The Rosenbaum Law Firm P.C. Blog

A new Empower survey has made some waves in the retirement plan industry. According to their July 2025 survey, a striking 68% of advisors already use private market investments—things like private equity, private credit, and private real estate, mostly in high-net-worth or wealth-advised accounts. More surprising is that 58% of those advisors would recommend private markets within retirement plans. Among advisors with pension or defined benefit experience, that number jumps to 75%. Overall, 43% of advisors are open to the idea.

On its face, this looks like momentum. Edmund F. Murphy III, Empower’s CEO, framed it as aligning the U.S. defined contribution system with the global investing universe, where private markets are hardly niche. The survey points to diversification (62%), higher return potential (48%), and lower correlation to public markets (48%) as the perceived benefits. The challenges—liquidity (68%), fees (48%), and complexity (33%)—are exactly the reasons I’ve always been skeptical about shoehorning private equity into 401(k)s.

I’ve been around this business long enough to know that plan participants already struggle with traditional investments. Too many chase performance, too many cash out at the wrong time, and too many don’t diversify properly. Adding illiquid and opaque private investments to that mix is like handing matches to someone who already leaves the stove on. The professionals in pension funds may have the sophistication and governance structure to handle private markets, but average 401(k) participants and their plan committees? That’s another story.

The survey also shows that 66% of advisors would be more inclined to recommend private markets if ERISA and the Department of Labor provided greater regulatory clarity. Translation: advisors want the legal cover before they stick their necks out. And that’s fair. Plan sponsors live under the constant threat of fiduciary liability, and the risk of litigation grows exponentially when you add complexity.

Empower isn’t just floating ideas—they’ve already moved. Back in May 2025, they launched a program offering access to private investments through seven major asset managers via collective investment trusts (CITs). The structure is designed to address liquidity and fees while offering limited exposure. It’s a landmark initiative, and if it succeeds, it could change the shape of the retirement plan investment menu.

But here’s the thing: private markets are not a magic wand. Yes, they offer diversification and potential returns, but they also come with higher fees, opaque pricing, and limited liquidity. Defined benefit plans can absorb those risks because they pool assets and make decisions centrally. Defined contribution plans, by their very nature, push decisions down to individuals. And when individuals make bad investment decisions, they pay the price, not the plan.

To me, the jury is still out. Private markets may have a place in retirement plans, but that place needs to be small, carefully monitored, and overseen by fiduciaries who truly understand what they’re buying. Without that, private equity in a 401(k) isn’t diversification—it’s a liability waiting to happen.

As with most things in this business, good intentions are never enough. The road to litigation is paved with them.

One of my favorite movie scenes in Donnie Brasco is when Lefty and the crew bust open city parking meters for dimes because they’ve got to make their weekly nut. Sometimes, I feel like ERISA litigation is the same thing, plaintiffs’ attorneys are searching for loose change in the form of new fiduciary causes of action. The latest example? Becerra v. Bank of America Corp. On Tuesday, Judge Max Cogburn Jr. in the Western District of North Carolina denied Bank of America’s motion to dismiss a case that cuts right into a sore spot for plan sponsors: the use of forfeitures. The plaintiffs claim Bank of America improperly used forfeited plan assets—millions of dollars’ worth, to offset its own future contributions instead of paying plan expenses. In their view, that’s not just bad optics, it’s a fiduciary breach under ERISA.

The Fiduciary Question

Bank of America argued that its use of forfeitures was a “settlor” decision, outside the scope of ERISA’s fiduciary rules. That’s been the line many plan sponsors have leaned on when it comes to plan design decisions. But Judge Cogburn wasn’t buying it—at least not yet. He held that the plaintiffs had plausibly alleged a breach of fiduciary duty by claiming plan assets were used to reduce employer contributions, not for the exclusive benefit of participants.

It’s worth noting that courts haven’t spoken with one voice on this issue. Some judges have accepted the “settlor” argument. Others, like Cogburn here, have kept the door open for plaintiffs to proceed. The Department of Labor hasn’t helped by filing an amicus brief in other forfeiture cases that supports employers, further muddying the waters.

