When it comes to aligning retirement benefits to organizational strategy, CEO of MJ Retirement Doug Prince told SWERVE seminar attendees gathered at the Indiana Farm Bureau Football Center, what lies ahead is part offense and part defense.  

“We’ve been so reactive to the SECURE 2.0 stuff,” he said. “Every quarter meant another decision, but we have a bit of a breather now and an opportunity to step back and look at retirement plans through a different lens.” 

Here are points he says are worth considering during that breather.  

“In the 2010s, two law firms started filing mass lawsuits against huge companies like Boeing and GM on fees and expenses,” Prince said. “Last year, in 2024, over 25 law firms were suing plan sponsors.”  

Those early suits focused on how much plan participants are paying in fees for managed accounts and what they’re getting from those fees. More recent suits have addressed decision-making around investments—such as the American Airlines case, where environmental, social, and governance policies were deemed inappropriate, and the ongoing Clorox case, which questions plan forfeiture decisions.  

Prince says to be on the lookout for a lot more forfeiture issues, which tend to arise when there’s any question around plan forfeitures being used to offset company contributions. Clear and meticulous documentation that shows the company’s circumstances and its decision-making factors go a long way toward protecting employers from this type of suit.  

More and more, Prince sees clients questioning whether it makes sense to continue operating separate committees to address their fiduciary duty to participants in their healthcare and retirement plans.  

“If I jump forward five to ten years,” Prince said, “I’m guessing most 40l(k) and retirement plan investment committees will be overseeing healthcare plans and have documented fiduciary processes for looking at costs, how to select providers—everything.”  

For companies who offer an ESOP, addressing repurchase liability can be an issue if there’s any question that the approach isn’t in the best interests of remaining participants. That is, maintaining a pool of cash within the ESOP for buying back stock from exiting employees can help an organization meet its legal requirement to repurchase shares, but only when done properly.  

“If you’re just leaving that in cash, earning 3% interest and not investing, then you’re neglecting the best interests of ESOP participants by not thinking about how to earn more money on that cash,” Prince said. “If you’re neglecting the cash in the ESOP, that’s one thing the plaintiff’s bar is targeting.” 

In 2021, the SECURE Act paved the way for the pooled employer plan (PEP)—a method for multiple employers to join in one retirement plan instead of offering their own. An employer in a PEP is not their own fiduciary but has a third-party fiduciary that sets up the plan and is responsible for oversight. Each employer’s fiduciary responsibility ends at selecting the PEP itself.  

PEPs were introduced as a way for more small employers to benefit from the bargaining power of banding together. An estimated 25,000 employers now participate in a PEP.  

Prince detailed the current largest PEP, which has approximately 50,000 participants and holds $1.6 billion in assets. It does cost a bit more than the average traditional plan, and so far fewer people participate in the PEP (43%) versus a traditional plan (97%).  

Understanding the whys behind your benefit offerings could help employers evaluate whether a PEP makes sense or not: 

Prince started his talk by noting that what makes sense for the professional services firm with long-tenured employees well into middle age might not appeal to the early-career employees a manufacturing operation is struggling to retain. A vision session with your MJ advisor can align offerings to your strategy, current state, and the employee struggles you want to overcome.  

Here are a few of the emerging options Prince suggests you might want to consider.  

“Your workforce is diverse,” Prince said. “Let them have choices about benefits and how to apply employer contributions.”  

Interested in learning more about how we can help align retirement benefits with organizational strategy? Contact us today!