The Rosenbaum Law Firm P.C. Blog

Here we go again. Another jumbo 401(k) plan, another lawsuit, another round of alleged fiduciary misconduct that reads like a broken record for those of us who’ve been watching this space since before fee disclosure was a thing.

This time, the target is the Stifel Financial Profit Sharing 401(k) Plan, with over $1.3 billion in assets—a big, juicy plan that allegedly fell short of its fiduciary responsibilities in a very familiar way: not acting like a prudent fiduciary when it came to fees and fund selection. The plaintiffs—five participants suing on behalf of themselves and similarly situated plan participants—claim the fiduciaries blew it. And not in a minor way, but in a way that cost plan participants millions of dollars over several years.

The central allegation? That Stifel’s fiduciaries failed to leverage their buying power as a billion-dollar plan. That they didn’t push for reasonable fees for recordkeeping and administrative (RKA) services. That they didn’t do the due diligence that ERISA demands—ongoing, objective review of the plan’s investment options to ensure they were performing and prudent.

If this sounds like déjà vu, that’s because it is.

Bargaining Power Means Nothing If You Don’t Use It

A $1.3 billion plan has negotiating clout, period. You should be able to command rock-bottom recordkeeping fees and premium service levels. But according to the suit, from 2019 through 2023, Stifel allegedly allowed unreasonable expenses to be charged to participants for RKA services. The fiduciaries, the suit claims, didn’t try to cut costs or explore lower-cost options until it was too late.

And that’s a fundamental breakdown of fiduciary responsibility. You’re not spending your own money when you’re a fiduciary. You’re spending the plan’s money. The participants’ money. That means you better act like you’re walking around with someone else’s checkbook—because you are.

Prudential, Empower, and the GIF That Keeps on Giving (to Them)

Then there’s the next layer: the investment menu. The lawsuit calls out the plan’s relationship with Prudential (now Empower), which allegedly included a stable value fund—a guaranteed income fund (GIF)—that didn’t live up to the “best available” standard.

Let’s be honest, stable value is where a lot of plan sponsors and advisors stop asking questions. They figure: “Hey, it’s stable, it’s safe, what’s to worry about?” Well, plenty—especially if you’re not paying attention to crediting rates, the underlying investment structure, and whether your participants are getting fleeced on the spread.

According to the complaint, the Empower GIF had low crediting rates, high embedded spreads (the difference between what Empower earned and what participants received), and a structure

that left participants exposed to single-entity credit risk, illiquidity, and zero transparency. Translation: Empower allegedly got rich while participants got shortchanged.

If true, that’s not just imprudent, it’s a disgrace. Selecting an investment based on ease or legacy relationships instead of participant outcomes is a surefire way to find yourself on the wrong end of an ERISA complaint. And here we are.

This Isn’t Just About One Plan—It’s a Pattern

I’m not here to say whether the allegations are true or not—lawsuits are one side of the story, and that’s always worth repeating. But if you’ve followed the pattern of fiduciary litigation over the last decade, the playbook is very familiar. Big plan. Big fees. Big service providers. And fiduciaries who either didn’t know better or didn’t care to ask better questions.

This isn’t about bad guys in the shadows, it’s about good intentions gone unchecked. It’s about fiduciaries not taking their duties seriously, or being overwhelmed, under-advised, or worse, asleep at the wheel. You can’t plead ignorance under ERISA. Fiduciary responsibility is an active duty, it’s not “set it and forget it.” It’s not “trust but don’t verify.” It’s work. Real work. And too many plan sponsors and committees don’t want to do it.

What Plan Sponsors Should Take From This

Whether you’re running a $1.3 billion plan or a $3 million startup 401(k), the fundamentals don’t change:

· Review fees regularly. Don’t wait for a lawsuit to realize you’re overpaying for basic services.

· Benchmark. Everything. Investments, recordkeeping, TPA services. You don’t know if you’re paying too much until you compare.

· Understand your funds. Especially stable value or GIC options. Just because the label says “guaranteed” doesn’t mean it’s good.

· Ask hard questions. If your providers can’t explain their fees, structures, or services, find someone who can.

