Before You Meet: Hot Topics for 401(k), 403(b), and Other Defined Contribution Retirement Plan Committees in Q4 2026

On this Ropes & Gray podcast, benefits consulting principal David Kirchner is joined by Sharon Remmer, an ERISA and benefits partner, and Elliot Saavedra, a senior benefits consultant, for a comprehensive discussion of recent developments and emerging issues that retirement plan sponsors and fiduciary committees should have on their radar heading into Q4 2026 meetings. The episode covers the continued growth of collective investment trusts (CITs), alternative investments in retirement plans, ESG regulatory developments, the current ERISA litigation landscape, and Trump Accounts. This podcast is the first in a series of episodes that will take deeper dives into several of these topics.

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Transcript:

David Kirchner: Hello, and thank you for joining us today on this Ropes & Gray podcast. I’m David Kirchner, a principal in the benefits consulting group, and I am here with my colleagues, Sharon Remmer, an ERISA and benefits partner in New York, and Elliot Saavedra, a senior benefits consultant in Boston. Today’s episode is the first in a series we will be doing this fall to help plan sponsors and fiduciary committees stay current on some notable recent changes to the retirement plan landscape. Today, our goal is to provide a practical overview of the key developments you should be thinking about as you head into your Q4 retirement committee meetings.

We have a lot of ground to cover, so let me quickly lay out our roadmap:

• We’re going to start with a discussion on collective investment trusts, or CITs, in defined contribution (DC) plans.
• We’ll then move to alternative investments, including the DOL’s proposed safe harbor and Anderson v. Intel, the closely-watched ERISA case that will be argued at the Supreme Court on October 6^th.
• Finally, we will wrap up with a brief update on ESG and, on the non-fiduciary side, the latest about Trump Accounts. That’s a full plate, so let’s jump right in.

Sharon, let’s start with CITs. They’ve been a big topic in the DC plan world for awhile now. Can you give us an update on where things stand?

Sharon Remmer: Absolutely. CITs continue to be one of the most significant trends in the defined contribution space. As of mid-2026, they represent approximately 37% of 401(k) plan assets. According to industry data, there has been a 35% increase in CIT usage by DC plans over the past decade. That’s substantial growth.

David Kirchner: That’s remarkable. What’s driving that growth?

Sharon Remmer: A few things. First and foremost, lower fees. CITs generally have lower expense ratios than comparable mutual funds, and when you’re talking about fiduciary duty to monitor investment expenses, that’s a significant consideration. Second, pooled trust structures have made CITs more accessible to smaller plans that historically may not have met a CIT’s investment minimums. Third, most major recordkeeper platforms now offer a broad range of CITs, so the operational barriers that existed years ago have largely been removed. Finally, since these vehicles are regulated by the OCC and state banking regulators rather than the SEC, they often have more flexibility in investment strategy and can be customized more easily for specific plan populations.

Elliot Saavedra: I’d add that this trend is especially relevant when you take into consideration the uptick in ERISA litigation. Looking at the growing list of excessive fee lawsuits that have been filed over the past several years, the availability of a lower-cost CIT share class is often cited by plaintiffs as evidence that fiduciaries should have selected a cheaper option. So, from a risk management perspective, fiduciary committees should at least be asking their investment advisors questions about CIT availability for their plan lineups.

David Kirchner: Good point. What about 403(b) plans? Right now, they can’t invest in CITs, but I know there’s been a lot of activity on the legislative front recently. Sharon, can you give us an update?

Sharon Remmer: Sure. Back in 2022, SECURE 2.0 amended the Internal Revenue Code to allow 403(b) plans to invest in CITs, but here’s the problem: corresponding amendments to federal securities laws are still needed before 403(b) plans can access these vehicles. In December 2025, the House passed a bill that would fix this issue under the ’33 and ’34 Acts, but despite bipartisan support (as well as letters from several industry groups), the bill hasn’t advanced in the Senate. A second bill was introduced in both chambers in 2025, but it similarly has not progressed¹. So as of now, there are more than 10 million 403(b) plan participants who cannot access CITs.

David Kirchner: Separately, I should mention that in May, the SEC issued staff guidance addressing the treatment of pooled employer plans, or PEPs, under the federal securities law, which may facilitate broader CIT access for PEPs². That’s something to keep on our radar.