Anti-Inurement and Prohibited Transactions

The decision also breathes life into claims under ERISA’s anti-inurement clause and prohibited transactions rule. The anti-inurement provision says plan assets can’t inure to the benefit of the employer. Plaintiffs allege that using forfeitures to lower contributions is exactly that. On prohibited transactions, Cogburn noted that the complaint plausibly alleged “self-dealing”—using plan assets in a way that benefits the employer.

If those claims stick, it could be costly. With a $63 billion plan covering over 250,000 participants, Bank of America is a very big target.

What It Means for Plan Sponsors

This isn’t a ruling on the merits, but it’s a reminder that forfeitures are a landmine. The regulations allow forfeitures to be used to pay plan expenses or to reduce future employer contributions. Many sponsors, and many plan documents, lean on that second option. But cases like Becerra show that just because the regulations say you can doesn’t mean plaintiffs’ lawyers won’t try to argue you shouldn’t.

This is why I tell plan sponsors that “doing the right thing” isn’t always enough—you have to be able to show it. Document your forfeiture policy, make sure your plan document is crystal clear,

and when in doubt, consider applying forfeitures toward legitimate plan expenses. That’s a harder target for plaintiffs to attack.

Final Bell

The Bank of America case is just getting started, but it’s another skirmish in the larger war over how far fiduciary liability extends. Until we get more consistent rulings—or better guidance from the DOL, plan sponsors need to treat forfeitures with the same care they’d treat investment lineups or fee arrangements.

Because when it comes to ERISA litigation, the plaintiffs’ bar is going to keep shaking every meter, looking for dimes.

When it comes to retirement plan litigation, the common theme I’ve noticed over the years is that lawsuits rarely die in the early rounds. A fiduciary’s best hope is to win on summary judgment or at trial, but a motion to dismiss? That’s usually a long shot. And Sentara Healthcare just found that out the hard way.

In Carter et al. v. Sentara Healthcare Fiduciary Committee et al., the Eastern District of Virginia refused to toss claims that Sentara and its fiduciary committee breached their duties by mismanaging a stable value fund, the Guaranteed Interest Balance Contract (GIBC) from Principal. While one plaintiff, Bonny Davis, initially lacked standing because she wasn’t yet in the GIBC, the court granted her leave to amend, effectively keeping her in the game. That’s like arguing your opponent doesn’t have a ticket to the dance, only for the judge to hand them one at the door.

Why This Matters

Stable value funds are supposed to be the “safe harbor” in a defined contribution plan, the place where risk-averse participants can find steady returns. The plaintiffs here allege the GIBC fell short of that promise, claiming its returns lagged far behind what comparable products offered at the same level of risk. That’s a damning accusation, because ERISA isn’t about guaranteeing the highest return, it’s about guaranteeing a prudent process. If the committee didn’t properly monitor the investment or solicit competitive bids, the court is saying that’s enough to let the case move forward.

And the hammer didn’t just fall on the committee. Judge Walker made it clear that Sentara itself, as the plan sponsor, has independent oversight duties. Employers sometimes think they can silo off risk by delegating responsibility to a committee, but ERISA doesn’t work that way. If the committee makes a mistake and the employer sits on its hands, the employer is just as liable for failing to step in. As the court put it, Sentara had the duty “to monitor investments and remove imprudent ones” and to rectify poor decisions.

The Bigger Picture

This isn’t a headline-grabbing case about excessive recordkeeping fees or overpriced share classes. It’s about something that most sponsors overlook, monitoring supposedly “safe” options. With $3 billion in plan assets and over 40,000 participants, Sentara is a big target. But size doesn’t matter when it comes to fiduciary responsibility; process does. A plan with $30 million in assets can just as easily get tripped up if it fails to follow a prudent process.

The lesson? Fiduciaries must treat every investment option, whether it’s an S&P 500 index fund or a stable value contract, with the same disciplined monitoring process. That means reviewing performance relative to peers, documenting discussions, and yes, occasionally soliciting bids to make sure the product is still competitive. If you assume “safe” means “immune from litigation,” this case should disabuse you of that notion.