Final Thought: Lawsuits Are Lessons—If You’re Willing to Learn

This isn’t the first time a mega-plan has been sued for allegedly falling asleep at the fiduciary switch, and it won’t be the last. But every one of these cases is a warning. Whether or not Stifel’s fiduciaries are ultimately found liable, the message is clear: fiduciary complacency costs money, reputations, and often your job.

So, stay tuned. We’ll see where this one goes. But if you’re a fiduciary reading this, don’t just stay tuned, get proactive.

Because in the ERISA world, “I didn’t know” has never been a valid defense.

While all the attention in the retirement plan world last week was on the One Big Beautiful Bill, cue the overly dramatic headlines and LinkedIn humblebrags—there was another important development flying under the radar. On July 1st, the Department of Labor quietly submitted a request to the Office of Management and Budget (OMB) that, to those of us who live and breathe ERISA, felt like a “hey, pay attention!” moment. It appears the DOL is teeing up a Request for Information (RFI) on pooled employer plans (PEPs). And let me be clear: I love PEPs. But we need more guidance.

Let me explain.

The OMB’s regulatory dashboard (yes, I’m the guy who checks that) now shows a pre-rule submission from the DOL focused on Section 101 of the SECURE Act, the very section that birthed PEPs by giving unrelated employers the ability to band together under one defined contribution plan, operated by a pooled plan provider (PPP). And while that’s been a game-changer for many of us in the retirement space, it’s also been a frustrating exercise in ambiguity.

The Department’s statement says it wants to consult a “diverse set of stakeholders,” including employers, employees, and service providers, to determine where regulatory or other guidance would help in establishing and operating PEPs. In other words: we’re finally going to have the grown-up conversation about what’s working, what’s not, and what guardrails are missing.

PEPs Were Supposed to Be Easy. They’re Not.

On paper, PEPs are beautiful. Open MEPs, no commonality requirement, no industry restriction, no need for employers to even know each other, other than having the good sense to offer a retirement plan. Section 101 even took a chainsaw to the “one bad apple” rule, ensuring that a mistake by one participating employer doesn’t ruin the plan for everyone. In theory, it was a new dawn for small and midsized businesses, finally a way to pool resources, reduce costs, and offload fiduciary liability to a professional PPP.

But in practice, the DOL and IRS have left just enough open questions to make a lot of people nervous.

What are the exact responsibilities of the pooled plan provider? What is the extent of their fiduciary oversight? What does operational compliance look like when you have 200 different employers, each with unique demographics, payroll systems, and HR practices? Can a PPP reasonably ensure compliance across that diversity without becoming a glorified babysitter? And how are recordkeepers, TPAs, and advisors supposed to coordinate in this new, semi-centralized structure?

PEPs were sold as plug-and-play. But too often, what you get is plug-and-pray.

Here’s Why This Matters

Look, I’ve been a fan of PEPs from day one. I’ve helped plan providers and advisors build PEP platforms, and I’ve watched some of them scale faster than you can say “SECURE 2.0.” I also know the pain points. I know the PPPs who thought this would be easy and then got a rude awakening when their plan got flagged during a DOL audit because one adopting employer didn’t process deferrals timely.

Section 344 of SECURE 2.0 now requires the DOL to study the PEP industry and provide Congress with a report, including recommendations, within five years. That clock is ticking. We don’t have five years to wait for clarity. We need it now, especially as more providers try to enter this space, and more employers consider joining a PEP rather than sponsoring their own plan.

Let’s also be honest: some PEPs out there are simply bundled garbage. Built with the same inefficiencies, same opaque fee structures, and same poor participant outcomes that gave MEPs a bad name ten years ago. If we’re serious about making PEPs a success—and we should be—we need guidance that distinguishes quality from chaos.

The RFI Is Our Chance to Speak Up

An RFI doesn’t have the glamor of a final regulation or the panic of a prohibited transaction class exemption, but it’s the first step in shaping policy. The DOL is essentially saying: “Tell us what you need.” And as someone who’s spent 25 years navigating the potholes of retirement plan compliance, I plan to take them up on the offer.

So should you. If you’re a pooled plan provider, an advisor using a PEP platform, a TPA helping run one, or an employer thinking about joining one—this is your moment. Let the DOL know where the confusion is. Tell them what’s working. Show them what’s broken.

