So this January, I’m releasing That 401(k) Plan Provider Handbook — coming to Amazon in Kindle and paperback. It’s not a memoir, not a motivational speech, and definitely not a sales pitch. It’s the practical, occasionally sarcastic, always honest guide for TPAs, advisors, recordkeepers, and anyone else who’s ever had to explain the difference between a QNEC and a QMAC at 5:00 on a Friday.

This book is for the people in the trenches — the ones juggling compliance tests, deadlines, and clients who think “safe harbor” means “I don’t have to do anything.”

So stay tuned, sharpen your fiduciary pencils, and get ready for That 401(k) Plan Provider Handbook — because it’s time the 401(k) industry had a book written for us.

When I read that Securian Financial is joining forces with Custodia Financial to bring their “Retirement Loan Protection” (RLP) program into more in-plan offerings, I immediately thought about how many times I’ve seen plan participants unintentionally derail their financial futures over a small 401(k) loan.

This announcement isn’t just another corporate partnership—it’s a signal that the retirement industry is finally acknowledging a problem we’ve all known about for years: participants borrowing against their futures and then losing twice when they can’t repay those loans.

What’s the Deal

Securian and Custodia announced a strategic relationship under which Securian will integrate Custodia’s patented Retirement Loan Protection program into more workplace retirement plans. The program protects 401(k) loans from default if participants lose their jobs, become disabled, or pass away. The goal is to reduce loan defaults and prevent unnecessary cash-outs, which together have created a massive drain on retirement savings—an estimated $2 trillion gap nationwide.

Why It Matters

1. Fiduciary Risk Recognition For years, I’ve warned plan sponsors that loan defaults are the leak nobody talks about. You can have great fund lineups, low fees, and compliant disclosures—but when participants leave their jobs and their loan becomes taxable income, that’s a permanent loss of savings. This partnership acknowledges that issue and offers an in-plan way to protect against it.

2. Reinforcing the Promise of Retirement A retirement plan isn’t just a benefit—it’s a promise. Too often, participants borrow because they have to, not because they want to. This program helps preserve that promise when life takes a bad turn. Securian’s involvement gives it legitimacy, and it signals that the market is shifting from “we hope participants repay” to “we’ll design to protect them if they can’t.”

3. Implementation Realities Execution will matter. Will employers make RLP an opt-in benefit or automatically apply it to new loans? How will costs be handled? Will participants understand it’s insurance against default, not a free loan forgiveness program? Like every new benefit, the success will depend on communication and administration.

The Caveats

· The protection only applies in certain circumstances—job loss, disability, or death. Voluntary quitters might not be covered.

· There will be costs and possible vendor-integration issues. Plan sponsors must evaluate whether it’s worth the expense.

· It doesn’t fix the underlying behavior. Borrowing from your retirement account is still a bad idea unless absolutely necessary. This is protection, not permission.

My Advice to Plan Sponsors

· Audit your loan defaults. Know your numbers—how many loans default annually and what the long-term impact is on participants.

· Document the decision. Whether you adopt the RLP or not, document your fiduciary process.

· Communicate clearly. If you implement it, create a short, simple explainer. Don’t bury it in legal language.

· Coordinate with your record-keeper and advisor. Make sure they understand how it fits into your plan’s operations and disclosures.

· Encourage minimal borrowing. Even with protection, participants should borrow only as a last resort. Education still matters.

A Word to the Next Generation

To anyone just starting their career: your 401(k) is supposed to be your future, not your emergency fund. Programs like RLP help protect you when life blindsides you—but the best protection is not needing one in the first place. Build habits that make borrowing unnecessary. The market is finally catching up to reality, but discipline will always be your best insurance.

This partnership between Securian and Custodia is a smart, needed move. It doesn’t solve every problem, but it plugs a costly leak. And for once, it feels like an innovation that actually helps the people the plan is meant to protect.

If after decades of advising retirement-plans I learned one thing, it’s this: The law doesn’t reward you for almost doing everything right — it rewards you for doing it right, and documenting you did it. So when I read the Supreme Court’s unanimous decision in Cunningham v. Cornell University, I sat up in my seat. Because this one isn’t a footnote. It’s a shift.

