Fixing Common Mistakes

Administrative errors occur even at the most sophisticated of organizations, but how plan sponsors bounce back from mistakes is what matters most, according to speakers at the 2026 PLANSPONSOR National Conference in Nashville, Tennessee.

During the “Fixing Common Mistakes” session on June 2, industry experts addressed ways for sponsors to respond to some of the most common plan errors, including missed deferral opportunities and delayed funding.

“If you’ve had [an error] or you’re facing one [now], it does not mean you’re a bad plan,” said Jeanne Sutton, a managing director for Strategic Retirement Partners. “It means you’re a good plan if you caught it and you’re fixing it.”

Documentation and Prevention

Mistakes can happen regardless of improvements in technology—and the sponsor bears the ultimate liability in the end, Sutton explained. But effective documentation can keep sponsors away from much trouble.

Sutton recommended plan fiduciaries write “narratives” of their mistakes, including the details of what happened and what they are doing to correct it. The narrative should be written for two audiences, she said: for auditors, so they can understand what happened without having to ask a single follow-up question, and for future plan fiduciaries, so they can understand how to prevent the mistake from occurring on their watch.

Suttons said she makes two preventative recommendations to every client: (1) once annually, one employee should verify that payroll codes match the definition of compensation in the plan document; and (2) every quarter, a human resources employee should conduct random, side-by-side comparisons of deferral codes and payroll codes.

“If you do [the random checks] every quarter, you’ll almost always fall within one of the shorter correction windows,” Sutton said. “You’ll catch [the mistake] and be able to correct it quicker and for less [of an] expense.”

M&A

When plan sponsors’ companies engage in mergers and acquisitions, mistakes in one plan can carry over into another, warned Rosie Zaklad, a principal in the Groom Law Group. When one company with a plan acquires another company with a plan, the acquiring company must terminate the acquired plan prior to closing the deal, maintain it or merge it into the existing plan. Any errors or qualification issues in the acquired plan become the acquiring party’s responsibility.

Even a terminated plan is still subject to Department of Labor investigation, Sutton cautioned. She recommended sponsors diligently document and correct errors, regardless of the future of the plan or the potential for the company to be acquired.

Forfeiture Mistakes

Claims that sponsors violated their fiduciary duties in their use of forfeited plan funds have proliferated over the past several years, making forfeiture mistakes a hot topic in the industry and during last Tuesday’s session. According to Encore Fiduciary, 48 forfeiture complaints were filed in 2025, and 29 were filed in 2024.  

One of the most common forfeiture mistakes Sutton said she has seen is when a plan lets forfeited funds vest for too long. Sponsors are supposed to use the forfeited funds regularly and, in general, within 12 months of the end of the plan year in which they are incurred. In turn, she has begun adding forfeiture policies into her clients’ plan documents.

“The problem is: Many plan documents state that it’s up to you to decide how to use forfeited dollars,” Sutton said. “That’s what leads to the gray area.”

Despite the gray area, however, Sutton said she does not find there is “much real meat” to the litigation. Most forfeiture claims are being summarily dismissed.

While the DOL has recently advocated against excessive forfeiture litigation during speeches and has weighed in on the side of employers during oral arguments in some cases, Zaklad cautioned that employers are not off the hook from defending against forfeiture claims. Plaintiffs’ lawyers have found it relatively easy to add a forfeiture claim to an existing fiduciary breach claim, she explained, keeping forfeiture claims in plan sponsors’ focus.

“Maybe the tide is turning now that the DOL has gotten involved,” Zaklad said. “But [the claims are] still out there.”