The Rosenbaum Law Firm P.C. Blog

Everyone in the retirement plan world claims to be “participant-centric.” It’s the industry’s version of “gluten-free”—proudly announced, poorly understood. The truth is, most providers focus on the plan sponsor relationship because that’s where the contract lives. Participants? They get a login, a call center number, and whatever canned webinar got approved in 2019.

But being truly participant-centric means designing services around the people who actually need help: the employees who don’t know Roth from pre-tax, think loans are free money, and believe their target-date fund is guaranteed. Providers who elevate participant support—real education, real engagement, real results—don’t just help participants; they make sponsors fiercely loyal.

Here’s the catch: providers are afraid to price participant services because they assume no one will pay. Wrong. Sponsors will pay for outcomes. They will pay for fewer errors, fewer complaints, fewer escalations, and fewer moments where payroll calls saying, “Participants are confused again.”

Make participant support measurable, meaningful, and proactive—not an afterthought. Do that, and you won’t just be participant-centric. You’ll be revenue-centric too.

One of the most persistent myths in the 401(k) universe is the idea that the third-party administrator (TPA) is the plan administrator. If I had a dollar for every time a plan sponsor insisted this was true, I could probably buy that Dallas Cowboys stadium Jerry Jones keeps pretending is a football team. But here’s the reality: unless your plan document specifically names your TPA as the plan administrator—and almost none do—that job belongs to you, the plan sponsor.

This comes as a shock to most HR and finance teams. They’re convinced the TPA handles everything. And to be fair, TPAs do handle a lot: compliance testing, Form 5500s, distributions, loans, payroll files, and more. But the Department of Labor didn’t write ERISA to make your life easy. They wrote it to make someone accountable. And that someone is the named fiduciary and plan administrator—which is usually the employer.

Being the plan administrator means you’re responsible for the accuracy of everything the TPA produces. If payroll sends over a file with 12 employees missing and the TPA processes it exactly as received, guess who the DOL is looking at? Not the TPA. You. If the TPA uploads the wrong amendment and you sign it without reading it, guess whose problem it becomes? Yours again.

This isn’t to say TPAs aren’t valuable—they are. A good TPA is the difference between operational compliance and a multi-year correction project that feels like Shawshank without the happy ending. But a TPA is a partner, not a shield.

The easiest way to avoid trouble is simple: know your role. Review what your TPA sends. Understand your plan document. Ask questions before signing anything. Hold annual meetings and document decisions. And for the love of ERISA, don’t assume “the TPA handles it” is a defense that will survive even 10 seconds with an auditor.

At the end of the day, it’s your plan, your fiduciary duty, and your name on the line. The TPA can guide you, but they can’t save you from responsibilities you didn’t know you had. So embrace your role—or at least acknowledge it—because pretending otherwise won’t save you when the correction costs start piling up.

If there’s one consistent truth in the retirement plan world, it’s that nothing stays consistent—especially the Qualified Default Investment Alternative (QDIA). Yet for some reason, many plan sponsors treat picking a QDIA like picking a couch: choose it once, stick it in the corner, and hope it still looks good a decade later. The problem is, unlike a couch, a QDIA actually requires maintenance. It’s not supposed to collect dust; it’s supposed to collect returns.

Target-date funds (TDFs) are the most common QDIA, and rightfully so. They’re diversified, easy to explain, and—best of all—participants don’t have to do anything. Unfortunately, that same “set it and forget it” attitude has infected plan sponsors. A TDF lineup is not a Ronco rotisserie oven. You don’t pick it, walk away, and shout “Set it and forget it!” as if fiduciary responsibility begins and ends at the 404(c) safe harbor.

The truth is simple: markets change, fees change, glide paths shift, investment teams turn over, and participant demographics never stay still. A QDIA that made perfect sense in 2017 might be completely inappropriate in 2025. And if the Department of Labor ever comes knocking, “But our advisor picked it eight years ago” is not going to be the winning defense you think it is.

Reviewing your QDIA annually isn’t just good governance—it’s survival. Did the fund underperform? Did the glide path become too aggressive or too conservative? Are the fees still competitive? Did the investment manager leave for a competitor? Did your workforce suddenly skew younger or older? If the answer to any of these is “I don’t know,” congratulations: you’ve wandered into fiduciary danger territory.

