The Rosenbaum Law Firm P.C. Blog

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

My latest article can be found here.

I always say one of the beauties of retirement plans is not one is alike. They are like snowflakes because every plan sponsor has a different retirement plan need based on the size of their business, profits, and demographics of their employees. So I’ve never held the belief that retirement plans come off the assembly lines in the way some retirement plan providers especially third-party administrators (TPA) treat them.

While not every plan is the same, every poorly run retirement plan has the same common thread. It’s not high fees, it’s not revenue sharing, and it’s not using a bad TPA. The common thread is a retirement plan sponsor and the decision makers of the Plan not exercising their Fiduciary duty in a prudent manner and having plan providers that are not supporting them.

So the $1 billion 401(k) plan that used retail share classes of mutual funds when cheaper institutional share classes of the same plan were available and the $3 million defined benefit plan that failed to cover the employees it needed to, suffer the same problem.

What makes a properly run retirement plan is a plan sponsor dedicated to their role as a plan fiduciary and having the right team of retirement plan providers to assist them and help them navigate the treacherous waters of sponsoring a retirement plan.

HUB International announced that it has acquired the insurance brokerage and investment advisory businesses of Quintes Financial Services, LLC and Quintes Administrative and Insurance Services, Inc.

Located in Northern California, Quintes provides retirement planning and wealth management services. Quintes designs, implements and manages a wide range of qualified retirement plans including 401(k), 403(b) and 457(b) plans, and defined benefit and cash balance plans.

As it appears we are in a recession and a bear market, don’t be surprised if there is an increase in hardship requests.

Hardship requests need to be substantiated by plan participants. Have them verify the need and document it. Make sure the hardship requests are in excess of the need (participants can gross up the request for the taxes due). Every distribution should be documented and consistent with the terms of the plan document.

I always joke that local news stations should simply recycle some stories during every major snowstorm. The stories where stores are emptied of food and shovels are just stating the obvious of a snow storm, so no need to redo those stories.

So you will certainly read articles about how employers are cutting back on contributions. Why? We are in a recession and employers are going to want to step back and tighten their belts. When they tighten their belts, one of the first things to go is employer contributions. Whether it’s a match or profit sharing, contributions will be cut across the board. Not everyone will cut their employer contributions, but don’t be surprised that many will.

More than a year after her nomination, the Senate confirmed Lisa Gomez as assistant secretary of labor for the Employee Benefits Security Administration in a 49-36 vote.

During a vote in June for the nominations, the vote failed 49-51, with all Republicans and Senate Majority Leader Chuck Schumer, D-N.Y., voting no. Mr. Schumer voted no for procedural reasons and immediately filed a motion to reconsider the nomination. At that time, Vice President Kamala Harris was attending an international summit in Los Angeles and couldn’t break the tie.

One of the business philosophies I learned while working for a third party administrator is that it’s a lot easier to lose a client than to gain one. I know firsthand, seeing bad service that gets plan sponsors to fire you and going on sales meetings and how slow the sales process can be.

Building a retirement plan provider “empire” doesn’t happen overnight. You might have started that business at a small desk in an office that you might have rented or been able to procure from a family member or business affiliate. It takes a lot of work to slowly build a strong provider practice just like it’s hard to build a new 401(k) plan’s assets into something a provider would look at.

While it’s great to admire your accomplishments in building your practice, you should ever lose sight that it’s far easier to lose your stature in the retirement plan business than it was to gain it. You should never strive away from the reason why you got into the business in the first place, providing good retirement plan services to plan sponsors at a reasonable fee. You should never get bogged down in the pettiness that gets plan sponsors so aggravated that they fire you.

You should never stray away from that important philosophy that the client is right as long as the Internal Revenue Code and ERISA.

So my son loves to go to baseball card shows and when I think of my younger days when my father wouldn’t take me, let’s just say I’m a softie. When there was a show at the Westchester County Center a few years back where Keith Hernandez and Stephane Matteau, were signing, we went.

There wasn’t much of a line where Stephane Matteau was and I wanted him to sign my replica mini-Stanley Cup which several players from the 1994 New York Rangers already signed. Matteau is remembered for scoring the overtime goal in the conference finals against the New Jersey Devils and he’s made nice career years later, autographing pictures of the moment he got the puck by Martin Brodeur.

Jason has no idea who Matteau is and I told him that if it wasn’t for his goal, the Rangers might not have made the Finals against the Canucks. Rather than lauding his own accomplishments, Matteau told us that if he didn’t score, someone else on the Rangers would have. I was just staggered by his humbleness, selflessness, and belief in his teammates. That’s not a hockey lesson, that’s a life lesson.

As retirement plan providers, we do a lot for our clients. I’ve bailed out countless clients with their retirement plan issues. It’s not time to brag about what I’ve done because that’s what I’m paid for. Avoiding big penalties from the Internal Revenue Service and getting a plan in order, that’s why people pay me. I try to be humble and downplay what I’ve done for clients because this is what I do for a living. Sometimes people take advantage of your humbleness, to push their agenda. That might be the case, but most people respect providers who are just doing their job more than the provider who is tooting their own on stuff they did, they were supposed to do.

Despite the volatile stock market, retirement saving continued to be a strong focus for defined contribution plan participants through the first half of 2022, according to new research from the Investment Company Institute (ICI).

The study found most plan participants did not change their asset allocations, even as the stock market declined during the first six months of the year. In the first half of 2022, 6.6% of plan participants changed the asset allocation of their account balances, slightly lower than 7.3% in the first half of 2021, 8.3% in the first half of 2020, and 7.7% in the first half of 2009.

In the first half of 2022, 2.9% of plan participants took withdrawals, compared with 2.8% in the first half of 2021, 2.8% in the first half of 2020 (as the COVID-19 pandemic hit the U.S.), 2.5% in 2019, and 1.8% in the first half of 2009 (another time of stock market stress). Only 1.6% of plan participants stopped contributing in the first half 2022, compared with 1.1% in the first half of 2021, 2.0% in the first half of 2020, and 4.6% in the first half of 2009.