Final Thoughts

Sentara says it will show the court evidence of its prudent practices at summary judgment. Maybe it will, maybe it won’t. But this case underscores the central truth of ERISA litigation: motions to dismiss rarely save you, and fiduciary oversight is never passive. You can delegate responsibilities, but you can’t delegate accountability.

The road to fiduciary trouble isn’t paved with bad intentions—it’s paved with complacency. And as Sentara is finding out, complacency can be very expensive.

Years ago, back in law school, I was the Executive Editor of the student news magazine. It wasn’t the New York Times, but it was our little soapbox to gripe about professors, tuition hikes, and the lousy food in the cafeteria. In one of my last issues, a friend of mine wrote a piece that was as hilarious as it was true. His beef was with the timing of professor evaluations. They were always handed out before final exams, before we knew our grades. He argued, quite convincingly, that evaluations should come after grades, because nothing colors your impression of a professor like the grade you get. In his words, a good grade meant you’d happily wave to that professor on the street; a bad grade meant you wouldn’t even relieve yourself on them if they were on fire. It was crude, it was biting, but it was also dead on. Our real view of the class usually came after we saw our transcript.

That article sticks with me because it reminds me of retirement plan sponsors and their relationship with third-party administrators (TPAs). Sponsors usually don’t get the real picture of their TPA’s competency until they’re walking out the door—during the dreaded de-conversion process. A de-conversion is just what it sounds like: unwinding your plan from the old TPA to hand it over to the new one. And like moving apartments in the middle of a New York summer, it’s rarely fun and sometimes downright miserable.

Why is it harrowing? Because the truth comes out in the move. If you’ve been working with a solid TPA, or if you’ve kept an eye on things with annual compliance reviews, then de-conversion is smooth. The boxes are labeled, the furniture makes it through the door, and you can actually see the floor when it’s done. But if you’ve been asleep at the wheel—if you don’t know the difference between the ADP test and ADP, the payroll company—you’re in for some nasty surprises.

I can’t tell you how many times I’ve been called in by a plan sponsor during a transition, only to find skeletons tumbling out of the compliance closet. Plans that should have failed their Top Heavy test but didn’t because the TPA flubbed it. Plans with years of overcharging hidden in plain sight. And let me tell you: no new TPA wants to inherit a mess. They’ll make you clean it up before they take on the plan, which means more cost, more headaches, and more sleepless nights for the sponsor.

That’s why I always tell clients: don’t wait for a breakup to find out who you were really dating. Do an annual review. Call it a plan tune-up, a compliance check, or whatever you want, but get an independent look at your plan’s administration. Whether it’s my $750 Retirement Plan Tune-Up or someone else’s review, the point is the same: know what you’re dealing with before you’re forced to confront it. Because when it comes to TPAs, the evil you know is always better than the evil you don’t.

In the retirement plan business, I’ve watched too many plan providers obsess over competitors—who’s stealing clients, who’s lowering fees, who’s suddenly offering “cutting-edge” solutions. But here’s the truth: if a plan sponsor is happy with their provider, they’re not going anywhere. Period.

When a client makes a change, it’s not because someone dazzled them—it’s because something wasn’t working. Service was slow. Mistakes piled up. Communication was nonexistent. Whatever it was, the client felt neglected or underserved.

Changing plan providers is a hassle. No one does it for fun. So if you lost a client, take it as a sign that something needed fixing—on your end.

Instead of worrying about what the competition is doing, focus on keeping your clients happy. Return calls. Solve problems. Be proactive. Show them you care.

Because in this business, it’s simple: happy clients never leave.

One of my favorite sayings is: “The road to hell is paved with good intentions.” To me, it’s a reminder that even when we mean well, things don’t always turn out the way we hoped.

A big part of what I do is help advisors and brokers build their retirement plan practices. Sometimes I serve as counsel, sometimes I partner up to chase new business. I like helping people do things the right way—cutting through the noise on fees, finding the right TPA, and staying on the right side of fiduciary duty.

A few years ago, I met a broker who was eager to make a name for himself. He liked what I had to say—loved my takes on plan expenses and TPA quality. He started prospecting a plan that used to be a client of mine back when I was head ERISA counsel at a New York TPA. I offered some insights—issues I remembered that might help him close the deal.

