A Major Change May Be in the Works for Your 401(k)’s Oversight

Key Takeaways

• DOL aims to curb “regulation by litigation.”
• 401(k) lawsuits rose from 49 (2023) to 69 (2025).
• Forfeiture cases now over 40, challenging fund use.
• Reducing lawsuits may let employers lower matching contributions.
• Litigation has driven down 401(k) provider fees.

Summary

The U.S. Department of Labor is signaling a shift away from relying on court cases to enforce ERISA duties, a practice known as “regulation by litigation.” 401(k) lawsuits have climbed from 49 in 2023 to 69 in 2025, driven largely by new forfeiture claims that challenge how unvested employer contributions are used. While the DOL argues that curbing frivolous suits will reduce legal noise, critics warn that fewer lawsuits could weaken fee‑transparency safeguards. The debate centers on preserving retirement‑plan quality without stifling legitimate enforcement.

Pulse Analysis

The Employee Retirement Income Security Act (ERISA) places fiduciary duties on plan sponsors, but the Department of Labor has traditionally let courts interpret those duties. Over the past decade, class‑action suits have forced employers to justify fee structures and investment selections, effectively creating a market‑driven check on plan costs. This litigation‑centric model emerged because the DOL has historically issued limited guidance, leaving the judiciary to define what constitutes reasonable fees and prudent investment choices.

A recent surge in lawsuits—particularly those targeting forfeiture practices—has prompted the DOL to reconsider its strategy. Forfeiture, the reallocation of unvested employee contributions, has long been accepted as a cost‑offset mechanism for plans. However, more than 40 cases filed since 2023 allege that using forfeitures to cover employer expenses harms participants, sparking concerns that the practice inflates hidden costs. Department officials, including Solicitor Jonathan Berry, argue that these suits are opportunistic and risk prompting employers to reduce matching contributions or alter plan designs to avoid litigation exposure.

Going forward, the DOL faces a delicate balance: it must preserve the deterrent effect of litigation that has driven down 401(k) fees while providing clearer regulatory guidance to prevent abusive practices. A measured approach could involve targeted rulemaking on fee transparency and forfeiture usage, leaving truly egregious cases to the courts. For workers, maintaining this dual enforcement pathway is essential to ensure retirement savings remain affordable and well‑managed, especially as alternative assets like crypto begin to appear in plan menus.