The Rosenbaum Law Firm P.C. Blog

There’s a hard truth about being a plan sponsor or a plan provider: you can be doing everything right and still get sued. That’s the world we live in—especially in the retirement plan space. You can dot every “i,” cross every “t,” and follow ERISA to the letter, but none of that guarantees you’ll avoid a courtroom or, at the very least, a legal headache.

I’ve seen it firsthand. A plan sponsor who took their fiduciary duties seriously—reviewed fees regularly, kept great documentation, and ran a tight ship—still got hit with a lawsuit. Why? Because a participant got confused or upset about something they didn’t understand, and they found a lawyer who was happy to take the case. And guess what? It didn’t matter that the claims had no merit. The lawsuit still needed to be defended. Time was wasted. Legal fees piled up. And stress levels skyrocketed.

I know a fiduciary who got sued not for something they did, but for something their predecessor did—a guy who literally stole plan assets the year before. No connection, no fault, no wrongdoing—just bad luck and bad timing. That’s what happens when an overly aggressive attorney is looking to make a name or a buck.

We like to believe that competence is protection, and to an extent, it is. If you’re a plan sponsor or provider doing your job well, you’ll likely come out on the other side of litigation unscathed. But that doesn’t mean you won’t have to go through it. Being right doesn’t prevent the lawsuit. It just improves your odds once you’re in it.

So yes, there are ways to reduce your risk:

· Document everything.

· Run regular fee benchmarking.

· Stay on top of investments.

· Communicate clearly with participants.

· Hire experienced service providers.

But let’s be clear—you can reduce risk, but you can’t eliminate it. You can do everything right and still find yourself on the receiving end of a complaint because someone misread a statement or didn’t update their address or just didn’t like what they saw in their account balance.

In the retirement plan world, doing a good job isn’t always enough. It just means you’ll have a strong defense when the lawsuit comes—which, unfortunately, is sometimes the best we can hope for.

Could listing designated beneficiaries on a participant statement spark a fiduciary breach lawsuit? In today’s world, the answer is always yes — and in LeBoeuf v. Entergy, it did.

This case involved Alvin Martinez, a longtime Entergy employee who remarried but never updated his 401(k) beneficiary form. Despite receiving quarterly statements listing his children as beneficiaries, the plan correctly distributed his $3 million account to his second wife after his death, per ERISA rules (no spousal waiver = spouse gets it).

The children sued, arguing the statements were misleading. The district court dismissed it. The Fifth Circuit affirmed. Why? Because:

· Plan documents and SPDs clearly said remarriage voids prior beneficiary designations;

· No one inquired about the rule — and fiduciaries aren’t liable for participant confusion absent a question;

· Entergy and T. Rowe Price weren’t acting as fiduciaries in just issuing statements.

Bottom line: Printing a name on a statement isn’t a fiduciary act. But it still took years of litigation to prove that.

Let this be a reminder: Participants need to know the rules — and update their forms. Spouses matter. Waivers matter. And if you’re a plan fiduciary, disclosure matters most of all.

I’ve been in the retirement plan business for 27 years, and during that time, I’ve seen the best and the worst it has to offer. But without a doubt, the most despicable person I’ve encountered is Matt Hutcheson. Matt paraded himself as a fiduciary expert, leveraging his appearance on PBS Frontline as proof of his supposed authority. Like an episode straight out of “Star Trek: The Next Generation,” where a character named Kieran MacDuff mysteriously appeared, Matt Hutcheson seemingly materialized out of nowhere, cloaking himself in credibility he never truly possessed.

Hutcheson was charismatic, hosting fiduciary symposiums and claiming connections that stretched all the way to a potential cabinet position as Secretary of Labor. He painted himself as a hero fighting for fiduciary transparency. Unfortunately, it was all smoke and mirrors. Behind the self-promotion, the truth was darker: Hutcheson was methodically embezzling millions from the multiple employer retirement plans (MEPs) he oversaw.

How do I know this? I replaced Hutcheson as fiduciary for one of the few MEPs he hadn’t robbed blind, though even that didn’t spare me from litigation. Unlike Hutcheson, I had fiduciary liability insurance, and because of it, I ended up getting sued. Meanwhile, Matt tried to convince me to suffer a default judgment in my own case so he could “rescue” me, another lie in an endless series of deceptions.