Apparently, they worked. He landed the client. But then came the twist.

He told me they were moving the plan to a payroll provider TPA, one I’m not a fan of. Not because I hold grudges, but because I’ve seen how often payroll TPAs prioritize convenience over quality. He chose them because they worked better with his platform, not necessarily because they were better for the client.

So, some of my well-meaning advice ended up helping a broker land a client… only for the client to be moved to a provider I would never have recommended.

This is why that old saying sticks with me. Good intentions don’t guarantee good outcomes. Sometimes your efforts to help can still lead to decisions you wouldn’t make yourself.

We all want to do right by our clients and partners. But in this business, the follow-through matters just as much as the intent. Because when advisors push changes just to get paid faster, that’s not fiduciary. That’s self-serving. And that’s exactly what we’re supposed to be working against.

Sometimes your guidance leads to great results. And sometimes… it doesn’t.

If you’re old enough to flip burgers, serve coffee, or serve your country at 18, you should be able to save for retirement too.

That’s why I fully support the bipartisan Helping Young Americans Save for Retirement Act (H.R. 4718). This bill would require employers to open up their 401(k) plans to workers as young as 18. It’s common sense. Right now, too many employers still use age 21 as a barrier, shutting out young adults during three of the most valuable years for compound interest.

We always say start early, so let’s back that up with action. This bill doesn’t just expand access; it smartly avoids punishing employers near audit thresholds by excluding these new participants from audits for five years. It’s policy that understands the real world.

This isn’t a partisan issue. It’s a fairness issue. If we want to close the generational wealth gap, we need to let young workers build wealth in the first place.

I started working young. A lot of us did. And I wish I had the opportunity to start saving sooner. This bill gives the next generation that chance.

Let them save.

Word on the street is that President Trump plans to issue an executive order promoting private equity and other private investments in 401(k) plans. While he can’t mandate it, he can certainly nudge it, and that’s exactly what’s expected. The idea? Let everyday investors access the same high-return opportunities the big guys get.

Sounds great… until you read the fine print.

Private equity is already technically allowed in 401(k) plans, but only a small fraction of plan sponsors offer it, for good reason. These investments are expensive, illiquid, complex, and opaque. They’re a square peg in a round ERISA hole.

Supporters argue higher returns justify the risk. But when participants need hardship withdrawals or predictable income in retirement, illiquidity becomes a real problem. And let’s not forget: high fees + opaque assets = litigation bait.

The market has changed. Rising interest rates have crushed PE returns lately. From mid-2022 to mid-2024, private equity returned 6.8% annually, while the S&P 500 did 12%. So much for the “illiquidity premium.”

Fiduciaries thinking about jumping into the PE pool need to know: the water’s deep, murky, and full of lawyers. If you’re not ready to do the due diligence dance with clear benchmarks, transparent fees, and airtight documentation, sit this one out.

Adding alts isn’t impossible, it’s just risky. And as we all know in the 401(k) world, risk without process equals liability.

The Department of Labor’s Employee Benefits Security Administration (EBSA) just dropped an RFI (RIN 1210–AC10) and some limited guidance on pooled employer plans (PEPs), asking for public input, especially from small employers. If you’re a small business or work with them, pay attention.

PEPs, born out of the SECURE Act in 2019, are still the new kid in the retirement plan world. The DOL is worried that small businesses don’t know enough about them or how ERISA applies. So, they’re asking: What’s holding you back? Is it awareness? Fiduciary fears? Confusing marketing?

They’re also providing some clarity: even in a PEP, employers retain fiduciary responsibility for investments unless the PEP delegates that role to a 3(38) fiduciary. If that happens, the employer has to monitor the PEP, not the investments directly. Simple? Not really. But important? Absolutely.

The DOL gives solid (if basic) advice: Know your PPP, understand the investments, ask about fees and liabilities, and monitor the PEP. No autopilot allowed.

Most importantly, they’re exploring whether to create a safe harbor for small employers that could limit fiduciary exposure if certain conditions are met, like requiring an unaffiliated 3(38), banning proprietary funds, or setting fee limits.

