The Rosenbaum Law Firm P.C. Blog

If you’re a 401(k) plan provider and think you can get away with charging sky-high fees while prioritizing your own bottom line, think again. A federal jury just reminded us all—fiduciary responsibility under ERISA isn’t just a suggestion, it’s the law.
In the case of Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al., a class of over 26,000 participants in Pentegra’s $2.1 billion Multiple Employer Plan for Financial Institutions sued over—you guessed it—excessive fees, self-dealing, and failure to act like actual fiduciaries.
The plaintiffs alleged that Pentegra:

• · Let the plan rack up unreasonably high administrative and recordkeeping fees.
• · Lined its own pockets instead of looking out for participants (a big ERISA no-no).
• · Didn’t even bother using the plan’s scale to negotiate better deals. Spoiler: when you’ve got $2.1 billion in assets, you’ve got leverage. Use it.

Apparently, the jury agreed. After a close look at the facts, they hit Pentegra with a $38.7 million verdict—a clear message that fiduciary breaches are expensive, especially when you’re dealing with retirement assets.
This case is more than just a big number. It’s a wake-up call. If you’re a fiduciary, acting in the best interests of plan participants isn’t just your job—it’s your legal duty. Ignore that, and you might just find yourself on the wrong side of a courtroom, with a jury reminding you exactly how much that duty is worth.

T. Rowe Price announced today the launch of in-plan emergency savings accounts (ESAs) for participants in retirement plans.

This ESA solution was made possible by the SECURE 2.0 Act of 2022, which includes a provision for pension-linked emergency savings accounts. This allows non-highly compensated employees to save up to $2,500 for emergency expenses within their 401(k), 403(b), or governmental 457(b) plans, if permitted by their plan.

Once participants reach the $2,500 limit, any additional contributions will be automatically converted to non-ESA Roth contributions for their retirement accounts.

Nothing surprises me much anymore, neither should the results of the survey that a Nasdaq 100 survey supports the inclusion of Nasdaq 100 index funds.

According to the Annual Nasdaq-100 Retirement Plan Survey, nearly 80 percent of 401(k) plan participants recognize the importance of including a Nasdaq-100 product in their investment options. This finding suggests a new market opportunity for retirement plans.

The survey, which included 1,000 401(k) participants and reflected the 2023 U.S. Census data regarding gender, age, and region, revealed significant demand among investors for the index within retirement plans.

As of December 31, 2024, Americans held $12.4 trillion in all employer-based defined contribution retirement plans, with $8.9 trillion of that in 401(k) plans, according to a quarterly report from the Investment Company Institute published on March 25, 2025.

However, data from over 700,000 401(k) plans shows that the allocation to Nasdaq-100 Index mutual funds accounts for less than 1% of all 401(k) assets. This is a notable underrepresentation compared to allocations in the S&P 500 and other large-cap growth indexes, as indicated by BrightScope Beacon.

Look, I get it. There are a lot of lawyers out there. Ambulance chasers, courtroom showmen, legal eagles with late-night TV spots and suspiciously white teeth. But here’s the thing: I’m not one of them.

I don’t sue over wet floors in fast food joints. I don’t call myself “The Hammer.” I don’t drive a wrapped SUV with my own face plastered on it. I’m an ERISA attorney.

Yes—E-R-I-S-A. No, it’s not the name of a small town in Tuscany. It’s the Employee Retirement Income Security Act. You know, that delightful little statute from 1974 that governs things like 401(k)s, pension plans, fiduciary duties, benefit denials—stuff that makes normal people fall asleep and me stay up excited.

But you wouldn’t know that if you looked at my LinkedIn inbox.

Every day, like clockwork, I get invitations from people who clearly think I’m running some kind of negligence sweatshop. “Hey, thought we could connect! We help PI attorneys grow their practice.” PI?! You mean “Personal Injury”? Not even close, buddy. Try “Plan Interpretation.”

And then there are the insurance sales reps. God love ’em, but come on. I’m not looking to buy another policy. I read insurance policies for a living. I parse subrogation clauses like they’re poetry. I’ve spent hours in ERISA plan documents trying to decipher whether “must” actually means “must,” or if it somehow means “unless the claims administrator is in a bad mood that day.”

I even had someone message me asking if I needed help with my “injury intake process.” My what?! I handle fiduciary breach claims, not fractured femurs.

Look, I don’t want to be a jerk. I like connecting. I like networking. But it’s like calling up a tax accountant and asking if they can help fix your car. Wrong person, wrong skill set, wrong planet.

So, if you’re thinking about hitting “Connect” and your opening line is “We help injury lawyers win more cases,” please—for the love of Section 502(a)—do a little scroll through my profile. Check the acronyms. If you see ERISA, fiduciary, plan sponsor, or “I once got into a heated argument about COBRA continuation rights at a wedding,” you’re probably barking up the wrong legal tree.

