The Rosenbaum Law Firm P.C. Blog

UnitedHealth Group is the latest big-name employer to get hit with a class action lawsuit over how it handles 401(k) forfeitures. The case, Kotalik et al. v. UnitedHealth Group Inc., accuses the company and its plan fiduciaries of violating ERISA by using more than $19 million in forfeited funds to offset employer contributions—without applying any of it toward plan expenses.

The plaintiffs, representing over 250,000 participants in a $22 billion plan, claim this cost-cutting move shortchanged participants by more than $25 million in compounded value. The lawsuit alleges five ERISA violations, including breaches of loyalty, prudence, and failure to monitor fiduciaries.

This isn’t UnitedHealth’s first brush with ERISA trouble—they recently settled a separate case for $69 million over mismanaged target-date fund investments.

Here’s the lesson: Forfeitures aren’t free money. They’re plan assets and must be handled according to the plan document and ERISA’s exclusive benefit rule. If you’re a plan sponsor, now’s the time to review your forfeiture practices—or risk being next in the litigation spotlight.

Empower recently made headlines by announcing a bold new initiative: giving defined contribution (DC) retirement plan participants access to private market investments. On the surface, it sounds like a win—more choice, broader diversification, and the chance to tap into investment strategies once reserved for institutional players.

But if you’ve been in this business as long as I have, you learn to read between the lines. And what I see here isn’t just a shiny new investment opportunity. It’s a potential red flag.

What Empower Is Pitching

Empower has teamed up with some of the biggest names in finance—Apollo, Goldman Sachs, Franklin Templeton, Neuberger Berman, PIMCO, Partners Group, Sagard. Together, they plan to offer private equity, private credit, and private real estate investments via collective investment trusts (CITs). The promise? Limited exposure, reduced fees, and more diversification for your retirement plan lineup.

Sounds exciting. But let’s pause for a moment.

The Reality Check

Private investments aren’t like mutual funds or index funds. They’re complex, opaque, and illiquid. They often require long holding periods. They involve higher fees. And they rely on valuation models that aren’t always easy to verify.

Using CITs to offer these investments doesn’t magically make them “retirement ready.” It just gives them a new wrapper.

And let’s be honest—these private market firms aren’t offering access out of charity. They see a new revenue stream in the massive DC plan market. If they can get their slice of that $10+ trillion pie, they will.

What It Means for Plan Sponsors

Here’s the part where fiduciaries need to pay attention.

Just because Empower is offering it doesn’t mean it’s prudent. Under ERISA, plan sponsors have a duty to act in the best interest of plan participants. That means doing serious due diligence:

· Can these investments be properly valued?

· What are the true costs after layering in all the fees?

· Are participants equipped to understand what they’re investing in?

· How will the plan handle liquidity if things go south?

If the answer to any of these questions is “I’m not sure,” that’s a problem.

A Word of Caution

I’m not against innovation. And I’m not saying private investments should be off-limits forever. But throwing them into DC plans without a clear roadmap for transparency, education, and fiduciary oversight is reckless.

This isn’t just about adding another fund to your plan menu. It’s about fundamentally changing what kind of risk you’re exposing participants to—and what kind of liability you’re taking on as a fiduciary.

Final Thoughts

Empower is calling this a “landmark initiative.” I call it a potential minefield.

If you’re a plan sponsor or advisor, proceed with extreme caution. Ask the hard questions. Demand clear answers. Don’t get swept up in the hype. Because in the retirement plan world, there’s a fine line between opportunity and overreach—and crossing it could cost your participants dearly.

When I titled my new book Full Circle, I didn’t just pick a catchy phrase—I picked a truth.

In life and business, we often think progress means always moving forward. But the longer I’ve worked in the retirement plan industry, the more I’ve realized that growth often means coming back to where we started—this time with clarity, experience, and purpose. Full Circle is about that return. It’s about rediscovering why we got into this business in the first place—to help people. To do the right thing. To build something meaningful.

It’s about survival and the neveending desire to pull through.

This book is for the plan providers—the advisors, TPAs, ERISA attorneys, recordkeepers—who want to grow their business the right way. It’s about how to navigate the noise, avoid the pitfalls, and keep your compass pointed toward value and integrity. I talk about the mistakes I’ve made, the battles I’ve fought (sometimes with myself), and the moments where everything came together to remind me why I do this.

Full Circle will be available in paperback and Kindle on Amazon starting June 9th. But if you’re as impatient as I am, Kindle pre-orders are open now.

And because this book isn’t just a book—it’s a conversation—I’m hosting a free webinar to talk about the ideas inside it. What does it mean to go full circle in this business? What does sustainable growth really look like? How do we help plan providers not just survive, but thrive?

Join me for the webinar here: Free Webinar Registration

Whether you’ve been in the industry 30 years or 30 days, Full Circle has something for you. Not just strategy—but purpose.

See you there.

