The Problem With Free Or Low Cost Plan Documents

As an ERISA attorney who drafts plan documents at a flat fee, my biggest competitors are not other ERISA attorneys, but third party administration (TPA) firms.

Plan documents are just another service that TPAs can provide and they can provide it either for free (as most of the bundled providers do) or at a cost that is highly competitive against most law firms. Some TPA firms have a legal department that drafts these plans, others have paralegals or plan administrators handle that duty. I know a thing or two about this topic, having done that as the Director of ERISA Legal Service for a certain TPA for almost 5 years.

As you know, retirement plans are legal entities and plan documents are legal documents that have legal consequences to the plan sponsor and the plan trustees. Would you want these plan documents to be drafted by someone who wasn’t an attorney? Even if your TPA has a legal department, there is no attorney-client relationship between the TPA’s attorney and the plan sponsor. So what? With an attorney-client relationship, the plan sponsor’s needs come first. With a TPA attorney, the TPA’s needs come first because a TPA attorney doesn’t have that duty of care. The independent ERISA attorney is essentially a check on the TPA, to ensuring proper administration. A TPA attorney can’t do that because they are the TPA.

I have a client who has had their defined benefit plan butchered by two consecutive actuarial firms. An independent ERISA attorney could have alleviated some of the problems before they happened, namely paying someone a lump sum even though the law prohibited that person getting a lump sum.

Attorneys don’t have a sterling reputation when it comes to reasonable fees, especially ERISA attorneys. With a low overhead and a flat fee, I am trying my best to make needed ERISA legal work affordable to plan sponsors.

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4 Responses to The Problem With Free Or Low Cost Plan Documents

  1. Herbie Glass says:


    I am sure that you are an intelligent and diligent attorney who truly works hard to do a diligent job for your clients when you write their qualified plan document. However, my guess is, and I may be wrong, that the reason you are able to write a good plan document is more because you have had experience writing documents for a TPA fim, and less because you are an attorney.

    Having been a pension consultant and the owner of a TPA firm for over 35 years, we have been responsible for writting hundreds of plan documents. Not only do we write plan documents directly for our clients, but also we ghost write plan documents for some of the best, smartest, and largest law firms in our city.

    Futhermore, in my city, many of the attorneys that used to specialize in the pension area were forced to abandon the area because the brokers and insurance agents gave away plan prototype documents to their clients thereby causing many clients to stop using atttorneys for their document services. Consequently, in our city, most attorneys no longer write a plan documents. These attorneys, if they want to make sure their clients are properly taken care of, either refer their clients to competent TPAs for their plan design and documents, or they have the TPA ghost the plan documents then present such plan documents to their client as their own.

    On the other hand, some attorneys still do write their own documents. But, I want to share with you that some of the remaining “so called” pension attorneys recently drafted the amended and restated EGTRRA plan documents for our mutual clients. Having reviewed their work, I was shocked by their hubris. Their lack of attention to the details of the plan document they were amending, and the fact that, without even asking the plan’s TPA, they just guessed at the administrative options that the TPA had followed in operation even though such operational details were required to be accurately reflected in the clients’ plan documents.

    So, as you may guess from the above decription of my recent experiences in the field, my finding have been totally contrary to the advice you have given in you newsletter. My own conclusion of the subject is not totally contrary to yours, but it is different. In summary, I would say: (1) One should almost never rely on a brokerage firm for a plan document. They even have trouble filling in a bunch of simple blanks and frequently produce documents that never get dated or signed properly. (2) If one is going to have an attorney draft a plan document, make sure that the TPA or firm doing the plan administration reviews the attorneys document before it is finalized. (3) Although an inexpensive document usually means a poorly designed plan and/or an inaccurate document, an expensive document does not guarantee the opposite. (4) However, if a TPA drafts a plan document and charges high fees, the chances are greater that the clients plan design and document are very good when compared to those TPAs that get most of their business referred to them by financial advisers who pressure those TPAs to charge low fees.

    Thanks for allowing me to express myself.

    Herbie Glass, MBA, CPC, CFP, ChFC, CFG, CLU, LIC

    • admin says:


      Thanks for the comments, I think they were fantastic because it brought up a lot of good points that I have touched in the past and I would like to touch again in the future. Yes, my experience working for TPAs was immeasurable and has a profound positive effect on my career as I was able to learn how plans were administered instead of just reading books on how they should be administered.
      I think your discussion about ERISA attorneys is dead on as well. There are quite a few good ones and quite a few that are not so good. I use a volume submitter plan because I think it’s a good value for 99.999% of my clients and using a custom made document for more money isn’t a value. I think costs is really important for a plan sponsor, so if an ERISA attorney is charging $7,000 for a custom plan document and the plan sponsor can get a volume submitter plan from a TPA for $2,000, then I would recommend going to a TPA.

  2. Frank Novio says:

    It seems like you are both in agreement, that the pedigree of the professional drafting the document is less an issue than the competency of the person, particularly when detailing plan operation. I find that there are quite a few multi-service providers that are adept at providing pre-approved documents that address plan operation well and at a value. Often, the documents are purchased from a quality operation, with a knowledgeable battery of support staff, willing to attend to interpretation issues. Often, the documents are, then, tailored for more structured offerings. There are bundled providers out there, described aptly by Ary. Just as voluminous are boutique shops offering individually drafted documents at a significant cost, that have some detailed description of operation that doesn’t conform with the plan operation or, more problematic, with the regulations. Documents are only as good as the individuals conducting the drafting. Reputation is everything.

  3. Pingback: The Need For Value From ERISA Attorneys | The Rosenbaum Law Firm P.C. Blog

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