Perhaps it is a result of the terrible economy for the last few years or perhaps more supervision by the Department of Labor, but I have seen a large uptick in owners of businesses stealing plan assets from retirement plans. I will never understand why people think they can get away with such a crime. With plan participants, third-party recordkeeping firms, 5500 filings, and plan custodians watching, eventually the culprits get caught.

Stealing plan assets leaves a trail and trust account statements don’t lie.

A few years back, I met with a potential client who claimed he had some defined benefit plan issues. He claimed he was being contacted by the Department of Labor (DOL) about the defined benefit plan that he sponsored. Apparently, there was no money left because he used the money for his own personal use. The DOL was contacting him because, for the last few years, there were no 5500 filings, Schedule Bs, and PBGC premiums to be paid. I had him consult with our criminal attorney and our viewpoint that since the DOL was on to him, the jig was up and he should just come clean. It was our opinion that they would eventually get to him.

He took our free advice and decided not to retain us. A few years later I read the newspaper and saw that he was arrested and indicted for crimes resulting from embezzling his defined benefit plan, Just a dumb crime if you ask me.

You know I’m not in favor of self-directed brokerage accounts (SDBAs), but they are still a thing.

Average account balances among plan participants with SDBAs with Charles Schwab increased 6.6% to $298,543 during the first quarter of 2023 compared to the 4th quarter of 2022. That’s still down by 10.08% compared to $332,017 a year ago for

Advised accounts held higher average account balances compared to non-advised accounts, $478,263 vs. $254,874. Gen X had the most advised accounts (51%), followed by Boomers (29%) and Millennials (17%).

As I always say, if you’re a retirement plan sponsor, you can be sued over anything, regardless of whether you are at fault or not.

An American Airlines pilot is suing his employer in Texas Northern Federal District Court, claiming that the company’s 401(k) planpicks investments that pursue “leftist political agendas.”

The class action lawsuit was filed by Bryan P. Spence individually and as a representative of a class action. The lawsuit alleges that over the past 6 years, the plan has underperformed from the airline choosing to invest in and recommend funds that meet ESG goals, causing him pecuniary harm.

American Airlines’ 401(k) includes approximately 100,000 participants, with around $26 billion assets.

Spence claims American Airlines violated its fiduciary responsibility under the Employee Retirement Income Security Act (ERISA). The lawsuit states examples of ESG policy, including sustainability efforts, LGBTQ+ interests and racial and gender diversity, as well as executive pay and diversity in leadership.

It should be interesting how the case pans out, but I lean towards a dismissal.

My latest article for JDSupra.com can be found here.

My latest article for JDSupra.com can be found here.

To pay for the tax savings implemented by SECURE 2.0, there was a huge tax revenue earner. Beginning in 2024, SECURE 2.0 significantly changes the rules for catch-up contributions. The law will require plans that permit catch-up contributions to accept catch-up contributions from participants who are Highly Compensated Employees (earned more than $145,000 in the prior year) only on a Roth basis.

Without guidance on how to deal with this, there are a lot of unanswered questions out there. Can plan sponsors eliminate catch-up contributions, rather than deal with the inevitable headaches? Could they require all employees to make catch up on a Roth basis? Plus, you know, there will be errors with highly compensated employees deferring catchup pre-tax. With six months to go before implementation, guidance would be nice.

If I have to say one sad thing about my experiences is that I try to get along with people and not fight, yet I get drawn into battles. As I get older, not as much. But sometimes you get drawn in. If you can avoid a conflict, do it, as long as it’s not to your detriment.

I recently had a situation that could have led to a huge battle and I realized that avoiding the conflict by making an agreement was the best way to go, to save time and to save an opportunity that had rewarded me substantially over the last few years.

Not every conflict needs a word war, you need to pick and choose your battles. Some battles are necessary, most are not. Battles can cost money and relationships. I remember my time as an editor at the Stony Brook Statesman. It was a one-year stint and it felt like 5 years because of the time spent and the needless battles, arguing over nothing, in the scheme of things. Communicate, tell people what you want and need. Don’t be passive-aggressive, tell them what you’re thinking.

When we had our inaugural Retirement Roundtable during That 401(k) National Virtual Conference last January, I would see some of the chat in the Zoom room among attendees. Some were annoyed at some of the SECURE 2.0 requirements that new plans have to offer automatic enrollment in 2025, as well as states forcing employers to offer their own plans or join the state’s IRA program.

I’m not the biggest supporter of government involvement. Ronald Reagan said it best when he said: “The top 9 most terrifying words in the English Language are: I’m from the government, and I’m here to help.” The way I see it, is that getting more employees deferring and more employees getting retirement plan coverage is a good thing. That means more assets and more plans, and that’s a good thing for anyone who makes shekels in the retirement plan business.

The reason you have contracts is really to detail the deal that you have. While people think you need to have all contracts in writing, you don’t, but you have to protect yourself.

Years ago, I had a big client, in terms of billable work. This southern third-party administrator (TPA) needed work done quickly and I didn’t waste time and print out a retainer agreement. Needless to say, when the TPA didn’t want to pay their $40,000 tab, they changed their name and pretended to be another company. They then claimed there were no retainer agreements and so they didn’t owe me anything. I showed the work and a judge agreed with me. The problem is that a contract protects you and outlines the terms and conditions you want. If you provided multiple services such as administration, advisory, or pooled plan provider with affiliated entities, make sure the process is correctly papered. You don’t need more headaches, you need less

While there has been a push to allow 401(k) plan sponsors to offer retirement income solutions for participants, most plan sponsors aren’t interested in offering it.

PGIM conducted a study that found that while seven out of 10 plan sponsors have taken steps regarding retirement income, only 15% are currently evaluating products or implementing a solution. Also, 27% of these plan sponsors said they are not currently interested in offering a retirement income solution.

The study showed that the most common retirement income solutions plan sponsors are considering are annuities. However, only 14% of plan sponsors agreed there is significant participant interest in adding in-plan annuities.