On January 21, 2025, Vanguard agreed to pay more than $100 million in fines to the Security Exchange Commission for misleading investors regarding their Target Date Funds, along with $40 million in fines to 401(k) plan participants. Also, in January, other employers, including Southwest Airlines, American Airlines and JPMorgan, have been sued in class action lawsuits, alleging ERISA violations.

Other findings:

43% of companies across the United States have at least one of four major red flag violations in their retirement plan that can lead to governance and compliance-related issues, which may result in violations, lawsuits, and/or fines (RIRFs).
76% of American-based companies have at least one of four major red flag violations that represent a fiduciary failure from either the plan administrator or plan sponsor (EPMRFs).

“Plan sponsors and employees are not only overpaying for their retirement plans on a widespread scale; they are also being underserved and exposed to unplanned and potentially damaging legal, compliance, and financial risks,” said Steven Abernathy, CEO of Abernathy-Daley. “CFOs, HR leaders, and other key executives must work to ensure the design and administration of their plans align with legal and fiduciary requirements.”

In 2024, the Employee Benefits Security Administration’s (EBSA) legal proceedings restored nearly $1.4 billion to employee benefit plans, participants, and beneficiaries. EBSA’s ensuing criminal investigations resulted in 68 indictments and 161 convictions or guilty pleas, including from plan officials and corporate officers.

Instant Insights /

Most 401(k)s have at least 1 fiduciary ‘red flag’ violation: Is yours at risk?

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