At issue: employees of Cornell sued claiming the university’s 403(b) plans paid excessive recordkeeping/administration fees, and in the process engaged in “prohibited transactions” under the Employee Retirement Income Security Act of 1974 (ERISA). They alleged that the plan had contracts with service providers (parties-in-interest), and argued that those contracts thus triggered Section 406(a)(1)(C) of ERISA.

In earlier rulings the 2nd Circuit and others held that plaintiffs had to also plead that no exemption under Section 408 applied — essentially forcing plaintiffs to show up front that the transaction wasn’t “necessary and reasonable.” But the Supreme Court rejected that. It held that the Section 408 exemptions are affirmative defenses for the defendants to plead and prove — the plaintiffs simply need to allege the core elements of a prohibited transaction: (1) a fiduciary caused the plan to engage in a transaction; (2) the transaction involved the furnishing of services, goods or facilities; (3) the transaction was between the plan and a “party‐in‐interest.”

In short: More lawsuits will survive motions to dismiss. They’ll get past the gate. That means discovery. That means costs. That means plan sponsors and fiduciaries need to be sharper than ever.

Why This Matters to Plan Sponsors & Fiduciaries

· Lower pleading threshold = higher exposure. Before, many cases died at the complaint stage because plaintiffs couldn’t overcome the “necessary and reasonable” filter. Not anymore. The bar has lowered.

· Almost every contract with a service provider might be challenged. Under the holding, a plan’s payment of assets to a party-in-interest for services can be deemed a prohibited transaction unless the fiduciary can show an exemption applies — but that’s on the defense side. So every recordkeeping, TPA, investment-line contract is now vulnerable.

· Defensive tools are still available — but you must use them. The Court told lower courts to use Federal Rule of Civil Procedure 7(a)(7), early discovery limits, fee awards, sanctions for frivolous pleadings. But these are reactive tools; the proactive risk remains.

· Document your fiduciary process and reasonableness of fees. If the lawsuit is going to creep into every service contract, the best defense isn’t hoping no one sues — it’s showing you did your homework, negotiated hard, benchmarked, got competitive bids, monitored.

· This hits higher education (403(b) world) and also applies to 401(k) sponsors. While the case involves Cornell’s 403(b) plans, the legal standard affects any ERISA-covered plan. So private-sector plan sponsors should take note.

What You Should Do, Now (In Plain Ary-Rosenbaum Speak)

· Audit all your service-provider contracts. Pull the roster: recordkeepers, TPAs, investment-line providers, any party-in-interest. For each contract review: What’s the fee? How does it compare to market? When was it last renegotiated?

· Ask your advisor: “When was the last competitive bid?” If it’s been more than, say, 3-5 years (depending on size), you may be exposing yourself.

· Review your committee and fiduciary process. Minutes should reflect: you considered alternatives, you had negotiation leverage, you evaluated reasonableness. If you can’t say that, you’re starting from a weaker position.

· Update your disclosures and communications. Your fiduciary memo should now include: “Because of the Supreme Court’s April 17 2025 decision in Cunningham v. Cornell University, we recognize increased risk under ERISA Section 406 of service-provider contracts.”

· Don’t ignore the cost. Litigation is expensive. Even if you believe you’ll prevail, discovery and motions cost millions. Better to reduce the chance of a claim.

· Consider monitoring litigation risk as part of your fiduciary oversight. Just as you monitor investment performance and fees, assess your “litigation-exposure” profile. What service-provider contracts have the potential to spawn prohibited-transaction suits?

Final Word to the Fiduciary Tribe

As I sit and think of my law-firm days, the dinners where the managing partner poured the wine and said: “Rule 2 – never surprise the audit committee,” I’m reminded that surprises are liabilities in retirement-plan fiduciary work. The Cornell decision isn’t hyperbole-alarm bells — it’s clear: the field has shifted. The plaintiffs’ bar has a wider door. You can still be on the right side of this, but you must act.

Your plan is a promise to participants. Not just of return on investment, but of prudent stewardship of their future. When you outsource services, you are still the fiduciary. The storm of litigants may be coming. Don’t wait for the thunder to decide to cover the roof. Get up there now. Metal panels. Secure bolts.

