Litigation remains a driving force in retirement plan governance. In this installment of our 2025 Regulatory Update series, we highlight key court cases and what they mean for plan sponsors.
ERISA litigation continues to shape best practices for plan sponsors and fiduciaries. This year, the Supreme Court’s decision in Cunningham v. Cornell University lowered the bar for plaintiffs to bring prohibited transaction claims, shifting the burden to plan fiduciaries to prove that an exemption applies. This plaintiff-friendly ruling is already influencing lower courts and could lead to an uptick in ERISA claims.
Another major trend is litigation over the use of plan forfeitures. Plaintiffs argue that forfeitures should reduce participant fees rather than offset employer contributions, but courts have largely sided with plan sponsors, affirming the IRS’s long-standing position. The DOL’s recent amicus brief further supports the sponsor’s discretion in this area.
Recordkeeper practices are also under scrutiny. A recent lawsuit alleges that Empower used participant data to target individuals for high-fee managed account services, raising questions about data privacy and the sponsor’s duty to monitor service providers.
On the positive side, courts have highlighted the importance of a prudent process in plan management. In Waldner v. Natixis, the court ruled in favor of the sponsor, emphasizing the value of documented, repeatable processes and the use of independent advisors. Similarly, Intel successfully defended its inclusion of private equity in plan investments, with the court noting the importance of participant communication and appropriate comparators.
Finally, the UnitedHealth Group settlement—at $69 million, the largest ERISA settlement related to poor investment performance—serves as a cautionary tale about conflicts of interest and the need for clear separation between business and fiduciary decisions.
Court decisions continue to clarify—and complicate—fiduciary duties. A documented, prudent process is your best defense.
For more litigation insights, download the full 2025 Regulatory Update.
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