Forfeiture lawsuits are emerging as a significant trend in ERISA litigation, eliciting varied reactions, often filled with frustration or dismissal. While some may downplay the importance of these lawsuits, advisors are encouraged to recognize their significance. Emotional responses can hinder plan sponsors and fiduciaries, while also obscuring an opportunity for retirement plan advisors to provide a more informed and nuanced understanding of the issue.
The American Benefits Council has proposed changes to allow employers to better utilize surplus assets in retirement plans. The first proposal seeks to enable surplus assets from defined benefit pension funds to be transferred to participants' defined contribution plans without having to terminate the defined benefit plan, a change that is currently restricted. The second proposal would allow surplus assets from retiree health accounts to be transferred to cover other benefits, such as active employee health benefits. These changes aim to benefit employees while also increasing revenue for the federal government.
As lawsuits persist against companies accused of mishandling forfeited funds in 401k plans in violation of their obligations under ERISA, Cigna Group has become the latest firm to be sued regarding its management of forfeitures. In contrast, software giant Intuit Inc. has reached a settlement after the court approved the case to proceed into 2024.
The SECURE Act and SECURE 2.0 have enhanced access to employer-sponsored retirement plans for many part-time employees. To improve these workers' retirement readiness, sponsors must recognize the unique challenges they face compared to full-time employees. This includes focusing on onboarding, education, communication, and plan design tailored to part-time workers. By addressing their distinct needs, employers can foster inclusivity and create a more cohesive workforce.
As an employer, you have the opportunity to provide a range of benefits that support your employees in achieving financial security, particularly regarding retirement. One valuable option is a Qualified Default Investment Alternative. A QDIA serves as the default investment choice within an employer-sponsored retirement plan. If an employee makes contributions to the plan without indicating their preferred investment strategy, their funds will be automatically directed to the QDIA. This is a brief overview of its function and importance.
A recent report from WealthRabbit highlights a significant retirement crisis among small business owners, revealing that one in five have no retirement savings, and most have saved less than $50,000. Many may rely on the sale of their business for retirement funds, but one in three respondents doubt they will ever be able to retire. The 2025 WealthRabbit Small Business Retirement Report indicates that the traditional retirement system is failing this demographic, with women particularly affected, being twice as likely as men to have no savings.
The retirement industry can be complex and filled with numerous acronyms, making it challenging to navigate. What is a TPA? TPAs specialize in administrative operations for plan sponsors, ensuring compliance with relevant laws and regulations, primarily those from the IRS and DOL. Their role involves various tasks to assist in managing retirement plans effectively.
A lawsuit has been filed against W.W. Grainger's 401k plan, which has over 30,000 participants and approximately $3.45 billion in assets, for alleged breaches of fiduciary duties under ERISA. The plaintiffs claim that the plan's fiduciaries misused forfeitures to benefit the company by reducing future employer contributions. This practice is said to violate the responsibilities of loyalty and prudence mandated by ERISA.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