If you’d like, I can draft a one-page briefing memo you can present to your plan committee summarizing the Cornell decision and its implications (ready-to-go, Word-doc style). Would you like that?

I’ve always said, “You’re only one rigorous process away from averting a major fiduciary failure.” It’s one thing to trust your advisors — but completely another to delegate without oversight. So when I saw the article in NAPA – National Association of Plan Advisors titled “Suit Says Plan Sponsor ‘Uncritically Relied’ on Advisor TDF Choice,” I flipped back through the decades of plan-committee meetings I’ve sat in, the ones where we drilled into vendors and funds and saved clients from themselves.

Here’s the gist of the case: In Elanco US, Inc.’s 401(k) plan (case caption: Phillips v. Elanco US, Inc., filed Oct. 21, 2025 in the U.S. District Court for the Southern District of Indiana), participant-plaintiffs accuse the plan’s fiduciaries and the investment adviser of breaching their duties. The complaint claims that the committee “uncritically relied” on the adviser in selecting and retaining a suite of American Century Target Date Funds as the plan’s Qualified Default Investment Alternative (QDIA) and core target-date funds, despite persistent underperformance, high turnover, shrinking market share and a clear plan policy that required under-performing funds (score < 65) to be flagged for review.

Why I View This as a Red-Flag for Plan Sponsors

1. Delegation is not abdication. You can hire a 3(21), have an adviser, outsource many operational tasks—but you remain the fiduciary for selection, monitoring, replacement. This complaint says the committee let the adviser do the heavy lifting and then sat back. That’s vulnerable.

2. Process over performance—but performance still matters. Under ERISA, a proper process may keep you safe even if the fund underperforms. Here, the suit alleges the plan policy said “score under 65 → watch list,” yet the committee didn’t act. That gets to the heart of prudence: it’s not just the tool you used (advisor + fund); it’s how you governed it.

3. The “unreasonable delay” element is emphasized. The complaint alleges the committee “delayed too long” to replace the under-performing TDFs despite knowing of the red flags. In plain Ary-Rosenbaum language: when the gear’s squeaking, you don’t wait for full failure before pulling the lever.

4. The stakes are real: “tens of millions of dollars” lost. The plaintiffs allege the mistakes caused “tens of millions” in losses for participants. Whether or not that number holds up, the message is clear: poor oversight = potential multi‐million liability

What You Should Do Now (Yes, this is the “Ary” checklist)

· Pull your TDF/QDIA suite. Who are the vintages? What are the benchmark returns, peer-group comparisons, turnover, asset-flows? Run a “score <65” type analysis (or something equivalent) and document the result.

· Check your advisor-committee relationship. Service agreement, scopes, meeting minutes: Did the adviser provide analysis? Did the committee challenge it, ask tough questions, get benchmarking data? If your documentation is light, you’ve got exposure.

· Review your investment policy statement (IPS). Does it require periodic suitability/switch reviews? Does it define watch-list triggers? If it says one thing and you do another—or worse, you do nothing—you’re behind.

· Monitor timing and replacement decisions. If you find a fund that’s underperforming, how long until you take action? The court of public opinion (and the plaintiffs’ bar) is increasingly looking at delay as evidence of imprudence.

· Document like your audit depends on it. You’ll want minutes that reflect “we reviewed performance, asked these questions, concluded to stay because of X, Y, Z” OR “we reviewed and concluded to replace effective date Z.” When the next complaint hits, you’ll need that trail.

Final Word to the Fiduciary Tribe

Let me speak directly to all the plan committee chairs, the HR leaders, the in-house counsel reading this: your plan is notthe place to be passive. You’re not just reviewing pie charts and fee schedules—you’re managing a promise to your employees. That promise says: “We will give you a retirement vehicle, guided by prudence, to build tomorrow.” When you say to yourself, “But the adviser told us it’s okay”, ask this question: Did you challenge the adviser? Because the lawsuit says: sitting quietly = “uncritically relying.”

In the days when my grandfather Emil taught me the value of a well-tightened watch gear, he meant: every piece must mesh. In retirement-plan fiduciary work, your watch is the TDF suite, the adviser, the committee process, the IPS. If one gear is loose—you hear the squeak long before the damage sets in.