If you care about how PEPs evolve—and how small businesses can adopt them responsibly—now is the time to speak up. Comments are due 60 days after the RFI hits the Federal Register (July 29). Don’t let others shape the rules while you stay silent.

You can cut corners in business. You can play fast and loose with your vendor contracts. You can even get away with sloppy recordkeeping—at least for a while. But when you mess with employee 401(k) contributions, you’re not playing games anymore—you’re playing with fire. And in Micone v. iProcess Online, Inc., the fire finally burned everything down.

In a brutal but unsurprising decision out of the District of Maryland, the Court ruled in favor of the Department of Labor (DOL), after the employer, not only the plan sponsor but also the plan administrator—ghosted the case completely. No response, no defense, no apology. Just silence. That’s not a strategy; that’s a confession.

What Went Wrong—And How It All Fell Apart

According to the DOL, the fiduciaries at iProcess Online failed in the most fundamental way: they didn’t deposit participant contributions into the 401(k) trust. Instead, they commingled those funds, over $175,000 withheld from employee paychecks across seven years—with the company’s general assets. In plain English? They treated employees’ retirement money like a piggy bank for operating expenses.

That’s not just bad practice, it’s a textbook breach of fiduciary duty under ERISA. Participant contributions become plan assets as soon as they can be “reasonably segregated” from employer funds. The law is crystal clear. You don’t borrow against it. You don’t delay. You don’t “float” the money for other business needs. You deposit it. Promptly. Period.

But that’s not all. iProcess also failed to make required employer matching contributions and didn’t process participant distribution requests in a timely manner. The company’s negligence was so egregious that the Court not only ruled in the DOL’s favor—it appointed an independent fiduciary to clean up the mess, to be paid out of the pockets of the very fiduciaries who made it.

Oh, and did I mention the company officer had already been convicted of embezzlement and was staring down additional lawsuits from plan participants? The whole story reads like a fiduciary horror show.

Joint and Several Liability: The Final Nail

The Court didn’t just slap the company on the wrist and walk away. It imposed joint and several liability on the fiduciaries for more than $100,000 in remaining damages—money that must be paid within 60 days. That means each fiduciary is on the hook for the entire amount, not just their “share.” There’s no safe harbor here. No ducking responsibility. And to ensure the safety of other retirement plans, the Court barred the individuals involved from serving in any ERISA fiduciary capacity going forward.

That’s not just accountability, it’s professional exile.

The Message for Plan Sponsors: Pay Attention or Pay the Price

If you’re a business owner, a CFO, an HR manager, or anyone with fiduciary responsibility over a retirement plan—this case should give you chills. Because the story here isn’t just about one company’s failure. It’s about what happens when fiduciary oversight breaks down entirely.

The DOL is watching. Participants are empowered. And when things go wrong, the consequences are swift and severe.

Here’s what this case reminds us:

1. Participant contributions are sacred. Once that money comes out of an employee’s paycheck, it’s no longer yours. Delay in depositing it into the plan is not a harmless administrative hiccup, it’s a potential fiduciary breach.

2. Commingling plan assets is never acceptable. This isn’t a gray area. It’s black-letter law. Your business accounts and the plan’s accounts are two different worlds. Don’t cross the streams.

3. Fiduciary responsibility is personal. You can’t hide behind your company’s logo. If you serve as a fiduciary and the plan suffers because of your breach, you’re on the hook, personally.

4. Ignoring the problem doesn’t make it go away. iProcess didn’t show up to court. The Court showed up anyway, with a judgment, with penalties, and with a permanent ban from ERISA service.

Don’t Be a Micone

I’ve said it before and I’ll say it again: your 401(k) plan isn’t just a perk—it’s a fiduciary minefield. You don’t have to be perfect, but you do have to take your responsibilities seriously. That means timely deposits. Clear documentation. Active oversight. And when in doubt? Ask for help before the DOL shows up with a lawsuit and a court-appointed fiduciary.

Because once you lose the trust of your employees—and your grip on compliance—it’s not just your retirement plan that’s in trouble. It’s your reputation, your wallet, and in some cases, your freedom.

Don’t be Micone. Be the fiduciary your employees deserve.