Because I still believe in PEPs. I believe in their ability to expand coverage, lower costs, improve outcomes, and make small businesses more competitive in the retirement benefits arena. But belief only goes so far. What we need now is clarity, structure, and rules that support innovation without inviting chaos.

PEPs are not a fad. They’re a fundamental shift in how we think about retirement plans for small employers. Let’s make sure the DOL gives us the framework to do them right.

Plan sponsors and recordkeepers let out a collective sigh of relief when the Roth catch-up contribution requirement under SECURE 2.0 was delayed until 2026. And for good reason—this rule, though well-intentioned, brings with it a level of administrative complexity that even seasoned ERISA professionals wince at.

Let’s start with the basics. The requirement applies only to employees earning more than $145,000 (indexed) in FICA wages, not partners or self-employed individuals. That $145,000 threshold? It’s not a number retirement plans are used to tracking. Many plans don’t even offer Roth at all, and suddenly they’re being asked to flip a switch they don’t have installed.

The IRS tried to help with proposed regulations, but in classic IRS fashion, the guidance added as many questions as it answered. This isn’t plug-and-play. It’s overhaul-and-pray.

So, what should plan sponsors be thinking about now, not in 2026?

· Do you need to add a Roth feature? If your plan doesn’t offer Roth, affected employees can’t make any catch-up contributions. That’s not a good look. But simply requiring Roth for everyone isn’t allowed, either. So, you’ll have to track who’s subject to the rule anyway.

· Will you use deemed Roth elections? Plans can default high earners into Roth catch-up without needing a separate election—but participants must be able to opt out. If you go this route, you can fix some mistakes with in-plan conversions instead of refunds.

· Tracking Wages and Employer Type Matters. Only FICA wages from the employee’s common law employer that participates in the plan count. So, if you’re in a controlled group or a multiple employer plan, the math gets tricky.

· Payroll Coordination is Key. Your payroll provider and recordkeeper will need to communicate like never before. The feeds must be aligned, and there’s zero room for error here.

· Watch for Traps. New hires aren’t subject to the rule their first year. There’s no proration for partial-year employees. And plan sponsors need systems that flag when associates become partners since the rule doesn’t apply to self-employed individuals.

· Correction Procedures Matter. You’ve got options, like converting mistaken pre-tax contributions to Roth before W-2s are issued or using in-plan rollovers. EACAs (early withdrawal features) also help by offering a wider correction window.

In short, 2026 may feel far away, but the work starts now. SECURE 2.0’s Roth catch-up requirement isn’t going anywhere, and like most things in the 401(k) world, if you wait too long to prepare, you’ll pay for it later.

The Department of Labor’s Employee Benefits Security Administration (EBSA) just did what many plan sponsors wish they could do, clear out old, confusing clutter that no longer serves a purpose.

On June 30, the DOL issued a Direct Final Rule (DFR) announcing the removal of several long-standing ERISA Interpretive Bulletins from the Code of Federal Regulations. Why? Because they’re outdated, superseded, and—most importantly—potentially confusing. In other words, the DOL finally Marie Kondo’d a few dusty corners of ERISA history.

Here’s what’s getting tossed:

Interpretive Bulletin 75-2

This one addressed whether a party in interest engages in a prohibited transaction by doing business with an entity in which a plan has invested. The DOL says it has issued enough subregulatory guidance since then to make this bulletin more relic than resource. Translation: we’ve said it better since.

Interpretive Bulletin 75-6

Back in 1975, the DOL weighed in on whether a plan could advance funds to a fiduciary for plan-related expenses. But in 1977, they issued a final regulation under ERISA Section 408(c)(2) that covered this issue fully. So why keep an outdated bulletin hanging around? They won’t.

Interpretive Bulletin 75-10

This one tried to sort out overlapping DOL and IRS responsibilities right after ERISA passed. But the Reorganization Plan No. 4 of 1978 split up interpretive duties between the DOL and IRS. In the years since, each agency has stayed in its lane. So this bulletin, while historically interesting, is no longer necessary for administration or compliance.