Now, Elliot, let’s talk about CIT fee structure and how a plan sponsor’s type of relationship with its investment advisor may impact how it can offer CITs.

Elliot Saavedra: Sure. So, what we’re seeing in the market is a growing trend where plans have access to lower-cost CIT fund options, with fees even lower than more broadly available CITs, but there’s a catch: the CIT provider is requiring that the plan engage its investment advisor as an ERISA Section 3(38) discretionary investment manager in order to access the lower-cost option.

This is most commonly coming up in the context of target date funds (TDFs). For example, if a plan uses a 3(21) nondiscretionary investment advisor, the plan can engage that same advisor as a 3(38) discretionary investment manager for the target date funds only. The investment manager then has full discretion to select, monitor, and replace the target date funds, which allows the plan to use a lower-cost CIT version of that target date suite. But all of this means that fiduciaries must decide how they structure the relationships with their investment advisors.

David Kirchner: So, it’s essentially a bifurcated model?

Elliot Saavedra: In this example, yes. The plan can choose to maintain its 3(21) advisor for the non-target date fund core menu, where the committee remains the ultimate decision-maker. But for the target date funds, the 3(38) investment manager relationship gives the advisor full fiduciary responsibility for selecting, monitoring, and changing the target date funds.

David Kirchner: Got it. So, how do these fees compare and what are some considerations that plan sponsors and committees should think about?

Elliot Saavedra: In some cases, the fees for these lower-cost CITs can be half the fees charged for more broadly available CITs. But there is an important caveat when considering these arrangements. Most investment advisors charge a higher advisory fee for 3(38) investment management services, even in cases where they are only managing a portion of the plan’s investment menu.

Committees need to be very focused on the aggregate savings analysis, not just the lower-cost fees savings, particularly if the 3(38) investment management fees are being charged to the plan.

There are a few other considerations I would flag, including:

• First, the committee should confirm no conflicts exist between the investment advisor and the fund manager offering the advisor access to these lower-cost CITs.
• Second, the plan’s Investment Policy Statement will need to be updated to reflect the bifurcated arrangement.
• Third, fiduciary documentation and committee minutes should clearly reflect the analysis of total fee savings—taking into account the reduced fund expense, plus the increased 3(38) fees—so there’s a clear record of the deliberative process.
• And finally, the bifurcated arrangement will require an amendment to the investment advisor’s service agreement, which should be carefully reviewed to ensure the proper split of the fiduciary responsibilities.

David Kirchner: Clearly, there’s a lot to think about when determining if CITs are right for your plan, and if so, which ones. Let’s shift gears and talk about alternative investments in retirement plans. This has been one of the hottest topics in the DC space over the past year. Sharon, can you bring us up to speed?

Sharon Remmer: Of course. As many of our listeners will recall, in August 2025, President Trump signed an Executive Order which directed the DOL: (i) to clarify fiduciary duties when evaluating asset allocation funds containing alternative assets, (ii) to consider rescinding the Biden-era guidance on private equity in retirement plans, and (iii) to prioritize actions to curb ERISA litigation that has historically constrained fiduciary judgment.

David Kirchner: Right—and so, then the real headline for 2026 was the DOL’s rulemaking initiative in response to the Executive Order.

Sharon Remmer: Exactly. On March 30, 2026, the DOL issued a proposed regulation that creates a process-based safe harbor under which fiduciaries who “objectively, thoroughly, and analytically” consider six factors will benefit from a presumption of prudence for evaluating and selecting plan investments. Those six factors are: liquidity, valuation, investment characteristics, costs, plan and participant needs, and fiduciary expertise.

Critically, the safe harbor is asset-neutral—it applies to all asset classes, not just alternative investments. But it only applies to the duty of prudence; it doesn’t address the duty of loyalty or prohibited transaction issues. Now, since this was a proposed rule, it is not yet final and could change. The comment period, while recently somewhat controversial, closed on June 1, 2026, and a final rule could potentially be released by the end of this year.

Elliot Saavedra: I think it’s important to emphasize just how significant this safe harbor could be as a practical matter, since it provides a roadmap for fiduciaries that did not previously exist. And the fact that it is asset-neutral is really important—despite the focus of the Executive Order, it is not a specific rule just for alts. It applies to any type of plan investment, which means it’s useful guidance for fiduciary committees across the board whether they are considering alternative investments or not.

