Managing litigation risk for 401(k) plans under the Employee Retirement Income Security Act of 1974 (ERISA) is among the top themes in the retirement planning space for 2026.
Lawsuits regarding forfeited funds, excessive fees, failing to monitor service providers, conflicts of interest, and imprudent investments—among other alleged breaches of fiduciary duty—have dominated headlines in recent years, and are expected to continue as even smaller plans face the risk of being sued these days.
Meanwhile, the regulatory outlook from a plan fiduciary’s perspective for ERISA-governed plans has brightened somewhat in recent months, as plan sponsors are experiencing a newfound wave of support during the second Trump administration.
The Department of Labor’s Employee Benefits Security Administration, under the leadership of recent Trump appointee Daniel Aronowitz, has repeatedly voiced its preference to eliminate what it calls “frivolous” 401(k) lawsuits, and the DOL has filed numerous amicus briefs in recent months supporting plan fiduciaries.
In this executive Q&A, 401(k) Specialist Managing Editor Amanda Umpierrez sat down with noted ERISA attorney Bonnie Treichel, Founding Partner and Chief Solutions Officer of Endeavor Law, to discuss some top misconceptions about why ERISA lawsuits get filed, the common errors plan sponsors and advisors make that can endanger plans, and what areas she expects could be prominent in the next wave of ERISA litigation.
401(k) Specialist: Let’s start with some basics. What do most plan sponsors and advisors misunderstand about why ERISA class actions get filed?
Bonnie Treichel: Historically, there is the perception that only big plan sponsors could get sued—that being sued in the ERISA context was limited to the mega-plan space. One misperception about ERISA litigation is that unfortunately, it is no longer a single law firm out of St. Louis that is filing cases in the mega space. There are what are called “copycat lawsuits,” so there are more attorneys that are filing ERISA litigation cases.
For example, forfeiture cases were filed initially by a firm out of Pasadena. Other lawyers started filing those cases as well, but that wasn’t the traditional Schlichter case. There are more attorneys filing them and they are moving down-market. It could be that it’s a $500 million plan being sued, not just your typical multi-billion-dollar plan. That is one of the things that is just a misconception about ERISA litigation.
I’ve always said that anyone can be sued for anything, but, if you have a good case, it’ll get dismissed. I still strongly believe that. But that pendulum has shifted just a tiny bit because the pleading standard changed for being able to get a case thrown out due to the Cunningham v. Cornell case. That was really a win for the plaintiff’s side.
“The best practice is to have meeting minutes that keep you out of trouble and really are a preservation of showing a prudent process that you can use as an ‘exhibit A.’”
Bonnie Treichel
401(k) Specialist: From your perspective, what are the most common “unforced errors” that land plans in litigation?
Bonnie Treichel: I’m going to say, turn off the AI [artificial intelligence].
We’ve all talked about how meeting minutes create a record to demonstrate prudent process. I was at a conference, and someone said that they do virtual meetings and end up with multiple sets of meeting minutes. They said, ‘isn’t that better because now we have multiple versions of the record because sometimes different AI systems capture different things?’ No, that is absolutely not better. Now we have conflicting minutes.
The best practice is to have meeting minutes that keep you out of trouble and really are a preservation of showing a prudent process that you can use as an ‘exhibit A.’
• EDITOR’S NOTE: This article is part of our Q1 2026 “How Not to Get Sued” Deep Dive. All published coverage to date can be found here.
I’m not saying don’t use AI, but make sure you have client consent for it, you’re not creating something that is going to be discoverable that you don’t want to be and make sure you’re creating one set of meeting minutes that is going to be what you want discoverable in the end. All these things can be good with the proper guardrails, consent and everyone’s understanding of it.
Another one I saw recently that came up in a case named both the plan sponsor and the advisor: it’s being too prescriptive in your governance documents. We’ve all seen these with investment policy statements. We want to be detailed, we want to help say ‘after three quarters of X, we’ve got to do Y.’
If you don’t follow that exactly, then what happens? Then you get into trouble. Now we’re in that ‘exhibit B’ of the complaint that shows you didn’t do what your governance document said.
You want to have these governance documents. They’re really good, but don’t be too prescriptive. Keep it more about the process, like, ‘these are the steps we’re going to follow, this is the periodic cadence we’re going to follow.’ Don’t get so detailed in that investment policy statement.
401(k) Specialist: Are lawsuits more about high fees and poor performance—or weak fiduciary process?
Bonnie Treichel: The two go hand-in-hand, but traditionally it was all about fees. It’s been over a decade ago, but there is a great study that showed three main categories of lawsuits. It was, you selected the wrong investment, you paid too much for the investments or the recordkeeper, or it was about self-dealing. Those were the three categories of lawsuits from about the early-to-mid 2000s until just recently.
That is not the case so much anymore. We’re seeing lawsuits about a variety of different things. The forfeitures, for example, you would have thought that was an issue for the Department of Labor and the IRS. The Treasury had regs or guidance on this for years, and there are several lawsuits related to forfeitures.