In 2013, Hutcheson was convicted on 17 counts of wire fraud involving more than $5 million in stolen retirement plan assets. Though sentenced to 17 years in prison, he somehow managed to secure a commutation. Yet karma wasn’t done with him. The Tax Court later determined that the $5,307,688 Hutcheson siphoned constituted taxable, unreported income. To add insult to injury, Hutcheson now owes back taxes, and severe penalties, on the stolen funds.

Reading through the court’s detailed findings reveals the depths of Hutcheson’s deception. He misappropriated retirement plan assets to fund an extravagant lifestyle, spending $1.2 million to purchase and renovate his own home, another $3 million attempting to buy a golf course, and yet another $1.2 million on personal and professional expenses. Judge Goeke made it crystal clear: Hutcheson had abandoned his fiduciary role, betraying the participants he was supposed to protect.

What’s particularly shocking is how long Hutcheson managed to maintain his facade. Despite clear warnings, despite the skepticism of participants who saw their distributions vanish, Hutcheson continued to double down, concocting elaborate lies to hide his theft. And ironically, while he testified before Congress advocating fiduciary transparency, he was secretly funneling hundreds of thousands of dollars into his pockets.

Judge Goeke didn’t mince words. He found Hutcheson’s explanations implausible, inconsistent, and utterly untrustworthy. The court concluded decisively that Hutcheson knowingly evaded taxes, underreported income by millions, and deserved every bit of the harsh penalties imposed.

This entire saga serves as a stark reminder for those of us involved in retirement plan management. Adopting employers were the ones who ultimately uncovered Hutcheson’s criminal acts, not regulators or watchdogs. It’s a sobering lesson about the importance of vigilance and due diligence. Fiduciary responsibility isn’t a mere title or a box to check; it’s a profound obligation demanding continuous oversight and integrity.

As we move toward simplifying retirement plans and reducing burdens on employers, let’s never forget the essential role of ongoing oversight. Removing barriers to plan adoption is important, but we cannot compromise fiduciary vigilance. Hutcheson’s story underscores the necessity of maintaining constant, careful monitoring of providers, particularly in multiple employer settings. Otherwise, we risk repeating history, and enabling fraudsters like Matt Hutcheson to strike again.

After six long years of litigation, Intel’s 401(k) plan design just got a big legal endorsement. A three-judge panel from the Ninth Circuit dismissed a lawsuit filed by plan participants who claimed that including hedge funds and private equity in the company’s defined contribution plans was a breach of fiduciary duty under ERISA.

This decision is important—not just because it ends a legal marathon, but because it puts to rest the argument that certain investment types, like private equity or hedge funds, are automatically off-limits for participant-directed plans.

The plaintiffs tried to paint these investment options as high-fee, high-risk landmines. They also tried to claim a conflict of interest, accusing Intel of funneling plan money into companies tied to its venture capital arm. But the courts weren’t buying it. The district court tossed the case, citing a lack of any valid performance comparisons or evidence of actual conflicts. And now, the Ninth Circuit has backed that decision.

Here’s what this ruling really means for plan sponsors: ERISA doesn’t prohibit complexity. It prohibits imprudence. If a plan sponsor includes private equity or hedge fund options as part of a thoughtfully constructed, well-documented investment lineup—one that fits within a diversified portfolio and serves the best interests of participants—that’s not a breach. That’s fiduciary judgment.

Let’s be honest: not every plan should offer private equity. But for larger plans with access to institutional share classes and the tools to educate participants, this ruling confirms what some of us already knew—there’s no one-size-fits-all definition of prudence.

Intel stuck to its guns. It documented its process. It didn’t back down when the lawsuits came. And now, it has a federal appellate decision to show for it.

The takeaway? Plan fiduciaries who follow a sound process shouldn’t be scared of complexity. They should be scared of neglecting their process.

The Investment Company Institute (ICI) just confirmed what many of us have seen on the ground: 401(k) mutual fund fees keep dropping, and that’s great news for plan participants.

According to ICI’s 2024 report, average equity mutual fund expense ratios in 401(k) plans have fallen 66% since 2000—from 0.76% to just 0.26%. Bond and hybrid fund fees dropped, too. Even target-date mutual fund fees fell 57% over the last 16 years, now averaging 0.29%.

What’s driving this? A few things:

· Fierce competition among fund providers;

· Plan sponsors who know what they’re doing and opt for low-cost share classes;

· Economies of scale;

· And participants who are (finally) paying attention to fees.

Bottom line: The 401(k) market works when it’s built right. Lower costs mean more savings stay in participants’ pockets, and this trend shows no sign of stopping.