David Kirchner: So, Elliot, how are alternatives expected to show up in retirement plans?

Elliot Saavedra: Good question. So, let’s be clear—we do not expect alts to appear as stand-alone investment options in the plan’s core investment menu. Instead, they’re expected to show up as a piece, or a “sleeve,” of a larger diversified investment option. So, you might see a target date fund suite where the glide path incorporates a small allocation to alternative investments, or a managed account where the managed account provider’s asset allocation model includes alternative asset sleeves, potentially with a different investment lineup than the plan’s core menu.

Sharon Remmer: David, one place we’ve seen some discussion about alts are in PEPs, which you briefly referenced earlier. Remember that PEPs use an outsourced fiduciary model, because the pooled plan provider takes on the investment fiduciary responsibilities, rather than the employer. This affects the dynamics of alts in the PEP context, and we’ve even seen some PEPs being established to offer exposure to pooled vehicles that include alternative investments. We’ll have more to say about PEPs in a future podcast in this series.

David Kirchner: As the Trump Executive Order noted and we have discussed in past podcasts and alerts.³ litigation risk has been a significant hurdle preventing plan fiduciaries from getting comfortable with alts. On October 6^th, the Supreme Court will hear oral arguments in Anderson v. Intel, which directly addresses these concerns. Sharon, can you give our listeners a quick overview of Intel and why it’s so pertinent here?

Sharon Remmer: Sure. Anderson v. Intel is a case that was originally filed back in 2019. Plaintiffs—former Intel employees—alleged that the company’s 401(k) plan fiduciaries breached their duties by incorporating hedge fund and private equity investments into custom target date funds. The district court dismissed the claims, and the Ninth Circuit affirmed in May 2025, holding that the plaintiffs failed to allege a “meaningful benchmark” against which to compare the challenged investments. The U.S. Supreme Court agreed to hear the appeal, and the key issue for the Court to consider is whether the “meaningful benchmark” pleading standard sets too high a bar for ERISA fiduciary breach claims, and whether plaintiffs must identify a comparable investment to survive the motion-to-dismiss stage.

Elliot Saavedra: What I find interesting here is the DOL’s position. On July 10, 2026, the DOL filed an amicus brief supporting Intel, arguing that ERISA is a law of process, not results, and that plaintiffs should need to show poor performance relative to a meaningful benchmark to survive a motion to dismiss. That seems notable here.

Sharon Remmer: I agree. We’ll have to see how much weight the Court gives to the Department of Labor’s position in this post-Loper Bright world. That said, the meaningful benchmark standard has been adopted in varying forms by the Second, Seventh, Eighth, Ninth, and Tenth Circuits, while the Sixth Circuit rejected it in Johnson v. Parker-Hannifin Corp, so there’s a circuit split for the Supreme Court to resolve. However the Court rules, this case is sure to affect the ERISA litigation landscape.

David Kirchner: It will also be interesting to see what impact (if any) the Court’s interpretation of “meaningful benchmark” has with respect to the DOL’s investment selection proposal, since that phrase shows up multiple times in the safe harbor. Speaking of investments, let’s move on to ESG. This has been a moving target over the past several years. Sharon, where do things stand?

Sharon Remmer: Moving target is correct. At this moment, we are still technically operating under the Biden-era 2022 regulations. However, on June 30, 2026, the DOL submitted a proposed replacement rule to the White House’s Office of Information and Regulatory Affairs for review. That process can take up to 90 days, which means the proposed rule could be published for public comment imminently.

We expect the DOL’s re-proposal will likely restrict fiduciaries from using any ESG or diversity, equity, and inclusion factors as part of their investment evaluation and selection process, and it may revert to the “pecuniary-only” standard from the 2020 Trump-era rule, which required investment decisions to be based solely on financial considerations tied to risk-adjusted returns. We will find out soon.

David Kirchner: Okay. Well, let’s transition to the current litigation landscape. Elliot, the filing numbers for ERISA class action litigation on excessive fees have been eye-popping.

Elliot Saavedra: They really have. ERISA class action filings have surged. In Q1 2026, there were 68 ERISA class action filings. Compare that to 38 in Q1 2025 and just 26 in Q1 2024. That’s a dramatic upward trend. Excessive fee litigation remains the bread and butter of ERISA plaintiffs’ bar, but what’s notable is the rise of other forms of ERISA litigation.