Why It Matters

On the surface, this looks like administrative housekeeping—and it is. But it’s also a good sign. When the DOL recognizes that keeping outdated guidance “on the books” creates confusion, that’s progress. If you’ve ever cited a rule from 1975 only to find that it was quietly replaced decades ago, you know how frustrating that legal archaeology can be.

The DOL isn’t changing any rules here—they’re just pruning old ones that no longer apply. Think of it like removing the rotary phone from your office to make room for Wi-Fi. The underlying communication still exists. It’s just happening through better channels now.

The DFR takes effect 60 days after it’s published in the Federal Register—meaning these bulletins will officially disappear by September 1, 2025.

It’s a small step, but in an industry built on complexity, even a little clarity goes a long way.

In the world of ERISA litigation, process often trumps perfection. That was the story in Waldner v. Natixis, where a federal judge dismissed claims that Natixis and its plan committee acted disloyally and imprudently by loading up a $440 million retirement plan with proprietary funds.

The plaintiff, Brian Waldner, argued the plan’s committee—made up entirely of Natixis employees—filled the plan with high-fee, underperforming affiliated funds to benefit the company, not participants. He claimed a breach of loyalty, imprudent selection and monitoring, and excessive fees.

But after a full trial, Judge Leo T. Sorokin saw it differently. While he acknowledged the plan had a heavy dose of proprietary funds—18 out of 28 during the class period—he found no evidence of disloyal intent. ERISA doesn’t ban proprietary funds. It just requires fiduciaries to act solely in the interest of participants when choosing them.

What saved Natixis? Process. The committee relied on Mercer, an independent investment consultant, reviewed fund performance at regular meetings, and consulted experienced ERISA counsel. They even rejected some proprietary funds and considered alternatives. When they chose affiliated options, they were among the top-performing available—hardly a red flag.

Judge Sorokin made it clear: just having Natixis employees on the committee or favoring in-house funds doesn’t prove disloyalty. Plaintiffs needed evidence of self-dealing or undue influence—and they didn’t have it.

As for the prudence claim, the judge admitted the committee wasn’t a model of perfection. There were lapses, including delays in conducting a full investment structure review. But he noted that the committee still reviewed detailed performance reports and acted based on independent advice. No specific misstep tied to actual losses, and that’s what ERISA requires.

In short, the committee may have made mistakes, but they didn’t breach their fiduciary duties.

What This Means

This case is a reminder that ERISA litigation is about process. You don’t need to be perfect—you just need to be prudent and loyal. Get good advisors, follow a documented process, and make decisions in participants’ best interests. Even if you wear two hats, as an employer and a fiduciary, just make sure you’re wearing the right one at the right time.

In the end, Judge Sorokin said it best: “Neither shows the true colors of this case.” Not the plaintiff’s portrayal of a conflicted committee, nor the defense’s image of perfection. What won here wasn’t a rosy picture, it was reasonable, documented decision-making.

If you’re a 401(k) plan sponsor, you don’t need to be an ERISA expert—you just need to avoid doing dumb things. Here are a few quick tips to help you stay on the right side of your fiduciary duties and keep your participants (and the DOL) happy:

1. Review your fees. Regularly. Don’t assume your plan is “fine” because no one’s complained. Benchmark your recordkeeping and investment fees every 2–3 years. Overpaying is not a victimless crime.

2. Document everything. If a tree falls in the forest and no one documents it, it never happened. Same goes for committee meetings. Keep minutes, note your process, and show your work.

3. Don’t just set it and forget it. ERISA doesn’t reward autopilot. Review your investment lineup at least annually. Performance, fees, share classes—all of it.

4. Watch your provider relationships. Just because your advisor or TPA is a nice guy doesn’t mean they’re giving you the best deal. Loyalty is great in friendships, not in fiduciary oversight.

5. Educate yourself. You don’t need to become an ERISA nerd like me, but you do need to understand the basics. Fiduciary responsibility is personal—ignorance is not a defense.

Do the right thing. Ask the tough questions. And if something feels off, it probably is. Better to be proactive now than be a case study in a class action later.

Every once in a while, the data tells a story that plan sponsors should actually feel good about. Vanguard’s latest How America Saves report offers just that, a story of progress. Thanks to smarter plan design choices, participants are saving more, engaging better, and showing greater retirement resilience.

And it’s not by accident. It’s by design.

