Plan sponsors are feeling the weight of SECURE 2.0’s ongoing rollout, and 2025 and 2026 bring no relief from the compliance pressures that have been building since the law was enacted over two years ago. With more than 90 updates spread across multiple implementation deadlines, many plan sponsors are experiencing what industry experts call “implementation fatigue.”
Richard Clarke, Chief Insurance Officer of Colonial Surety Company, recently outlined the mounting challenges in BenefitsPro, emphasizing how the complexity of managing simultaneous compliance requirements is creating new risks for plan sponsors. The law represents the most substantial update to ERISA in decades, but its phased approach means sponsors must juggle current obligations while preparing for future changes.
The compliance landscape is further complicated by a surge in ERISA litigation. In 2024 alone, 136 ERISA-related lawsuits were filed, with many targeting 401(k) forfeited funds—cases that are no longer dismissed as “nuisance lawsuits” but are now drawing serious attention from law firms. Daniel Aronowitz, the recently confirmed Head of the Employee Benefits Security Administration, has even called for specialized ERISA courts to address inconsistent rulings that encourage forum-shopping and drive up litigation costs.
Adding to plan sponsors’ challenges is the phenomenon known as “Peak 65.” In 2025, an average of 11,400 Americans will turn 65 every day, meaning 4.18 million people will reach traditional retirement age in a single year. This creates unprecedented demand for withdrawal strategies, increases funding constraints, and heightens the need for proper compliance measures, all while new SECURE 2.0 provisions take effect.
One of those provisions allows participants aged 60-63 to contribute up to $11,250 in catch-up contributions, or 150% of the standard limit, whichever is greater. This seemingly beneficial change adds administrative complexity just as plan sponsors are managing the largest retirement wave in history. Any misstep in handling these enhanced contribution limits could trigger fiduciary breaches and potential lawsuits.
The 2026 provisions loom large on the horizon, bringing their own set of challenges. High earners—those making over $145,000 annually—will be required to make all catch-up contributions to workplace plans on a Roth basis using after-tax dollars. Employers will also gain the option to provide vested matching contributions to Roth accounts. These changes require significant system updates and employee education efforts.
Clarke noted that plan sponsors need robust risk management strategies to navigate this evolving landscape. Modern financial technologies can streamline retirement plan management while improving employee engagement, offering easy access to retirement resources and educational materials. However, technology alone isn’t enough.
Establishing comprehensive protection measures becomes particularly important given the litigation environment. Fiduciary liability insurance can protect both employee benefit plan decision-makers and their employers, offering defense coverage and funds for settlements or judgments under ERISA. This safety net is becoming increasingly valuable as alleged fiduciary breaches rise in tandem with the growing complexity of plan administration.
Plan sponsors who want to avoid costly compliance missteps need to act now. SECURE 2.0’s rolling deadlines aren’t slowing down, and neither is the pace of ERISA litigation. The sponsors who will thrive in this environment are those building robust risk management processes today, before the next wave of changes arrives.