The IRS just dropped Revenue Ruling 2025-15, and while it’s not revolutionary, it’s a reminder that when it comes to uncashed distribution checks, constructive receipt still rules the day.

Here’s the deal: If a participant or beneficiary doesn’t cash their distribution check, it doesn’t matter—the plan still has to withhold taxes and issue a Form 1099-R. No refund, no do-over, unless there was an actual calculation error. The check was issued, they could have cashed it, and that’s what counts.

If the plan sends a replacement check, you don’t withhold again—unless the second check is for more (say you added interest). Then you withhold on the difference and report that extra piece separately.

Bottom line? Participants can’t dodge taxes by ignoring their money, and plan sponsors need to report distributions based on the facts at the time of payment, not whether the check gets cashed.

No surprises here, just classic IRS: If you make a payment, you report it. The end.

News that Principal has transitioned administration of its largest pooled employer plan (PEP), Principal EASE, to FuturePlan by Ascensus isn’t just a reshuffling of duties — it’s a smart move in a maturing market.

Principal EASE serves a large base of small- and mid-sized businesses, many of which are new to offering a retirement plan. That means getting administration right isn’t optional — it’s mission-critical. By bringing in FuturePlan as the 3(16) fiduciary and TPA, Principal is doubling down on what it does best: investments, recordkeeping, and distribution. And it’s outsourcing the complex and time-consuming tasks to a TPA that already supports over 37,000 plans.

It’s a sign of the times. PEPs aren’t a novelty anymore. They require real infrastructure, clear roles, and expert compliance. With the number of 401(k) plans expected to pass one million by 2030, providers who know when to delegate—and who to delegate to—will lead the pack.

This isn’t a step back for Principal. It’s a step forward for everyone in the PEP ecosystem: providers, advisers, employers, and ultimately, participants.

When I look back at my time as an employee, before I ran my own practice, before I was speaking in stadiums and calling the shots, I remember two kinds of people: the good ones and the bad ones. And truthfully, most fell in that first category. I always tried to be the good fellow employee. I treated people with respect, did my work, and showed up. I wasn’t perfect, but I never tried to hurt anyone. I wasn’t there to step on necks or play office politics, I just wanted to do the work, do it well, and maybe, at the end of the day, earn the respect that comes from that.

But some people? They had a different playbook.

I can’t get one moment out of my head, even all these years later. I was a law clerk at Bernkopf Goodman. I wasn’t even in the deep end yet—still learning, still finding my footing. And there were these two partners talking. From where I was sitting, I was convinced they were goofing on me. Whispering, chuckling, glancing in my direction. Maybe it was paranoia. Maybe it wasn’t. But when you’re the young guy in a rigid pecking order, it’s hard not to feel like you’re the punchline.

And here’s the twist: those partners? They didn’t last. The firm no longer needed their services at a certain point. Why? Because they weren’t bringing it in, as they say. They weren’t producing. You can coast on bravado for only so long in this business before the numbers catch up with you. And when they did, the snickering stopped.

I never wish bad on people like that. Honestly, I don’t have the energy for grudges. But I’ve lived long enough to see how this all plays out. The bullies, the snarkers, the ladder-climbers who step on others to rise, they always get their comeuppance. Maybe not on your schedule, but it happens. Because in the long game, talent, integrity, and consistency always win out. The quiet people doing the work eventually pass the loud ones making the noise.

That’s one of the small comforts I take from those years. That and the knowledge that I didn’t have to burn anyone down to get ahead. I stood up for myself when I had to, and maybe that rubbed some the wrong way. But I’d rather be remembered for being decent than being a shark.

So, to those still grinding it out in the office trenches, keep your head up. Do the work. Treat people right. And when you feel like someone’s mocking you or trying to make you feel small, remember this: time has a funny way of revealing people’s true value.

It all works out in the end. It really does.

itcoin has blown past $120,000 and, predictably, the buzz is back. Advisors are getting questions. Participants are curious. And yes, some plan sponsors are starting to wonder if it’s time to add crypto to their 401(k) investment lineup.

Let me stop you right there: don’t do it.

The price tag may be seductive, but volatility doesn’t mix well with fiduciary responsibility. Bitcoin isn’t just volatile—it’s an unregulated, speculative asset class with massive price swings and zero fundamentals. Unlike traditional investments, it doesn’t produce income, it isn’t backed by hard assets, and it doesn’t follow the rules of rational markets. That’s not an opinion. That’s the nature of crypto.

