A sharp rise in Employee Retirement Income Security Act (ERISA) litigation since 2020 is creating new compliance headaches for plan sponsors, impacting the brokers and advisors who serve them.
That's the assessment of Bonnie Treichel, founder of Endeavor Retirement and Endeavor Law, who spoke with Insurance Business America about the forces reshaping the retirement plan landscape. For benefits brokers with plan sponsor clients, she says, the litigation environment alone warrants a hard conversation about risk exposure.
"The plaintiff bar expanded beyond one or two dominant firms," Treichel said. "More attorneys entered the space, and AI-assisted document review has lowered the cost of filing ERISA lawsuits, enabling more firms to bring cases and further increasing litigation volume."
The result: plan sponsors are on defense, and brokers who help manage their benefit programs need to understand what that means for plan design, compliance, and client relationships.
One of the starkest illustrations of the current environment is the forfeiture litigation wave. More than 60 cases have now challenged what had been considered settled law for roughly 30 years under IRS guidance; specifically, how plan sponsors can use forfeited funds within a defined contribution plan.
For decades, plan sponsors used forfeitures to offset employer contributions or cover plan administrative expenses, consistent with longstanding IRS guidance. The plaintiff bar is now arguing that those forfeitures should have been used to reduce participant costs instead. Whether or not those suits ultimately succeed, the wave itself signals something important: once-stable corners of benefits law are now contested territory.
"Heightened litigation risk is making plan sponsors reluctant to adopt innovative plan features," Treichel said. "Fear of being the first mover and attracting a lawsuit is suppressing plan design creativity."
For brokers advising employer clients on benefit plan strategy, that chilling effect has real consequences. Clients who might otherwise embrace new design options such as emergency savings features, auto-enrollment enhancements, and financial wellness integrations, are now pausing, waiting to see what the courts do first.
Treichel noted that the Department of Labor has signaled it wants to push back on excessive litigation to restore plan sponsor confidence. But a group of former Employee Benefits Security Administration (EBSA) heads has written a letter arguing that litigation serves a beneficial function of keeping fees down and protecting participants. That tension is unlikely to resolve quickly, leaving plan sponsors caught in the middle.
The litigation surge isn't the only compliance weight plan sponsors are carrying. The pace of legislative change from SECURE 1.0 in 2019 and SECURE 2.0 in 2022, has left many sponsors struggling to keep up with implementation requirements, and the prospect of a SECURE 3.0 is not being welcomed.
"Plan sponsors don't fear that the legislation would be harmful," Treichel explained. "They fear they lack the operational bandwidth to implement another round of changes so soon."
She pointed to the Roth catch-up provision as an example. On the surface, it sounds like a minor tweak. In practice, it requires substantial operational work to implement correctly — system changes, participant communications, payroll coordination. Multiply that across several SECURE 2.0 provisions and the burden becomes significant.
Treichel expects a wave of plan corrections over the next few years as sponsors work through implementation issues stemming from recent legislative changes. Brokers who position themselves as compliance navigators, not just product distributors, have a clear opportunity here.
A third trend worth monitoring is the slow-moving push to allow alternative investments such as private equity, private credit, and real estate, inside 401(k) plans. There has never been a formal prohibition under ERISA, Treichel noted, but operational barriers are significant.
Unlike defined benefit plans, which manage pooled assets over a long time horizon, defined contribution plans must accommodate daily liquidity needs. The current regulation covering investment selection remains in the proposed phase; it creates a pathway for alternatives but does not mandate adoption.
"Many plan fiduciaries are taking a wait-and-see approach," Treichel said. "The proposed rule says they can include alternatives — not that they must."
Crypto is the most visible edge case. Fidelity previously discussed allowing digital assets on its recordkeeping platform with a 20% cap as a guardrail against over-concentration. Behavioral finance risk with participants chasing a hot asset class, remains a central concern for plan fiduciaries weighing that option.
For brokers advising on retirement plan design and fiduciary compliance, the practical implication is the same across all three fronts: plan sponsors need guidance, they're reluctant to move first, and they're looking for trusted advisors who understand the regulatory terrain.
Treichel's firm, Endeavor Law, has expanded its practice to cover both retirement and health and welfare plan legal work, a reflection of how intertwined those two worlds have become for employer benefit clients. Brokers serving that same cross-section of clients should be thinking the same way.
