Fiduciary Liability Insurance and the 2026 Wave of 401(k) Fee and Forfeiture Litigation

The lawsuits land quietly — a complaint naming the retirement committee, a demand letter citing recordkeeping fees, a class action filed on behalf of your own employees. In 2025, plaintiff firms filed roughly 155 ERISA fiduciary class actions, a near-record year, and the pace has not slowed. What was once treated as a large-plan problem has become a broad one, and the question for any employer that sponsors a 401(k) or 403(b) is no longer whether the exposure exists. It is whether the company has priced it, documented against it, and insured it correctly.

The numbers describe a settled industry, not a passing trend. Excessive-fee and imprudent-investment filings have held a steady rhythm — 43 in 2023, 47 in 2024, and 51 through the first ten months of 2025, by Mayer Brown's count — and more than 600 such suits have been filed against defined contribution plans over the past decade. Roughly a quarter of plans holding over $500 million in assets have been sued at least once. Encore Fiduciary tracked about 30 excessive-fee settlements in 2025 averaging just over $3 million, and more than 200 settlements over five years totaling north of $1.3 billion. Plaintiff firms generally take a third off the top; the individual participant recovers something on the order of $55 to $70.

The fastest-moving front is forfeiture litigation — and it is new. When an employee leaves before vesting, the forfeited employer contributions have to go somewhere, and for decades plans routinely used them to offset future company contributions. A wave of suits now argues that choosing to reduce the employer's cost, rather than defray participant expenses, is itself a breach of fiduciary duty. The theory was marginal two years ago: 5 class actions in 2023, then 30 in 2024, then 43 through ten months of 2025. The Department of Labor's amicus brief in Hutchins v. HP poured fuel on the fire — 21 of 48 forfeiture suits were filed after it — and the early rulings are split across circuits, which is precisely what sustains the litigation.

The duty no longer stops at the retirement plan. The same fiduciary logic has crossed into health benefits. Plaintiffs have filed roughly 50 tobacco-surcharge suits in 2024 and 2025, attacking wellness-program penalties as fiduciary breaches, and a smaller but growing set targets pharmacy-benefit-manager arrangements and prescription-drug pricing — the argument being that a plan sponsor who fails to police its PBM has mismanaged plan assets. The ghost-network case Hecht v. Cigna settled for nearly $6 million. A new cluster of suits over voluntary-benefit programs arrived in late December 2025. The exposure is migrating from the 401(k) committee to anyone who touches a plan document.

This is the risk fiduciary liability insurance exists to meet — and it is routinely confused with the thing that does not. The ERISA fidelity bond that federal law requires covers theft and dishonesty; it does nothing for a breach-of-duty claim. Fiduciary liability insurance is the policy that defends the company, the plan, and the named fiduciaries individually when they are accused of imprudent process — and the named fiduciaries are real people, often a handful of HR and finance leaders whose personal assets sit behind the duty. Defense costs alone run into six figures before any settlement, and the policy's retention, defense-cost treatment, and the breadth of its definition of covered claims are where a program either answers the complaint or leaves a gap.

The market is giving buyers room to get this right. Willis Towers Watson describes fiduciary liability premiums as largely flat through 2025, with flat renewals the default into 2026 and reductions available to plans that present well. Underwriters are no longer pricing the whole book the same way; they are separating the committees that can show a disciplined process from the ones that cannot. That discipline is not cosmetic. It is the documented record — fee benchmarking, an investment policy statement that is actually followed, committee minutes that show decisions being made and revisited, and a deliberate, written choice on how forfeitures are applied — that both defeats a claim and earns the better renewal.

There is a backdrop worth noting: the Employee Benefits Security Administration's proposed fiscal-2026 budget would cut roughly $10 million and 47 staff. Less federal enforcement does not mean less exposure — it means the private plaintiffs' bar, not the government, increasingly sets the standard of conduct, and that bar is unforgiving of plans that cannot produce a paper trail.

This is where our four-step process does its work. Strategic Discovery surfaces who your named fiduciaries actually are and what governance exists behind them. Risk Assessment measures the plan's fee posture, forfeiture practice, and health-plan oversight against the live theories of liability. Solution Design builds the fiduciary liability tower — limits, retention, and definitions — around those facts rather than a generic form. Ongoing Optimization keeps the program and the governance aligned as the litigation frontier keeps moving, because it will.

A fiduciary duty is, at bottom, a duty of attention — and litigation is simply the moment someone asks whether you were paying it. The committees that come through these claims intact are not the lucky ones; they are the ones who treated the plan as an obligation to be managed in the open. The light belongs on your own process, held there deliberately, before a plaintiff's firm holds it there for you.

Sources: The State of ERISA Fiduciary Litigation in 2025 (The D&O Diary, February 2026); Fiduciary Liability: A Look Ahead to 2026 (WTW, February 2026); Key Issues to Watch in ERISA Defined Contribution Plan Class Action Litigation in 2026 (Mayer Brown, January 2026); ERISA Fiduciary Litigation in 2025 (Encore Fiduciary, 2026); 401(k) Settlements Highlight ERISA Litigation Divide (PlanSponsor, 2026); Quarterly ERISA Litigation Update, February 2026 (Gibson Dunn); Understanding the New Wave of ERISA Litigation Targeting Voluntary Benefit Plans (Holland & Knight, January 2026)

— Ryan Mefford, President & Risk Advisor