What the Numbers Show

The report looks at nearly five million participants and the findings are hard to ignore:

· 76% of plans now offer immediate eligibility to contribute.

· 61% of auto-enrollment plans default at 4% or higher, nudging people to save more from day one.

· Roth contributions are climbing, with 18% of participants using Roth and 86% of plans offering it.

· 67% of participants are fully invested in a managed solution, like a target-date fund or managed account.

· 45% of participants increased their savings rate last year, pushing both deferral rates and overall plan savings to new highs.

These aren’t just statistics, they’re proof that modern 401(k) plan features are working.

Why It Matters to You

Plan sponsors sometimes view plan design as just a box-checking exercise. But in reality, smart design reduces fiduciary risk and helps employees build better futures.

When participants save more automatically, when they’re defaulted into professional management, and when they’re given access to both pre-tax and Roth options—they win. And when participants win, plan sponsors win too.

Better participant outcomes mean less exposure to litigation, fewer complaints, and a stronger defense if fiduciary processes are ever challenged.

What You Should Be Doing

1. Check Your Auto Features If you’re not using automatic enrollment, or you’re defaulting participants at 3% or lower, you’re missing an opportunity. Higher default rates don’t cause opt-outs; they lead to better savings.

2. Review Roth Availability More participants are asking about Roth contributions, and tax diversification is

becoming part of the retirement planning conversation. If you’re not offering Roth, you’re behind.

3. Reassess Your Default Investments With two-thirds of participants using managed solutions, target-date funds should be the qualified default investment alternative (QDIA) in most cases. That’s not just good practice, it’s good protection.

4. Track Participant Behavior Don’t just install good features. Measure whether they’re being used. Are deferral rates increasing year to year? Are more participants engaging with Roth? That’s fiduciary gold when you need to show your process works.

Final Thought

What this data tells us is simple: plan design isn’t just about structure, it’s about impact. Small decisions like setting a default rate or enabling Roth deferrals have real, measurable effects on people’s retirement outcomes.

We don’t often get a pat on the back in this business, but this is one of those times. If you’ve built a plan that pushes employees to save better, you’re doing your job. Keep it up, and keep improving.

Forfeitures have long been a sleepy corner of 401(k) plan administration, but recent class-action lawsuits are waking everyone up.

Over the past couple of years, plaintiffs’ attorneys have set their sights on how plan sponsors use forfeitures, those leftover funds from employer contributions that aren’t vested when employees leave early. Many plans, following long-standing IRS guidance, use forfeitures to offset future employer contributions. That’s been standard operating procedure. But now, some lawsuits claim that doing so may violate ERISA’s fiduciary standards.

Whether these cases succeed remains to be seen. But if you’re a plan sponsor or fiduciary, now is the time to get your house in order.

The Basics: What Are Forfeitures?

When an employee leaves before employer contributions are fully vested, the non-vested portion is forfeited. ERISA says those forfeitures can’t go back to the employer. The IRS has long said forfeitures may be used to:

· Reduce future employer contributions,

· Pay plan expenses, or

· Provide extra benefits to participants.

In 2023, the IRS proposed rules confirming this—and adding that forfeitures must be used no later than 12 months after the end of the plan year in which they occur.

So far, so good.

The New Legal Theory

Here’s where the litigation flips the script: Plaintiffs argue that using forfeitures to offset employer contributions benefits the company, not plan participants, and therefore violates the fiduciary duty to act “solely in the interest” of participants. They claim that plan sponsors should be using forfeitures to reduce fees borne by participants first, not employer costs.

Some courts have dismissed these claims, others are letting them proceed. And in the post-Loper Bright world, where courts are no longer required to defer to federal agencies’ interpretations of statutes, the long-held IRS guidance may not carry the weight it once did.

What Should You Do?

1. Review Your Plan Document. Make sure the way your plan uses forfeitures is spelled out clearly—and that you’re following it. If your plan document gives discretion to fiduciaries, that can be a litigation risk.

2. Consider Removing Discretion. The more discretion fiduciaries have, the more second-guessing plaintiffs can do. You may want to amend your plan to say forfeitures shall be used in a specific way—like paying expenses first, then reducing employer contributions.

