Written by

Quick Takes

  • Fiduciary focus is shifting from “what you offer” to “how you decide,” with committee governance, documentation, and outsourcing strategies under increasing scrutiny.
  • Litigation and regulatory attention remain intense around fee oversight, forfeitures, missing participants,
  • and cybersecurity, reinforcing the need for disciplined processes and clear records.
  • Participant optimism about retirement is high, but gaps in savings behavior, literacy, and timing of retirement continue to create workforce and cost pressures.

Fiduciary Support Spotlight: Strengthening Committee Governance and Documentation

Committee structure, meeting cadence, and minutes are core risk controls—not formalities. Sponsors must
demonstrate prudent oversight of investments, fees, vendors, and regulatory requirements. Effective
committees follow a clear charter, structured agendas, ongoing fiduciary training, and document decisions
with rationale. Strong minutes are critical when fiduciary compliance is evaluated.

Align Supports You By:

  • Meeting cadence and process: Standardized agendas and minutes to capture key discussions, decisions, rationale, and follow-up owners.
  • Regular fiduciary training: We offer fiduciary workshops for all committee members in Spring and Fall

Participant Trends:

Generic, one-size-fits-all retirement messaging is losing effectiveness as workforces become more diverse
and employees shoulder greater responsibility for their own outcomes. Targeted, segmented
communications improve engagement, support higher savings behaviors, and strengthen retention.

Align Supports Your Participants By:

Align is pleased to introduce our revised financial wellness program, Tomorrow Funded. Using recordkeeper
and employer census data thoughtfully, Align helps our plan sponsors move from broad, generic education
to tailored nudges that prompt specific, measurable actions. Reach out to learn more!

REGULATORY UPDATE

Action Required | Plan Document Restatement by 12/31/2026

Plans must incorporate changes from the SECURE Act, SECURE 2.0 Act, and Taxpayer Certainty and Disaster Relief
Act into plan documents by December 31, 2026 (2027 for certain plans), or risk jeopardizing plan qualification.
Sponsors should not assume providers will act automatically—coordinated review and timely execution are essential.

Take Action | Align Can Help:

  • This is a great opportunity for a plan document “walk through.” Align can help you schedule this valuable exercise with your recordkeeper and TPA partners.

Action Required: Lost and Missing Participants

Regulators continue to stress accurate participant records and a prudent, documented process to locate missing or
unresponsive participants. With DOL enforcement and Lost and Found reporting, plans must demonstrate proactive
outreach, multi-step searches, and clear procedures for uncashed checks and unclaimed benefits.

Take Action | Align Can Help:

  • Promote regular updates to participant contact and beneficiary information
  • Establish and document a consistent search process
  • Maintain records of outreach efforts and outcomes

LITIGATION UPDATE

ERISA litigation remains active but is expanding beyond fees and prudence to include target-date fund
performance, forfeitures, and plan design. Recent decisions demand more specific allegations and
benchmarks, reinforcing that disciplined process and documentation can reduce fiduciary risk.

TDF “Underperformance” Suits and Benchmark Risk

Plaintiffs are increasingly targeting target‑date funds (TDFs), including both off‑the‑shelf series and custom
structures, alleging imprudent retention based on multi‑year underperformance versus chosen benchmarks.
Recent filings challenge proprietary and non‑proprietary TDFs, criticize “to” versus “through” glidepaths,
and fault committees for relying on custom benchmarks that allegedly mask weak results.
At the same time, some courts have dismissed suits where fiduciaries could demonstrate a coherent
monitoring process and the plaintiffs failed to use “meaningful benchmark” comparisons. For sponsors, this
reinforces the need to clearly articulate the rationale for QDIA and TDF selection, document performance
reviews relative to appropriate peers and indices, and capture those discussions in committee minutes.

Alternatives in 401(k)s and Rising Fiduciary Stakes

Regulators and courts are increasing scrutiny of alternative investments in plans, especially within TDFs and
managed accounts. Developments involving Intel Corporation and guidance from the DOL make clear that
while alternatives are permissible, they require a higher standard of fiduciary process, expertise, and
documentation. Sponsors must rigorously assess fees, liquidity, valuation, and glidepath impact—and
clearly document their rationale, particularly when using private markets within multi-asset strategies.

Fees, Forfeitures, and the Next Wave of Excessive Fee Litigation

ERISA fee and recordkeeping lawsuits remain the largest share of class actions, with claims increasingly
targeting mid-sized plans and incorporating forfeiture practices into fee challenges. Plaintiffs argue
forfeitures should offset participant expenses, though outcomes vary when plan terms are clear and
fiduciaries document their process. Sponsors should align forfeiture use with plan documents, adopt a
written policy, and periodically document review and application in committee minutes.

The Takeaway

Across these developments, the focus is on how committees make and document decisions. Sponsors
with strong governance, meaningful benchmarking, and well-documented minutes are better positioned to
withstand scrutiny, even as plans grow or adopt newer strategies.

WHAT ALIGN IS WATCHING

  • DOL activity on a revamped fiduciary rule and related guidance, with potential proposals signaled for mid-2026.
  • Growth in personalized, tech-enabled participant engagement and its intersection with cybersecurity and data governance.
  • Legislative and policy efforts that may affect plan disclosures, paper statements, and participant communication requirements.

YOU’RE NEVER ALONE WITH ALIGN

With experience, structure, and steady guidance, Align helps plan
sponsors navigate change with confidence. Explore what’s possible…