We also saw in the American Airlines case a split on the duty of prudence and duty of loyalty. You’re seeing issues about duty of loyalty and other types of topics that are beyond ‘it was just too expensive.’
Now, a lot of times, it’s coupled together. It’s not just, ‘something was too expensive.’ It’s ‘something was too expensive, and these other things.’
“I really believe that if you don’t have the right expertise and the right partners, you’re not going to have that good fiduciary process and governance, and you’re going to have trouble.”
Bonnie Treichel
401(k) Specialist: How can sponsors effectively oversee or work with recordkeepers, advisors, and third-party administrators to avoid litigation?
Bonnie Treichel: If you go back to the basics of ERISA and back to 1974, I don’t think the legislative intent was ever that plan sponsors stop making widgets and become experts in retirement plan compliance. I think sometimes we’ve gotten so fixated on fees that it’s like, ‘oh, we can’t hire outside experts to help,’ but that isn’t the case. The case is if you don’t prudently select them initially or monitor your partners on an ongoing basis, that’s when you get into hot water.
You also get what you pay for. Going with the cheapest provider or partner isn’t always best. It’s more about making sure you inventory where you need help, where you have gaps, and then go find partners to help you. I really believe that if you don’t have the right expertise and the right partners, you’re not going to have that good fiduciary process and governance, and you’re going to have trouble.
I mentioned earlier that there is a lower bar from a pleading and process standpoint in ERISA litigation because of the Cunningham v. Cornell case. From that same point, I still believe that having good governance and a good process can really get you out of, or at least be a really strong defense, in many of these cases.
We always have the bad headlines about losses but there are a lot of wins for plan sponsors. There are several of these where there is a demonstration of good process and through that demonstration, the actual plan sponsor, and sometimes the advisor with them, win.
Insurance is a good thing, too. You’re not required to have it, but in addition to the bond, have insurance because it will be very helpful to have that fiduciary liability coverage.
401(k) Specialist: When should sponsors bring in legal counsel for a proactive fiduciary review?
Bonnie Treichel: We talk to a lot of folks about not waiting to bring in legal counsel until they are doing a filing with the Department of Labor or with the IRS. It’s much better to proactively say, ‘come take a look at our meeting minutes and approve what our advisor has put together,’ or ‘sit in on one of our committee meetings.’
We have several clients where, when we’re working with the plan sponsor or sometimes alongside the advisors that we support, we will participate in committee meetings. Oftentimes, it’s much more cost-effective for us to be there along the way rather than later because we can issue-spot as we go.
There are some attorneys too who will do flat fees for a lot of that work. That can also be very helpful.
401(k) Specialist: What area or areas do you see as the “next wave” of ERISA litigation?
Bonnie Treichel: There are a couple of pieces to that question. One is what we talked a little bit about already—it’s no longer confined to the mega plans. We will continue to see litigation move down-market and then continue to stay up-market as well. We’ll continue to see the magnitude of cases.
I will caveat that by saying there is a movement with our current EBSA or Department of Labor to kind of curtail some of that, and there has been some legislation introduced to curtail ERISA litigation. I do think we are going to continue to see ERISA litigation proceed unless there is some success in those efforts from Labor and the legislative front.
In terms of what will be a part of that ERISA litigation, this is not necessarily the topic at hand but for the folks on the plan sponsor side, in HR [human resources] and finance, we’re going to see the healthcare sides. We saw that before the holidays on the voluntary benefit side, so one takeaway is know when you’re in ‘ERISAland’ and when you’re not because there is an impact there.
Managed accounts are another area. As you continue to see the need for personalization and flows into managed accounts, that could be another area where we could see some issues.
One thing I’ll close on is—service providers have to get paid. They’re running a business just like our plan sponsors. All of these are like levers. We can push for reduced recordkeeping fees, but that just means a different lever will be pulled instead. We can lower fees in one place, but fees are going to go up somewhere else. It’s more about understanding what lever is being pulled.
401(k) Specialist: If you could give plan sponsors a couple of concrete steps to reduce litigation risk, what would they be?
Bonnie Treichel: No.1., make sure you hire the right partners. Make sure you know what you’re paying them and where your 408(b)(2) is, and that you know if you have any conflicts with those engagements. That’s a super basic one going back to 2012, but it’s still a tried and true one.
Along with that, make sure that you understand who those partners or providers you have are, what data are you giving them access to, how are they protecting it, and if they are giving that data to any other third party. That goes along with the DOL’s cybersecurity guidance and it being one of their priorities for this year.
Last but not least, make sure that you are keeping that strong fiduciary file. You might hire all these vendors and think they’ll keep it for you, but you as the plan sponsor ultimately are responsible for the first dollar in and the last dollar out, so you just want to keep track of all of the documentation that goes with that process because your vendor is probably not contractually responsible, but you are. So, you get to own that documentation to support your good governance.
ADDITIONAL “How Not to Get Sued” Deep Dive COVERAGE: