More than eight in 10 (84 per cent) U.S.-based employer-sponsored retirement plans have at least one likely Employee Retirement Income Security Act red flag from a regulatory and/or fiduciary perspective, according to a new report by consultancy Abernathy Daley 401k Consultants.
The report, which analyzed filings for more than 760,000 plans, found 43 per cent of plan sponsors have at least one major red flag in their retirement plan that can lead to governance and compliance-related issues potentially resulting in violations, lawsuits and/or fines.
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Three-quarters (76 per cent) have at least one red flag representing a fiduciary failure from either the plan administrator or plan sponsor.
The report noted in 2024, criminal investigations by the U.S. Employee Benefits Security Administration’s legal proceedings restored nearly US$1.4 billion to employee benefit plans, participants and beneficiaries. The investigations also resulted in 68 indictments and 161 convictions or guilty pleas, including from plan officials and corporate officers.
“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, chief executive officer of Abernathy-Daley, in a press release. “[Chief financial officers], [human resources] leaders and other key executives must work to ensure the design and administration of their plans align with legal and fiduciary requirements.”
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