In Part 1 of the new 401(k) Specialist DeepDive, we examined how ERISA litigation evolved from a niche legal strategy into a powerful force reshaping retirement plan governance. Featuring candid insights from high-profile plaintiffs’ attorneys—including Jerry Schlichter—and leading ERISA defense lawyers, we explored why excessive fee and imprudent investment claims continue to gain traction in court.
The key takeaway: courts consistently favor documented process over performance, and fiduciaries who fail to demonstrate active oversight, prudent benchmarking, and disciplined decision-making leave themselves vulnerable. As litigation momentum builds—and regulatory signals begin to shift—the spotlight on fiduciary fundamentals has never been brighter.
Part 2 examines the newest fronts in ERISA litigation, including the surge in forfeiture and voluntary benefits lawsuits, and how plaintiffs are leveraging plan document language to challenge fiduciary decisions. Also addressed is the growing role of documentation, engaged oversight, and defensible process as courts continue to emphasize prudence over outcomes. This installment also looks at the evolving regulatory environment, including EBSA’s shifting posture toward so-called “frivolous” lawsuits, and what that could mean for plan advisors and sponsors. Ultimately, Part 2 focuses on practical steps fiduciaries can take now to strengthen governance, tighten documentation, and reduce litigation exposure.
Forfeitures, voluntary benefits cases on the rise
A more recent development in the ERISA lawsuit world involves claims that plan fiduciaries misused or improperly allocated forfeited employee contributions to 401(k) or other voluntary benefits plans, which occurs when participants leave a company before full employer vestment. While ERISA allows plans to use those forfeited amounts to offset employer contributions or pay reasonable plan expenses, lawsuits have occurred when fiduciaries are alleged to have steered forfeitures to the benefit of employers—reducing required contributions, while still charging participant plan expenses.
Jerry Schlichter’s firm, unsurprisingly, has been at the forefront of this new avenue of legal attack, with its recent series of class action suits against United Airlines, Community Health Systems, United Services of America and Labcorp, as well as Willis Towers Watson. The overlapping cases all allege that plan fiduciaries favored insurance options with excessive fees and high broker commissions, over participants’ interests.
“With voluntary benefits, frequently the employer does not pay the cost of those benefits, and that can create a relaxed view of who the providers are,” Schlichter says. “They need to inquire of the broker and require that the broker show any conflicts of interest. You know, are they getting Hawaiian vacations based on who they recommend? The fees have to be reasonable, too. You need to treat a selection of voluntary benefits with the same underlying serious fiduciary purpose that you do with a 401(k) plan.”
George Sepsakos of the Groom Law Group says the precept for these cases hinges on language in plan documentation.
“The lynchpin really is the plan document,” he says. “Where plaintiffs have tended to have success is if that documentation reflects that forfeitures were intended to be used to pay down expenses. So the courts are really looking at those documents to determine liability.”
Unlike improper fees or investment cases, however, the government has rather proactively stepped into the voluntary benefits fray already. A forfeiture suit filed in August 2025, Jacob v. RTX Corp., was dismissed by Eastern Virginia’s U.S. District Court on grounds that the defendants had indeed followed their ERISA responsibilities and that the fiduciaries had been properly monitored. This comes on the heels of two amicus briefs recently filed by the Department of Labor in similar cases—Siemens Corp. and Wright v. JPMorgan Chase & Co.—which suggested these sorts of suits come in conflict with nearly 40 years of ERISA legislation, and are more speculative than based on established fiduciary breaches.
Documentation, process emerge as best practices
As case law builds, Fiduciary Law Center’s Matthew Eickman says it has become more important for plan sponsors and advisors to clearly demonstrate that they were focused on fiduciary prudence, at every step in the game. That includes documented evidence of engaged professionals or an ERISA council being involved in plan management.
“Anything you can do to document and support those efforts, commensurate with you carrying out those tasks, is fundamentally important,” Eickman says. “The advice I share with clients is, ‘tell your story when it’s unfolding.’ Failure to do so will set up the opportunity for someone else to tell it for you, years in the future. If you’re afraid to tell your story while it’s happening, you’re probably doing something in a way you shouldn’t be doing it.”
Eickman cites the example of Anderson v. Intel case, which was based largely on fund underperformance, but has resulted in a Ninth Circuit Court appeal. Plan fiduciaries made their decisions almost 15 years earlier, and Eickman says substantive documentation of the “why” of those choices is being used to help try to reestablish a case for their fiduciary oversight.
“Process is certainly king,” Sepsakos says. “It’s absolutely paramount to demonstrate, defensibly, that fiduciaries were brought in, were engaged, and were able to articulate the investment philosophy of the plan. It’s even more important that they understand the landscape on the investment side, especially when there are questions about decisions such as alternative investments.”
