Broadcast Retirement Network’s Jeffrey Snyder discusses the U.S. Department of Labor Enforcement Priorities in 2026 for Employee Benefit Plans with Kutak Rock’s John Schembari.
Jeffrey Snyder, Broadcast Retirement Network
Well, joining me now is John Shembhari of Kutak Rock. John, great to see you. Thanks for joining us this evening.
You bet, Jeff, nice to be here. Always great to see you. I hope the weather’s warming up there in Omaha, Nebraska.
It is here on the East Coast, so hopefully you’re getting some of that as well. John, I wanted to talk to you, and I think our audience wants to hear about the Department of Labor. Just released their enforcement priorities for 2026.
What can you tell us? What are they gonna be focused on this year?
John Schembari, Kutak Rock
Yeah, it’s kind of a big change. In fact, maybe the biggest change they’ve had in a number of years. We got a new head of the Department of Labor, end of 25, Daniel Aronowitz.
He came from the private sector. In fact, he ran a fiduciary liability insurance company. So if anybody was more familiar with fiduciary litigation and that side of the business, Daniel is the guy.
So when he came on board, he emphasized that they were gonna try to cut down on the amount of class action litigation that was affecting plan sponsors all across the country, which is great news. But in exchange for that, he needs to increase the amount of Department of Labor enforcement. So he’s going to focus on a number of things.
He’s gonna focus on cybersecurity. Cybersecurity has been an area of focus from the Department of Labor since 2021. In 21, they issued three pieces of guidance for plan sponsors to follow regarding cybersecurity.
In 2024, they came out and extended that guidance, if you will, to health and welfare fiduciaries. So Daniel said that they’re gonna come out and really focus on cybersecurity. They’re gonna focus on service providers and our plan sponsors and fiduciaries monitoring those service providers, basic fiduciary hygiene.
And then they’re gonna look at plan distributions. Are plans operationally distributing the money that people are entitled to when they’re entitled to it? How are they handling missing participants, checks that bounce and come back to the plan?
How are they handling things like that? Notably, Jeff, something that had been on the priority list for the last 20 years was ESOPs. So the last 20 years, the Department of Labor has really been at war against ESOP companies.
And notably, that is removed from the 2026 enforcement guide. And that’s consistent with the testimony that Daniel gave to the Senate hearing to get himself confirmed, where he said he’s gonna end the Department of Labor’s war on ESOP. So that’s good news.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, so let’s, I mean, all the things that you mentioned in terms of priority, as someone who’s been in the business like you for a long time, those sound pretty good, logical steps in terms of enforcement. What’s the process? So assuming that Secretary Aronowitz stays in the position for the full four years, what’s the process for instituting these enforcement priorities?
Do they issue basic regulations to get some comment on? Can you take us through that process a little bit?
John Schembari, Kutak Rock
Yeah, it’s probably not gonna do anything for existing ongoing investigations. Those are gonna continue, they’re gonna run its course. But what it’s gonna do is it’s gonna focus the department on future investigations.
A practice that the prior Department of Labor did was they would work hand in hand with plaintiff’s lawyers to do what they call joint interest enforcement. So they would basically, Department of Labor would deputize some private plaintiff’s law firms to help them investigate businesses and employee benefit plans. That’s off the table.
He’s not gonna do that anymore. He’s also said that while they’re gonna increase their enforcement activity, enforcement and audits will be much more concise and shorter in duration. So I don’t expect to see audits that last multiple years, which was common in the past.
I expect to see audits that may take three, four, five months at tops. And they’re gonna be precise audits. They’re gonna be audits focused on cybersecurity or fiduciary governance.
On the health and welfare side, we’re gonna see audits, we’re already seeing some on mental health parity compliance, surprise billing, all of that. So the Department of Labor is gonna focus not just on retirement, but also health and welfare plans.
Jeffrey Snyder, Broadcast Retirement Network
And if I’m a plan sponsor, so you sit around the fiduciary table, what should I know? I mean, what should I be thinking about? Does my approach change to how I manage my plan?
Because you still gotta have meetings, do everything on behalf of the participant and the beneficiaries in the plan. And you have to take notes and keep track of all your decisions. But do I need to think about things differently than I did in 2025?
John Schembari, Kutak Rock
No. So if you’re an employer that’s been taking your fiduciary responsibilities pretty seriously in the past, I don’t think you should be nervous about this. In fact, I think you should encourage it.
You know, we’re gonna get rid of a lot of this needless litigation, which is great news, in exchange for the DOL, maybe doing a few more visits to confirm that you’re following your prudent process. If you’re doing that, you have nothing to worry about. But what you can do to prepare for a Department of Labor audit, it’s better to do it in advance than after they come knocking on the door.
Make sure your documentation is in order. They’re gonna ask to see your contracts with your vendors. They’re gonna wanna see your documentation of your fiduciary meetings, your plan documents.
Have that stuff in order now so that when the Department of Labor comes in, you can impress them with how prepared you are how timely you are, how organized you are. And oftentimes, just being prepared, just being timely, just being responsive, that goes a huge way towards resolving a Department of Labor audit.
Jeffrey Snyder, Broadcast Retirement Network
And I guess my last question for people in retirement plans. So people like us, employees, or what we call in the industry as participants, are there any lessons here? I mean, we won’t be directly involved as participants.
We wouldn’t be directly involved in an audit or cybersecurity. But I guess there’s a bit of a reassurance there that these protocols, these priorities have been established.
John Schembari, Kutak Rock
I think that’s exactly right, Jeff. I think participants can take some comfort. And Daniel did say in his testimony to the Senate that that is a priority, is to provide protections for the American workforce.
That is his number one priority. So he works for participants in retirement plans more than he works for the fiduciaries that oversee them. So he’s gonna make sure those fiduciaries are doing their job, which then preserves our retirement plan benefits.
Jeffrey Snyder, Broadcast Retirement Network
And John, I guess my last last question is, I’ll just offer a comment. You can respond if you want to. The retirement ecosystem continues to expand.
We’ve got new providers all the time. We’ve got new services. It’s a pretty complex world.
I don’t envy the regulators. Just like I don’t envy people in our position to have to learn all those things. It’s a lot to keep in mind.
They’re regulating what is a growing, expanding ecosystem.
John Schembari, Kutak Rock
It is. It’s absolutely growing. It’s expanding.
It’s getting more and more complicated. I specialize in this area. So it’s my job.
I don’t envy the HR professionals out there who have to manage a million different things. And this is just one part of their responsibilities.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it is so tough. Hats off to them. Hats off to people like you for guiding clients.
John Shambari, we’re gonna have to leave it there. Thanks for joining us. And look, we look forward to having you back on the program again very soon, sir.
Sounds great, Jeff. Take care.