If there’s a Mount Rushmore of ERISA class-action litigators, you better believe Jerry Schlichter’s face is carved into it—probably right next to a 408(b)(2) disclosure and a stack of mutual fund fee charts. And once again, the law firm of Schlichter Bogard LLC is back, targeting an old friend: Northrop Grumman. This makes lawsuit number three.

Yes, that Northrop Grumman. The one that’s been down this road before—with a 2006 excessive fee case, and again in 2019. Apparently, the third time is the charm, or maybe just déjà vu with different plan language. This time, the suit is about how forfeiture assets were handled. Or, more specifically, mishandled.

The complaint, filed on behalf of Brian Clouse, Steven Kawakami, Douglas Hoffelt, and Michael Winkler, accuses Northrop Grumman, its Benefit Plan Administrative Committee, and the obligatory John Does 1–17 (because ERISA litigation wouldn’t be complete without some mystery fiduciaries), of breaching fiduciary duty by misallocating plan forfeitures in violation of ERISA and the Plan Document.

Now here’s where it gets interesting—because, as is often the case, it’s not just about what the fiduciaries did, but what the Plan Document told them to do. According to the plaintiffs, Section 7.04 of the plan required a strict forfeiture order of operations: first, restore unvested balances of rehired participants; second, pay plan administrative expenses; and only then, if there’s any money left, reduce employer contributions. Pretty straightforward. No discretion. No wiggle room.

But according to the lawsuit, Northrop didn’t just miss a step—they skipped the first two entirely. For six straight years, the complaint alleges, all forfeiture assets were funneled directly into reducing employer contributions. Plan expenses? Ignored. Reinstatement reserves? Nonexistent. The Plan allegedly said “must,” and the fiduciaries allegedly said “nah.”

That brings us to Section 7.05—another nail in the fiduciary coffin, if true. This section allegedly required maintaining a forfeiture reserve for five years in case former participants were rehired. Not only was this not done, but the suit claims every dollar of forfeitures was rerouted to benefit Northrop’s bottom line instead of serving participant interests.

Let me say this plainly: ERISA doesn’t care how expensive recordkeeping fees are or how many lawyers reviewed the plan design. If the document says “must,” and you treat it like “may,” you’re asking for trouble. And with over 100,000 participants and $36 billion in plan assets, that’s a big target.

So, what does this mean? Well, if these allegations hold water, don’t expect this to get to trial. Mandatory plan language is plaintiff gold. And if you’re betting on whether Northrop Grumman reaches for their checkbook before or after discovery heats up, take the “before.”

The takeaway? Always, always, check your forfeiture language. Fiduciaries don’t get to rewrite “shall” into “whatever seems reasonable at the time.”

The department store has been a dying business for 50 years. That’s not hyperbole—it’s a fact. Ever since the rise of the shopping mall, the explosion of discount retailers like Walmart and Target, and now online shopping, the traditional department store model has been on life support. And what has management done over the past five decades to stop the bleeding? Not much. It reminds me of A&P—the grocery giant that once ruled the U.S. market and then slowly faded into nothing over 60 years. Death by inertia.

Here’s the thing: your business probably won’t die tomorrow. Businesses rarely go out in a blaze of glory. Most of the time, the end comes slowly, and you won’t realize you’re in trouble until the doors are about to close. The issue is that dying businesses tend to follow the same script. They do nothing to change course. They’re stuck in a death spiral of outdated thinking, bad leadership, and fear of real change.

I’ve seen it firsthand. I worked for a TPA where the business was in a constant state of reorganization—every year, a new structure, new roles, same old problems. The guy running the place once said if this new structure didn’t work, he’d fire himself. Well, it didn’t work—and surprise, he stayed right where he was while the ship kept sinking.

The retirement plan industry isn’t immune to this. It’s an ever-evolving business. Regulations shift, technology changes, client expectations grow. If you’re not adapting, you’re falling behind. And if you keep running your business like it’s 2005, don’t be surprised when you’re treated like a department store in 2025.

Change with the times—or get left behind. The choice is yours.

When I first started my law practice, I’d get invited to sponsor networking events or plan sponsor forums. They’d ask for a check, promise big exposure, and deliver… almost nothing. The room would be filled with the wrong audience or not enough of the right people. It felt like I was throwing money into a hole, hoping someone on the other end needed an ERISA attorney. Spoiler: they usually didn’t.

So when I launched That 401(k) Conference, I built it around two principles:

1. Make the event something memorable for advisors—fun, engaging, and actually worth attending.

2. Don’t burn out the sponsors.

The top-level sponsorship at That 401(k) Conference is $1,500. That way, even if you don’t walk out with a dozen leads, you don’t feel like you mortgaged your marketing budget for nothing. The goal is to make connections that matter, not to sell pipe dreams with a hefty price tag.

Want to sponsor? You know how to find me. We’re in Milwaukee this September, and I’ll have ideas for 2026 by August. Let’s make it worth your while.