As a plan sponsor, your job under ERISA isn’t to chase hype. It’s to act prudently and solely in the best interest of participants. Adding Bitcoin to your 401(k) plan may sound “innovative,” but the risk/reward profile is wildly inappropriate for retirement savings. One bad swing, one negative headline, and participants lose faith, not just in the investment, but in the entire plan.

Regulators aren’t exactly thrilled either. The DOL has already raised serious concerns about crypto in retirement plans. If you think offering Bitcoin gives you an edge, consider how you’ll explain it in a deposition when participants lose their shirt.

Let Bitcoin do what it does, but keep it out of your 401(k). Plan sponsors should focus on delivering long-term, risk-adjusted returns, not headlines.

Leave the crypto speculation to the sidelines. Your fiduciary duty demands better.

It’s not often you see the U.S. Department of Labor jumping into the legal ring to back plan sponsors, but when they do, you know something bigger is at stake than just one plan participant’s gripe. That’s exactly what happened in Hutchins v. HP, Inc., a case that has become a flashpoint over one of the oldest and most misunderstood practices in defined contribution plans: forfeitures.

Let’s get the basics out of the way. Forfeitures happen when an employee leaves a company before fully vesting in their employer contributions. Those unvested dollars go back into the plan and, here’s the important part, they can legally be used to either pay administrative expenses or offset future employer contributions. This isn’t a loophole or a gray area. It’s been standard procedure for decades, blessed by the Internal Revenue Code, Treasury regulations, and, yes, even the ERISA statutes themselves.

But apparently, that’s not enough for the plaintiffs’ bar.

Paul Hutchins, a participant in HP’s 401(k) plan, filed a lawsuit claiming that HP’s use of forfeited funds to offset its matching contributions somehow violated ERISA’s fiduciary duties. Never mind that this practice is disclosed in plan documents, permitted by law, and used across the industry. His theory? That these forfeited funds should have been used to pay administrative fees instead.

The district court in Northern California tossed the case. Rightfully so. But Hutchins appealed, and now the case sits in front of the Ninth Circuit, dragging along with it a parade of copycat class actions aimed at blowing up a half-century of settled law.

Enter the DOL.

In a rare show of unified defense, the Department of Labor, alongside ERIC and other trade groups—filed an amicus brief not just urging the Ninth Circuit to uphold the lower court’s ruling, but warning of the tidal wave of chaos that could follow if it doesn’t. And they didn’t mince words: “The Plaintiffs’ bar cannot get what it wants from Congress, and it cannot get what it wants from the executive agencies, so it has invited the judicial branch to rewrite a half century of settled law relating to forfeitures.”

That’s not legalese. That’s a shot across the bow, and one that had to be fired.

Because if Hutchins wins, every plan sponsor in America suddenly finds themselves on shaky ground. Legal costs skyrocket. Plan costs go up. Forfeiture strategies that were once routine become landmines. And who pays for all that? Participants. Not in theory. In practice. In real dollars that should have gone toward improving plans, reducing fees, or adding benefits.

This case isn’t about protecting participants. It’s about opening the litigation floodgates. It’s about trial lawyers trying to convert standard, lawful plan practices into new revenue streams under the guise of fiduciary breach.

And let’s not forget, these forfeiture practices are disclosed. They’re in the plan documents. They’re reviewed by recordkeepers and ERISA counsel. They’re audited annually. If that’s not enough to insulate plan sponsors from liability, then we’ve crossed into dangerous territory where any fiduciary decision can be second-guessed by hindsight and headline-chasing lawsuits.

The DOL gets this. That’s why they’re taking a firm stance: using forfeitures to offset employer contributions is not a breach of fiduciary duty, it’s a longstanding, permissible practice. And one that, when properly executed and documented, benefits the plan and its participants.

The final paragraph of the DOL’s brief says it best: “The Secretary has a substantial interest in fostering established standards of conduct for fiduciaries by clarifying the Secretary’s view that a fiduciary’s use of forfeited employer contributions in the manner alleged in this case, without more, would not violate ERISA.”

Translation? Let’s not turn every routine administrative decision into a litigation trigger. Let’s not scare plan sponsors out of offering robust retirement benefits. And let’s not let lawyers rewrite the rules just because they don’t like how Congress or the IRS did their job.

The Ninth Circuit has an opportunity here, not just to decide a case, but to restore some sanity to the retirement plan landscape. Here’s hoping they do the right thing. Because ERISA’s not perfect, but it doesn’t need a rewrite from a courtroom. It just needs to be followed as written.