And that’s fine. I’m not offended. I’m just… exhausted.

Now, if you’ve got a hot take on retirement plan governance, or you want to chat about how excessive fee litigation is reshaping fiduciary standards, I’m all ears. But if you’re about to pitch me on a slip-and-fall case involving a rogue quesadilla at a Tex-Mex joint, I’m out.

You know what everyone’s talking about lately in the retirement plan world? Pooled Employer Plans — PEPs! Yeah, PEPs. Like they’re the second coming of sliced bread. Spoiler alert: they’re not.

I’ve been talking to a bunch of TPAs, advisors, people in the know — and guess what? Most of us are scratching our heads. PEPs? Meh. They’re not bad, but let’s not throw a parade. And here’s the kicker: providers are diving into them like it’s a gold rush, and half the time, they’re getting the pricing completely wrong. You think you’re getting $100 million in assets, and suddenly it’s $3.42 and a stick of gum. It’s like buying oceanfront property in Nebraska — looks great on paper.

Now, is there an opportunity here? Sure, yeah. In theory. But the math has to work. You need enough assets to make it worth anyone’s while. Otherwise, you’re just stealing from your own single-employer plan business to prop up a shiny new PEP. That’s not growth — that’s just cannibalism in a suit.

The real value in these things? Outsourcing fiduciary duties. That’s the pitch. Not the pricing. Let’s be honest — most PEPs aren’t saving anyone real money. Maybe a few bucks, a couple slices of pizza. That’s not a game-changer. That’s lunch.

Bottom line: PEPs are gonna be a niche thing. And only the ones who get that — the ones who focus on bundling assets like it’s a Costco run — they’re the ones who’ll survive. Everyone else? Eh. Good luck.

Following a jury’s decision to award over $38 million to a class of more than 26,000 participants in Pentegra’s multiple employer plan, the issue of working with providers affiliated with the plan sponsor highlights the potential conflict of interest that I have been emphasizing for many years.

In the case of Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al., the jury determined that the fiduciaries of the Multiple Employer Plan, which has more than $2 billion in assets, breached their fiduciary duties under the Employee Retirement Income Security Act by paying unreasonable recordkeeping and administrative fees. The core of the plaintiffs’ complaint centered on the allegations that the defendants failed to ensure that the fees paid by the plan were reasonable for the services received when retaining Pentegra Services Inc. as a service provider.

Using an employer’s own affiliated company as a service provider is problematic, especially with $2 billion in assets at stake. This type of case is exactly the kind that attorney Jerry Schlicter pursues, and this was one of his cases.

The plaintiffs accused Pentegra of profiting from collecting additional fees directly from the employers participating in the Multiple Employer Plan (MEP).

According to a summary of the case, Pentegra President and CEO John Pinto served as a non-voting board member of the plan while also being the president of Pentegra Services Inc. Pinto and the other board members named in the lawsuit were found by the jury to have breached their fiduciary duties. This case serves as a warning for those who use plan providers with even a slight affiliation. If your organization is large enough, you could become a target.

Let’s get one thing straight: The Shawshank Redemption isn’t just about prison. If you think it’s just a story about a guy escaping through 500 yards of foulness, you’re missing the point—and probably still stuck in your own version of Shawshank, whether it’s a toxic workplace, a career you never chose, or a family that gaslights you over breakfast.

Andy Dufresne was a banker wrongfully convicted of murder. But his real sentence wasn’t the prison walls—it was the assumption that he had no control over his life. Sound familiar? Because for a lot of us, our own Shawshank is disguised as a six-figure job at a “prestigious” law firm, or a family who defines loyalty as “never making them uncomfortable.”

Andy didn’t just break out of Shawshank. He quietly, meticulously reclaimed his destiny. And while I never used a rock hammer to tunnel through a wall, I did carve my way out of law school, out of a law firm that thought 80-hour weeks and soul death were part of the benefits package, and out of a family system that believed conformity was the price of love.

What did it take? Hope. And not the naive, bumper-sticker kind. I’m talking about the kind of hope that looks like insanity to people who are still imprisoned. The kind of hope that makes you start your own firm with no net, write blogs like this one, and build a life where you call your own shots—even if the first few years feel like solitary confinement.

You don’t get out in a day. Andy didn’t. He spent 19 years digging behind a poster of Rita Hayworth while laundering warden bribes. You and I? We spend years pretending that burnout is just part of “making partner,” that dysfunction is tradition, that Sunday night dread is a fact of life. It’s not.

Here’s the deal: You don’t have to stay in a prison just because you helped build it.

Andy said it best: “Get busy living or get busy dying.” For me, living meant leaving. Leaving the firm. Leaving law the way it was “supposed” to be practiced. Leaving relationships that drained more than they gave.