Businesses in the retirement plan industry don’t collapse overnight. It’s never sudden. Like Sears, the decline drags out over years—death by a thousand paper cuts. One day you’re a major player, the next you’re just a name people remember from a conference ten years ago. The truth is, most long-term failures in this business are slow and quiet, not loud and explosive.

And here’s the kicker: these businesses could change course, but rarely do. Why? Because real change requires a cultural shift, and that’s hard—especially when the same leadership that got the business into trouble is still firmly in control. You can’t expect a different result when the same people keep making the same decisions with the same mindset that’s already led to a slow death spiral.

Leadership inertia is a killer. If the people at the top refuse to acknowledge the need for transformation, nothing happens. Maybe you’ll get a new logo, maybe a shiny new website—but the core business, the stale strategy, and the tired value proposition? Still there. Still ineffective.

If your business has been stagnating for a while—losing clients, losing market relevance—the worst thing you can do is double down on what’s not working. The best option? Change course. Admit that what you’ve always done isn’t cutting it anymore. That’s not a weakness—it’s awareness. And it’s the first step in pulling out of the nosedive.

In this industry, survival isn’t guaranteed. But reinvention? That’s still possible—if the leadership has the stomach for it.

About 20 years ago, there was a medical report claiming that dental plaque could cause heart disease. Now, the cynic in me can’t help but wonder if that was cooked up by the dental lobby as a way to generate more patient visits. Let’s face it—fluoridated water and improved dental hygiene probably didn’t help the average dentist’s bottom line. But cynicism aside, good oral health is a legitimate goal.

Some people only see the dentist when their mouth is screaming in pain. Others go twice a year for checkups and cleanings to avoid the bigger problems—root canals, caps, and dentures. Preventative care is common sense.

As an ERISA attorney, I’ve started to see myself as the retirement plan version of a dentist. Some plan sponsors only come to me when something’s gone horribly wrong—like a missed restatement, late deferrals, or a full-blown DOL audit. But there are others, thankfully, who understand that seeing ERISA counsel is part of a healthy, preventative routine.

Part of the core messaging in my practice has always been this: plan sponsors should be reviewing their retirement plans annually. Not just to check a box, but to ensure proper plan operation, confirm fees are still reasonable, and verify that fiduciary processes are in good shape. That’s where my Retirement Plan Tune-Up comes in. It’s a legal check-up that reviews the plan document, administration, and fiduciary oversight—identifying what’s working and what might need attention before it becomes a liability.

Plans need to evolve as businesses do. Sponsors need to ask whether the plan still fits the company’s needs and if there are lurking issues in how it’s being run. That’s why I write articles and blog posts that shine a light on the common pitfalls—things like missing investment policy statements, excessive fees, or poor documentation. These aren’t abstract concerns; they’re real issues that lead to real litigation.

Now, I’ve had critics over the years—some are even fellow ERISA attorneys—who argue that I’m just fearmongering. They say that small and mid-sized employers rarely get sued for fiduciary breaches, and that my legal services are overkill. To them, I say: that’s the plaque-causes-heart-disease argument all over again. Maybe it’s a stretch. Maybe it’s not. But we still avoid standing under trees during a lightning storm, even if the odds of getting hit are low. Litigation evolves, and when plaintiffs’ attorneys exhaust the large plans, they’ll start looking downstream.

At the end of the day, good practices help avoid bad outcomes. Just like brushing and flossing, regularly reviewing your retirement plan is common sense. You don’t want to wait for the ERISA version of a root canal.

Those small employer plans like SEPs and SIMPLE-IRAs? They’re great starter tools for retirement savings. Think of them like toddler clothes: low maintenance, affordable, and easy to manage. No administration costs, no annual 5500s, and they get the job done—for a while.

But like kids’ clothing, there comes a time when these plans no longer fit. When’s that time? It’s when your business starts growing—specifically, when you add employees who aren’t owners or family. These plans don’t allow for contribution disparity. That means if you want to give yourself a 15% contribution, you’ve got to give the same to your eligible employees. There’s no flexibility. And in a SEP, there are no employee salary deferrals. In a SIMPLE, deferrals are capped and employer contributions are limited. Translation: you’re carrying the full load on funding.

That’s when you know it’s time to graduate to something more robust—like a 401(k) plan or even pairing that with a cash balance plan if your business can support it. Don’t wait until the plan stops working to make the change. Know when the SEP no longer fits—and be ready to upgrade before your business growth turns into a compliance headache.

For the first time, That 401(k) Conference returned to the same venue. On Friday, May 9, 2025, we returned to Kansas City at Kaufmann Stadium, home of the Kansas City Royals.

We had a great event there in 2019 and we will had a great event in 2025.

We had some great presentations, a nice turnout, and a great guest in Royals broadcaster Rex Hudler.

We return with a live event in Anaheim on June 5th.