Lawsuits, legislation & SECURE 2.0: Top compliance trends employers need to know

Mercer recently provided an update on the legal, legislative and regulatory activity impacting defined contribution plans, and provided advice for plan sponsors for the near term.

In legal developments, Mercer noted there was action on 43 defined contribution-related cases during the first quarter, including 14 settlements for a total of $55.3 million, with individual settlements ranging from $200,000 to $15 million. Most cases continue to revolve around fees and investments, according to Rhonda Berg, senior defined contribution consultant: Eight cases target 403(b)/not-for-profit plans. Four cases targeted plan sponsor operations, a relatively new focus of litigation.

“It’s important to note that there are plan fiduciaries out there that are being targeted and can get sued over the perception that they’ve been mismanaging their plans or maybe even questionable operational practices,” said Berg. Examples of those cases include plan sponsors ignoring participant direction, limiting investment trades, ignoring participant distribution requests and not administering plans.