The U.S. Department of Labor is sharpening its scrutiny of employee benefit plans at a time when EBSA says it is concentrating resources on issues with the greatest impact on participants’ savings, health coverage and claims. In a recent field assistance bulletin, the agency said it wants to avoid cases that simply second-guess prudent process, while devoting more attention to conduct that produces direct harm, bad-faith administration or clear conflicts of interest.

That framework helps explain why cybersecurity has become a formal enforcement priority. EBSA has warned for years about the risks cyberattacks pose to benefit plans and their service providers, and investigators are now expected to examine whether fiduciaries have put in place written safeguards, incident-detection procedures and other protections for sensitive data. Where breaches lead to financial loss, the department has indicated it will look closely at whether participants are made whole.

Retirement plan investment oversight remains another major target. Under the department’s Retirement Asset Management project, EBSA is focusing on how fiduciaries select, monitor and retain advisers and managers, with particular attention to conflicts, excessive charges, hidden compensation and imprudent investment decisions. The agency is also paying close attention to how plan committees and sponsors vet third parties, and to whether disclosures and due diligence are robust enough to surface improper arrangements.

Within that broader investment review, underfunded defined benefit plans are drawing fresh attention. The department has said participants in such plans face a heightened risk of reduced or lost benefits, and its reviews are reportedly aimed at risky strategies and portfolio-wide vulnerabilities rather than isolated mistakes. A separate 404(c) Enforcement Project is also examining whether sponsors follow a sound process when choosing and monitoring participant-directed investment menus, especially in midsize plans that may have fewer internal resources.

The department continues to treat missing benefits and contribution failures as core enforcement issues. Its Terminated Vested Participants project expands on long-running missing participant reviews by testing whether plans keep accurate census records, search for former workers, send required notices and deal promptly with uncashed checks. At the same time, EBSA regularly audits whether employee deferrals and loan repayments are deposited on time, since those amounts are treated as plan assets once they can reasonably be separated from the employer’s general funds.

Health plan enforcement has also expanded sharply in recent years. According to EBSA, the agency’s work is now heavily focused on mental health parity compliance, No Surprises Act violations and emergency-care protections, alongside the continuing review of claims handling and required disclosures. The Consolidated Appropriations Act of 2021 gave the department additional tools and funding in this area, reinforcing an enforcement strategy that reaches well beyond retirement plans.

Even where issues are not branded as official priorities, they are still likely to draw attention in an investigation. EBSA routinely checks whether plans maintain required documents, issue mandated disclosures and hold the bond required under ERISA. It also examines claims and appeals procedures to ensure plans follow both their own terms and the department’s timing and notice rules. In more serious cases, document failures can become part of a broader fiduciary breach theory rather than a simple compliance correction.

One notable change is the department’s decision to drop employee stock ownership plan reviews from its official priority list for 2026, despite decades of focus on valuation, voting rights and stock-sale protections. Whether that signals a real retreat or only a reduced emphasis remains unclear. What is clear is that EBSA still wants to prioritise the worst conduct, especially cases involving self-enrichment, misappropriation or deliberate harm. For plan sponsors and fiduciaries, the practical lesson is straightforward: the strongest defence is a compliance programme that identifies and fixes these problem areas before investigators arrive.

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Source: Noah Wire Services