The Rosenbaum Law Firm P.C. Blog

Greetings—this is Ary Rosenbaum picking up the referee’s whistle to review a recent win for fiduciaries and what it signals for plan-sponsors, TPAs, and compliance teams.

1. What Happened

A federal judge dismissed a lawsuit against Peco Foods Inc. that challenged the company’s practice of using forfeited 401(k) account balances to satisfy employer contribution obligations. The claim: departing participants’ forfeitures were not being used in the “correct” order or for the “right” expense categories. The judge said no violation of the plan document or ERISA fiduciary duties was shown.

2. Why This Matters

In my “Rosenbaum voice” pragmatism: forfeiture-reallocation litigation is a live and growing threat for defined contribution plans. Yet, this case underscores a few key takeaways:

· Plan Document Is King – What the document says governs the outcome. The judge emphasized that fiduciary liability did not automatically arise just because someone questioned how forfeitures were used.

· No Categorical Liability – Even under §404(a) of Employee Retirement Income Security Act of 1974 (ERISA), you’re not liable simply for exercising discretion in forfeiture use. The specifics matter.

· Operational Risk Still There – While this is a win for the defendant, the reasoning leaves open that other plans with less clarity in their documents or more ambiguous execution might still get hit.

3. Three Questions Plan Sponsors, Fiduciaries & Advisors Should Ask

Because yes, this is your “to-do” list (in true Rosenbaum style):

· Does my plan document clearly articulate how forfeitures are allocated? If language is vague (“may apply,” “at the employer’s discretion,” “as determined by the committee”), you’re inviting interpretation risk.

· How is “administrative expense” defined and treated in practice? The Peco decision leans on how the plan defined (or didn’t define) expense categories and whether the fiduciaries followed that order.

· Do our operations match the document? It doesn’t help to have crisp language if your practice diverges. Contractors, record-keepers, audits: all must be aligned.

4. Final Takeaway

For plan sponsors: this decision is encouraging, but not a free pass. In the 401(k)/403(b) space, forfeiture-allocation suits remain among the “hot topics” of fiduciary exposure. The Peco outcome points to the defensive strength of:

· A well-worded plan document

· Clear, consistent operational practice

· Documentation showing fiduciary decision-making aligned with the instrument

Treat forfeitures not just as accounting line-items, but as compliance potential. Make sure your plan docs reflect your operations, your vendor contracts reflect your practice, and your audit/committee materials show you reviewed this.

As I sit back, figuratively dusting off my “That 401(k) Conference” binder and sipping lukewarm coffee—the true fuel of every ERISA late-night writing session—here’s how I, Ary Rosenbaum, see the latest IRS release of the 2026 retirement plan limits: another year, another set of numbers that look simple on paper but carry real consequences for fiduciaries who don’t stay ahead of the curve.

1. The Big 2026 Changes

Here are the highlights you’ll be fielding questions about:

· 401(k)/403(b)/457(b) Elective Deferral Limit: $24,500

· Age-50+ Catch-Up: $8,000

· SECURE 2.0 “Super Catch-Up” (ages 60-63): $11,250

· Defined Contribution Annual Additions Limit: $72,000

· Compensation Limit: $360,000

· IRA/Roth IRA Contribution Limit: $7,500

· IRA Catch-Up: $1,100

· HCE Threshold: $160,000

· Key Employee Threshold: $235,000

· Starter 401(k) Deferral Limit: $6,000

These numbers aren’t just arithmetic—they’re compliance obligations waiting to trip up an unsuspecting plan sponsor.

2. Why These Numbers Matter

In true Ary fashion: the IRS doesn’t just change limits for fun—every adjustment creates a ripple of responsibilities.

· Plan Documents Need Updating: SPDs, plan instruments, and operational manuals must reflect the 2026 limits. Failure to update means operational defects.

· Payroll Coordination: This is where most plans stumble. If payroll doesn’t load the new limits properly, you’re looking at excess deferrals, corrective distributions, and a very unhappy audit team.

· Participant Communication: Every year, participants ask the same question—“How much can I put in?” Give them clear guidance, especially the 60-63 crowd who now get that super catch-up.

· Testing Implications: With new HCE and Key thresholds, nondiscrimination testing outcomes may shift. Early modeling will help avoid next year’s panic.

· Plan Design Strategy: These new limits are a natural point to revisit design—safe harbor, match formulas, eligibility windows, contribution structures, Starter 401(k) considerations, all of it.

3. Ary’s Fiduciary “To-Do” List

· Review plan documents and SPDs for necessary limit updates.

· Confirm payroll and recordkeeper systems are configured for January 1, 2026.

· Prepare participant communications and highlight catch-up and super catch-up opportunities.

· Run early nondiscrimination projections using the updated thresholds.

· Confirm whether your plan will actively support the 60-63 super catch-up, and prepare targeted messaging.

· Calendar the amendment deadline so you don’t find yourself racing in November.

· Brief the investment/plan committee on how the updated limits may affect participation and testing.

4. Final Thoughts

This is the yearly dance: the IRS gives us numbers, and we translate them into operational reality. But here’s the thing—handling these changes smoothly is one of the easiest ways a plan sponsor can demonstrate competence, care, and fiduciary diligence.

Every year I say the same thing: don’t let your plan be the one that forgets to update payroll. Excess deferrals and testing failures aren’t glamorous mistakes, but they’re the ones that sting.

Plan sponsors who get ahead of these adjustments show participants that they’re attentive, prepared, and committed to running the plan the right way. In an industry built on trust, that matters.

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.