I don’t know your Shawshank. But I know it’s real. And I know there’s a Pacific Ocean waiting—if you’re willing to start chipping away.

Alright, listen—I’m stubborn. I admit it. There are just some things I don’t understand, and when I don’t understand something, it sticks with me. It burrows into my brain like a woodpecker with an agenda.

So I get this call. Financial advisor. Nice guy, polite. He asks about how I price my retirement plan document work—specifically my flat fee. I tell him, “Two thousand bucks. That’s it. That’s the price.” Straightforward, right?

Then he hits me with this: “Does the fee change if the plan has, like, thousands of participants?”

What? Thousands? No! What does that have to do with anything? I mean, sure, I get the curiosity, but c’mon. Drafting a plan for one guy in a cardigan or drafting one for an entire Fortune 500 army—it’s the same document. Same rules, same IRS pre-approved volume submitter plan. I don’t suddenly type faster because there are more participants. I’m not being paid by the comma.

So I explain this to him. I tell him: “Look, the number of participants—that’s a TPA issue. They’ve got the sub-accounts, the statements, the whole buffet of administrative nightmares. That’s where the scaling happens. Not with me.”

I mean, what does he think I’m doing? Personalizing each plan with tiny names etched in the margins? “Oh, Janet from Accounts Payable is in this one. Better raise the fee!”

And by the way—I’m no TPA expert, but I’ve been around. I know enough to know that the only fee that should scale with assets is the custody fee. That makes sense! Six to eight basis points, fine, because you’re holding more stuff. You’re the vault. You want a bigger vault? You pay a little more. That I can get behind.

But here’s where it gets nuts.

Some of these well-known, highly regarded TPA firms—they’re still charging administration fees based on plan assets. Assets! Like they’re investment advisors! What are we doing? That’s like me saying, “Oh, your plan has 3,000 participants? That’ll be $200,000. Because… reasons.”

It makes no sense! The amount of money in the plan doesn’t make it more difficult to administer. It’s not like the server is sweating under the weight of extra zeros. You’ve got 100 participants whether it’s a $10 million plan or a $100 million plan. Same statements, same calculations, same work. The decimal place just moved over.

Look, I know what people are gonna say. “If the client’s okay with it and it’s disclosed, it’s fine.” Sure. But you know what else is disclosed? Airline baggage fees. And we still complain about those, don’t we?

Call me old-fashioned. Call me stubborn. But I believe in this crazy little thing called logic. A fee should relate to the work involved. Not some arbitrary number you pulled out of a pie chart.

Anyway, that’s my rant. I feel better now. Sort of.

Many moons ago, I got a call from a bank with a problem. For two decades—yes, twenty years—they had failed to include bonuses as part of plan compensation. The kicker? They were supposed to. This wasn’t a gray area; the plan document was crystal clear. I gave them the only legitimate answer: file under the IRS Voluntary Compliance Program (VCP). It wasn’t fun, but it was the right play.

But instead of taking that advice, the bank went shopping and found an ERISA attorney who told them they could just self-correct. Self-correct? For 20 years of errors and who-knows-how-many participants? That’s not self-correction—that’s magical thinking. Sure, they could try to self-correct. And G-d help them if an IRS agent ever knocks on the door.

There are plenty of plan providers and attorneys who pride themselves on being aggressive for their clients. They push the envelope, bend the rules, and tell clients exactly what they want to hear. But there’s a difference between being aggressive and being reckless. Fly too close to the sun and you might not just get burned—you might take your client down with you. And the IRS or DOL? They don’t exactly hand out sunscreen.

I love Las Vegas. Great restaurants, great shows, and five trips in a row without dropping a nickel into a slot machine. Why? Because I hate gambling. I hate losing even more. Honestly, just getting out of bed every morning is risky enough for me.

That said, I see a lot of plan sponsors who seem to love gambling a whole lot more than I ever could. They make a bet that a compliance error will just quietly disappear. Instead of self-correcting, they cross their fingers and hope the statute of limitations on that year’s Form 5500 runs out before the IRS or DOL comes knocking. That’s not strategy—that’s a Vegas-style long shot with terrible odds.

Here’s the thing: when the cost of fixing the problem is a fraction of what the government could hit you with if you get caught, refusing to correct it is a fool’s bet. You’re not gambling with the house’s money—you’re gambling with your own. And in this game, the house (a.k.a. the IRS or DOL) doesn’t lose often.

Self-correction and the Voluntary Compliance Program exist for a reason—they’re your best path out when you’ve made a mistake. Betting on getting lucky with an audit isn’t just bad compliance; it’s a great way to get fired by any third-party administrator that knows what they’re doing. Worse, if you do get audited, you’ve lost all credibility, and now you’re at the mercy of someone with the power to levy real pain.

Vegas is for shows and steak dinners—not your retirement plan compliance strategy.