401(k) plans under scrutiny: Should employers worry about the fiduciary failings of big firms?

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Now, it seems every week or so, an employer is getting sued in a class action lawsuit, alleging fiduciary breach, filed by its employees (or ex-employees) over mismanagement of their company 401(k) retirement plan. Just in 2025 alone, these are the stories we’ve covered on defined contribution lawsuits, which fall into basically these main categories:

• Excessive fees: Trader Joe’s
• Misuse of forfeited funds: HP Inc., Charter Communications, JP Morgan, Amazon
• Underperforming funds: Southwest Airlines, Northern Trust
• Prioritization of ESG goals: American Airlines

While there has been a surge in 401(k) lawsuits against companies for Employee Retirement Income Security Act (ERISA) violations, the majority of retirement plans could be in danger of getting sued, since 84% have at least one likely ERISA “red flag” from a regulatory and/or fiduciary violation, according to Abernathy Daley 401k Consultants.  

Abernathy-Daley analyzed the latest Form 5500 filings for 764,729 plans, identifying and tagging each plan with any red flags from their most recent filing. Abernathy-Daley defines red flag violations as either “infractions, fineable offenses, fiduciary failure, or plan malpractice.” These infractions include failing to provide automatic enrollment, no corrective distribution of excessive contributions and failure to transmit payments on time.