3. Document Your Process. If you’re applying forfeitures correctly and in line with the plan document, write it down. Keep a record. If you ever face scrutiny, documentation will be your best defense.

The Bottom Line

This may seem like an attack on long-standing practice—but it’s more about litigation strategy than legal clarity. Still, plan sponsors can’t ignore it. As always, the safest path is to follow the plan, eliminate ambiguity, and document everything.

It’s one more reminder that in ERISA, even the smallest buckets of money come with big responsibilities.

When I was getting ready for law school, I watched The Firm. Tom Cruise, fresh-faced and full of promise, with all these big-name law firms throwing money at him like he was a first-round draft pick. A Mercedes. A Rolex. A house. All for signing on the dotted line. Of course, he picked the mob firm in Memphis, but that’s beside the point. I wasn’t dreaming of mob ties, I was dreaming of being wanted.

I thought, maybe they’ll throw money at me too. Spoiler alert: they didn’t.

Instead of Harvard or Yale, I went to American University Washington College of Law. A third-rate law school in a two-law school town. And when I graduated, after adding a cherry on top with an LL.M., no Mercedes was waiting for me. No Rolex. Just a job at a third-party administration (TPA) firm and a Toyota Camry. Starting salary? $35,000. Tom Cruise probably made that every time he blinked.

I spent nine years grinding at two TPA firms, learning the retirement business inside and out. Eventually, I thought it was time to try the law firm path. First stop: a union-side firm where they treated associates the way they thought the employers treated union members, badly. Then came a fakakta Long Island law firm. I stayed for two years, working hard, doing what I thought was the path to success.

That’s when I saw it. The “path to partnership” was a mirage. The first level of “partner” had no vote. No say. Just a different title and maybe a better parking spot. It was like a country club with two entrances, and I didn’t have the key to the one with power.

Worse than the structure was how I was treated. Like a necessary inconvenience. I realized I was never going to be that guy. The law firm golden boy, shaking hands at bar association events, billing hours like it was a religion, kissing the right rings, waiting 10 years to maybe become “non-equity partner.”

I was getting older. The longer I stayed, the more I felt like I was cosplaying a lawyer instead of living like one.

So I jumped. I started my own firm. No partners. No gatekeepers. No fake ladders. Just me, clients who needed help, and the belief that I could do it better. I wasn’t trying to win a corner office, I wanted to build something real. And I did.

Years later, I met Drew Brees and asked him about the Chargers giving up on him early in his career. He just smiled and said, “It all worked out in the end.” That stuck with me.

Because it did. It did all work out. I was never going to be that guy, and thank God for that.

If you’re a plan provider—advisor, TPA, recordkeeper, or pooled plan provider—you’ve probably heard the advice a million times: “Create content to stay top of mind with plan sponsors.” But what kind of content actually works?

Here’s the secret: plan sponsors don’t want white papers on mortality assumptions. They want practical, readable, “what do I do now?” kind of stuff.

Here are five types of content you should be producing:

1. The “Are We Doing This Right?” Checklist Give sponsors a simple, jargon-free checklist they can use to evaluate their own plan. Think: Are we benchmarking fees? Do we meet regularly? Are we documenting decisions? It’s actionable, digestible, and it positions you as a helpful resource.

2. Short Videos or Posts on Fiduciary Duties Sponsors live in fear of doing the wrong thing. Short videos or posts explaining things like “What’s a QDIA?” or “What happens if we miss a deposit deadline?” are gold. Keep it short, human, and useful.

3. Quarterly “What’s New in 401(k)” Updates A quick email or PDF recapping regulatory changes, key court cases, and compliance reminders. Be the one who helps them avoid a mistake before it becomes an issue.

4. Case Studies Share anonymized stories of plans you’ve helped—especially if you’ve improved investment lineups, reduced fees, or streamlined administration. Everyone loves before-and-after stories.

5. Participant-Facing Tools They Can Share Sponsors love content they can pass along to employees. Provide short explainers, calculators, or videos on saving more, Roth vs. pretax, or how to read a statement. You help them look good to their employees.

Bottom line: plan sponsors are busy, confused, and terrified of doing something wrong. Your content should solve problems, reduce fear, and make you the provider they trust to keep them out of trouble.