And don’t take anything for granted, he adds. Slowing down and taking the time to explain the nuances of costs with plan sponsor clients can also avoid more questions down the road.
“The law says you have to look out for the best interest of your employees, so when you go to these meetings, take them seriously.”
Charles Field
“Sometimes that means walking a client through every step that’s made, and understanding how the recordkeeper is being paid, plus the advisor and the investment manager. Let’s make sure that it’s all reasonable,” Sepsakos says.
Sanford Heisler Sharp McKnight’s Charles Field reiterates that active fiduciary participation is the best way to prevent a firm like his from getting involved. That includes more aggressive monitoring of fund performance.
“The law says you have to look out for the best interest of your employees, so when you go to these meetings, take them seriously,” he says. “Don’t just go through and check off the boxes. Take an active role. And pay attention to the performance of every investment option. Do not wait forever to remove an underperforming option and replace it with something that looks better. We know that most actively managed funds do not beat their benchmarks.”
The regulatory shift: EBSA and ‘frivolous’ lawsuits
Despite their well-justified concerns about legal risk, plan sponsors and advisors might have also have an ace in their corner. During his confirmation hearing and in his subsequent writings, EBSA’s Aronowitz pledged to end protracted investigations and abusive litigation, shift fiduciary discretion to sponsors, rather than lawyers or regulators, as well as providing clearer guidance so plan sponsors are less exposed to legal liability.
Aronowitz has called for other reforms including higher pleading standards and the creation of a specialized ERISA court to add more consistency to rulings, as he and other policymakers say this spree of litigation has increased plan costs and reduced sponsors’ willingness to expand their benefits. Sepsakos says he sees this as the most recent twist in an industry where regulatory oversight has been inconsistent.
“Retirement has been politicized over the last decade, with issues like ESG, crypto and alternative investments,” he says. “We’ve seen a consistent ping-pong between administrations on how they administer ERISA. Now, there seems to have been an actual shift in policy, which might actually move how the courts interact with plaintiffs and defendants.”
The current administration has articulated a desire for action to curtail the ongoing spree of high-profile retirement plan suits, and Sepsakos says he believes Aronowitz has let the industry know where his biases fall.
“But I see that as fairly welcome news,” he adds. “As a lawyer who defends retirement committees, I see that as beneficial to my clients. I really can’t remember a time when the DOL came out with a defense-friendly position in this space. I think that’s a nice change, as we can get some clarity on things.”
Eickman, meanwhile, cautions any oversimplification of the success of Schlichter and his contemporaries, especially as new ERISA claims are filed on a near-daily basis.
“Calling these cases ‘frivolous’ is an unfair depiction of a lot of the current litigation,” Eickman says. “ERISA fiduciary responsibilities are inherently fact- and circumstance-based, and there’s a continuum of reasonableness here. It’s hard to see how a lot of them could be categorized as frivolous.”
Field says “frivolous” was also mentioned frequently by the defense as he and his firm concluded seven years of work on the UnitedHealth case. The $69 million settlement suggests that may not have been the case.
“We’ve done a great service for American workers and retirees. They’ve even said we’ve educated the DOL on what’s necessary, because it wasn’t doing anything.”
Jerry Schlichter
“It was aggravating to hear people saying that, as they knew better,” he says. “In the response to the motion that United filed to dismiss, the judge said that a reasonable person looking at the facts could conclude that the plaintiff caught the defendants with their hands in the cookie jar. That was not a frivolous case.”
Schlichter says he also believes any adversarial legislation as a result of EBSA’s recent political turn will only bring amplified legal action from he and other attorneys, as he feels the 401(k) industry’s adherence to fiduciary standards is still far from imperfect.
“There’s no explosion of litigation. Judges have the duty, and the ability, to screen out frivolous lawsuits, but in our cases, multiple federal judges have said we have functioned as a private attorney general,” Schlichter says. “We’ve done a great service for American workers and retirees. They’ve even said we’ve educated the DOL on what’s necessary, because it wasn’t doing anything. The number of cases that’s been filed is less than one-tenth of 1% of the current 401(k) plans. It’s a miniscule number.”
Do your homework and cover your bases
As frightening as the big-ticket payouts have been in ERISA suits, most plan sponsors and advisors understand that simply doing their job will continue to help protect them from legal action.
The best defense is still a dry, well-documented process, that explains that forethought, fiduciary focus and ample, active monitoring of investments take place on a regular basis. Re-committing to those basics—and keeping yourself aware of the twists and turns of more litigation challenges—can help lower the temperature and help you and your clients do what’s right for plan participants.
• Read Part 1 of this feature here
Andy Stonehouse is the primary author of this article, with additional research and reporting by 401(k) Specialist Editor-in-Chief Brian Anderson.