David Kirchner: Let’s break down some of those categories.

Elliot Saavedra: Sure. On the forfeiture front, nearly 100 forfeiture lawsuits have been filed since September 2023, but new filings have actually slowed to just about half a dozen in Q1 2026. District courts have overwhelmingly ruled in favor of employers on motions to dismiss, and the slowdown in new filings may reflect plaintiffs waiting for appellate guidance—there are appeals pending in at least five circuits, including the Third, Ninth, and Eleventh. So, that’s one area where the trend has stabilized for now.

Sharon Remmer: Right, but it’s a different story on the target date fund performance side. At least 20 ERISA class action suits were filed in Q1 2026 alone targeting TDF performance, arguing that fiduciaries should have replaced underperforming fund suites with better-performing alternatives. We’re also seeing about 10% of recent filings challenge stable value fund returns, alleging fiduciaries could have secured better performance.

Elliot Saavedra: On the health and welfare side, we’re seeing continued increase in litigation around tobacco-use surcharges, with claims asserting programs violate the nondiscriminatory rules established for safe harbor wellness programs. While some cases have been dismissed by courts, others have led to large settlements, and so, employers overall are checking their tobacco surcharge programs to ensure compliance.

Another topic to keep in mind is Pharmacy Benefit Manager, or PBM, litigation, where plaintiffs have applied theories used in the 401(k) excessive fee context to claim a breach of fiduciary duty by failure to negotiate transparent and cost-effective contracts with their PBMs. While regulators have been busy with developing PBM fee transparency requirements, employers should ensure they are reviewing, evaluating, and negotiating contracts and agreements with PBMs to ensure transparency and cost efficiencies.

Finally, while relatively new to the ERISA litigation space, claims have been made against employers for failure to monitor and select insurers for voluntary benefit offerings, including accident, critical illness, hospital indemnity, and cancer insurance. While the root of the claims lies in whether these programs constitute ERISA plans, the results of this new wave of litigation have yet to be seen—employers should evaluate their voluntary benefit programs in the context of the asserted claims.

Sharon Remmer: And I’d be remiss not to mention the class certification numbers. ERISA plaintiffs achieved a 95% class certification success rate in 2025. That’s significantly higher than securities fraud, antitrust, or wage-and-hour cases. That high certification rate fuels settlement pressure and encourages additional filings. It’s a factor every fiduciary committee should keep in mind.

David Kirchner: Well, let’s close out with one item which is not fiduciary in nature, but is very much on the radar of employers and plan sponsors these days. Elliot, tell us about Trump Accounts.

Elliot Saavedra: Sure. Trump Accounts were established under the One Big Beautiful Bill Act in July 2025 and have gotten a lot of attention. They are tax-advantaged savings accounts, like IRAs, designed to benefit children and young adults. Employers can contribute up to $2,500 annually to the Trump Account of an employee’s dependent, and may also set up a cafeteria plan-type arrangement for employees to make contributions out of their salary. Nearly six million accounts have already been set up, and some organizations have announced their intent to provide employer contributions to eligible employees’ dependents. The federal government has a pilot program where the Treasury will deposit a $1,000 seed contribution for eligible children born from January 1, 2025, through December 31, 2028.

David Kirchner: What about ERISA considerations?

Sharon Remmer: The DOL issued guidance in June that said employer-facilitated Trump Account programs will generally not constitute employee pension benefit plans within the meaning of ERISA, subject to certain conditions. In August, Treasury issued proposed rules regarding the non-discrimination testing requirements that apply to such accounts as well as eligible investments for these accounts. Under the proposed rules, the accounts cannot discriminate in favor of highly compensated employees, although reasonable business criteria—like geographical location, job category, or type of compensation—are permitted, and there is a proposed eligibility safe harbor based on a 90% ratio percentage test. Still, there are a number of outstanding questions related to tax, reporting, and similar technical aspects of these accounts, and, in fact, the U.S. Treasury just issued proposed regulations regarding auto enrollment. So, stay tuned for more guidance. 

David Kirchner: Thank you both. And keep an eye out for additional podcasts in this series, where we will dive more into ESG, PEPs, and the ongoing regulatory landscape. We’ll have much more to say on those topics in the coming months. You can also subscribe and listen to this series wherever you regularly listen to podcasts, including Apple, Spotify. Thanks again for listening and take care.