The term fee

Signing up with a third-party administrator (TPA) is like getting married, you come in with the best of intentions and you never think that things won’t work out.

In 24 years of being an ERISA attorney, I have never met a plan sponsor who understood what the termination or de-conversion fees were when they signed their contract. That’s troubling because when things go south, there might be the sticker shock when a plan sponsor realizes what it’s going to take to break free from a TPA that they want to get rid of.

Deconverting a plan takes a lot from the TPA’s side and any termination costs are a proactive way for TPAs to hold on to their clients, especially those who might fire their TPA the way that George Steinbrenner fired managers pre-Joe Torre.

It’s important for a plan sponsor to understand upfront, what it will cost them to break free when things go south. By the way, zero chance that a TPA will negotiate a termination fee the way you can negotiate a pre-nuptial.

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The thing about Lisa Gomez

When I left a semi-prestigious law firm about 12 years ago, I swore that I was going to start my own law firm. I was 38 and knew my time as an associate attorney making a good salary would be soon over when partners at law firms would end up being younger than me. In a mid-size or large-size law firm setting, the associates are younger and do the bulk of the work. I was getting too old for the grind. Plus if you work for law firm partners, half of them aren’t nice people and aren’t very good at what they do.

When I left the third party administrator (TPA) I was at and before I joined that semi-prestigious Long Island law firm, I spent almost a year at a union side law firm called Cohen, Weiss & Simon. I don’t talk much about it. The pay was decent, the hours weren’t very good when the partner I worked for wanted me to stay and work with her, and she liked to work until 2 am. As someone who liked selling and didn’t like to mix politics with the job, it wasn’t my thing. One highlight was meeting Lisa Gomez, who was a partner there. Unlike most partners, she wasn’t arrogant and quite knowledgeable. When I heard she was nominated for the Employee Benefits Security Administration head, I was pleasantly surprised. Nice guys (or gals) don’t always finish last. When she finally does get approved, she will do a good job.

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IRS launches pre-Audit pilot program

Our tax system is based on voluntary compliance and retirement plan audits conducted by the Internal Revenue Service are one tool to ensure that.

The IRS has just announced a pilot program where they will send letters to plan sponsors letting them know that their retirement plan has been selected for examination.

Under this pilot program, plan sponsors who receive the pre-examination notice will have a 90-day window to review their retirement plan’s documents and operations to see if they meet tax law requirements and notify the IRS. Employers who don’t respond within 90 days will be contacted by the IRS to schedule an examination.

This will allow a plan sponsors that finds a compliance error to correct the error using the correction principles in the IRS’s Employee Plans Compliance Resolutions System (“EPCRS”). The IRS announcement states that the IRS will review the documentation of plan sponsors who have found and fixed errors to see if they agree with the correction.

This is a huge deal since EPCRS wasn’t available for plan sponsors that were under audit. This is a win-win for a plan sponsor to find errors before an IRS agent does.

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One Digital buys another practice

OneDigital Investment Advisors has announced another purchase.

OneDigital has acquired TimeScale Financial, a Danvers, MA-based registered investment adviser.  TimeScale currently supports 95 institutional and 950 individual clients, and currently manages approximately $3 billion in assets across wealth management and retirement plan advising.

After this deal, One Digital Investment Advisors have approximately $106.7 billion in total assets under advisement, representing over 1 million participants and 41,000 individual accounts.

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HUB buys an Indiana firm

HUB International Limited (Hub) said that it has acquired the assets of CSi Advisory Services, LLC.

Headquartered in Indianapolis, IN, CSi Advisory Services, with $1.1 billion assets under management, is a retirement plan consulting firm focusing on participant outcomes, investment outcomes, and financial coaching and wealth management.

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Gomez nomination fails, for now

The Senate rejected President Joe Biden’s nominee for an assistant secretary post for the Department of Labor’s Employee Benefits Security Administration, with Vice President Kamala Harris unable to cast a tie-breaking vote.

The Senate voted 51-49 to defeat Lisa Gomez’s nomination to become the head of the employee Benefits Security Administration.

Senate Majority Leader Charles Schumer (D-N.Y.) changed his vote to “no” with Harris’s absence and filed a motion to allow him to bring up the nomination for another vote in the future. Republicans had voted against Gomez for the post after GOP members expressed concerns about the agency’s retirement investing proposals.

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The Mid-2022 401(k) Plan Sponsor Update

My latest article for can be found here.

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ForUsAll sues DOL over crypto guidance

With Bitcoin more than 50% off its highs (boy, you should see my Coinbase account), it’s surprising all the takes on offering crypto investments in 401(k) plans.

ForUsAll, a 401(k) retirement provider, filed suit against the Department of Labor (DOL) and Martin Walsh as Labor secretary in U.S. District Court in Washington, D.C. The company is seeking the DOL to withdraw a compliance assistance release issued in March on crypto investments in retirement plans, claiming the decision was arbitrary and capricious.

The DOL release warned that the department’s Employee Benefits Security Administration is expected to “conduct an investigative program” aimed at 401(k) plans that contain cryptocurrency.

ForUsAll claims that about 150 companies have signed up for 401(k) plans that include crypto, and ForUsAll intended to begin rolling out 401(k) plans that include crypto this summer.

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Inflation will increase retirement plan limits

It’s not October yet when the Internal Revenue Service will announce its retirement plan limits for 2023, however, expects some major increases.

With high inflation, I can certainly see the 401(k) salary deferral limit increasing from $20,500 to $23,000. The compensation limit, as well as the annual addition limit should increase as well.

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Advisors getting respect

Rodney Dangerfield was one of my favorite comedians and his shtick was that he got no respect. Apparently, advisors working on 401(k) plans are getting respect these days from plan sponsors, based on a new survey from Morgan Stanley.

87% percent of plan sponsors reported that offering access to a plan advisor with a retirement plan delivers better retirement plan outcomes.

About 45% of plan sponsors with a plan advisor noted that 75–100% of eligible employees are enrolled in their company’s 401(k) versus only 33% of plan sponsors without a plan advisor.

In addition, 95% of plan sponsor who responded said the fees associated with a plan advisor is well worth the cost given the investment management (28%), fiduciary guidelines (67%), and compliance (75%) considerations.

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