A QDIA is one of the most significant decisions a plan sponsor makes, because it affects the people least likely to make their own investment decisions. That’s a lot of responsibility. And like any responsibility, it requires ongoing attention.

So don’t treat the QDIA like the treadmill in your basement—used enthusiastically once and then ignored. Check it. Review it. Document it. Your participants, your fiduciary file, and your future self will thank you.

If you’re a plan sponsor reading this, you can sit back, relax, and think, “I’ll never be that guy.” Except the guy in question just might be you. The case of Rick Case Enterprises Inc.—a Florida automotive group that allegedly lost roughly 9% of its 401(k) assets during a recordkeeper conversion—is the textbook cautionary tale of what happens when oversight takes the day off.

Here’s how the horror story went down: The plan switched from one major recordkeeper (Empower Retirement) to another (Principal Financial Group) in late 2022. During that transition, participants were placed in a blackout period—unable to access or change their accounts. When assets arrived at the new recordkeeper in early January 2023, the plaintiffs allege account balances were roughly 9% lower than before. For one participant, invested entirely in a stable value fund (which by design is supposed to preserve principal), that drop was all the more baffling.

Let’s translate that into fiduciary English: 1) You choose a vendor. 2) You execute a transition. 3) You fail to monitor the flow of assets, communications, or blackout procedures. Boom—now you’re looking at possible ERISA breaches, lawsuits, and reputational damage. The complaint alleges not only missing funds but conflicting communications: participants were told a “market value adjustment fee” applied; others were told missing assets would be returned—but then nobody got documentation or reimbursement.

The rubber-meets-the-road takeaway: A recordkeeper switch is not simply a checkbox for “vendor change”. It is one of the highest-risk operational events in a plan lifecycle. Blackout periods must be communicated clearly, participant funds must be accurately transferred, and plan fiduciaries must vigilantly follow every step of the process. If you hand off everything to your provider, and then treat the transition like a lunch meeting that maybe one of your folks attended, you are creating systemic risk.

Another layer: The alleged investment mishandling. Participants had been told their assets would default into age-based target-date funds (the plan’s stated designated default investment alternative), but instead, they claim assets were dumped into a “diversified mix of mutual funds” that didn’t align with the plan’s documented default investment rules. Now you’ve not only got missing money—you’ve got document-noncompliance, messaging mismatches, and possibly a breakdown of your investment governance.

So what should you do (and I mean now)? One: rigorously document your vendor-change plan—including blackout communications, transfer validation, reconciliation procedures, and participant access protocols. Two: audit the results post-conversion—did every dollar move, did every participant end up in the correct vehicle, were communications accurate? And three: treat your plan oversight like you would your house—don’t assume the vendor installed the windows properly and just walk away.

If you ignore these things, you may not get a law firm knocking—yet. But trust me: when the dust settles in your next transition, the legacy you’ll leave isn’t your firm’s reputation—it’s a

googled headline about “automotive group loses 9% of plan assets during switch.” And you’ll wish you’d done the dirty work ahead of time.

Your participants count on you. So act like someone who knows they’re responsible.

Bundling sounds so convenient, doesn’t it? One login, one service team, one bill. It’s the Netflix of plan administration — until the compliance season arrives and the algorithm starts buffering.

Payroll companies love to sell the dream: “We can handle your 401(k) too!” It’s a compelling pitch for small employers who are tired of juggling vendors. The problem is, most payroll companies know as much about ERISA as I know about hair care. Once the integration gets messy — late deposits, missing census data, wrong deferral codes — the client realizes the hard way that convenience doesn’t equal competence.

I’ve seen it countless times: a plan sponsor calls, furious because the DOL is investigating late contributions, and the payroll provider blames “a system glitch.” Translation: “We didn’t know what we were doing.” The truth is, payroll integration is hard. Payroll systems weren’t built to interpret plan eligibility, match formulas, or vesting schedules. They were built to cut checks.

Providers like to joke that when payroll gets into the 401(k) business, it’s like a toddler getting into a toolbox — something’s getting broken. And when it does, guess who gets called to fix it? You — the independent TPA or plan consultant who knows how the machinery actually works.

Bundling will always have its place, but don’t confuse it with expertise. A good provider partnership doesn’t start with “we do it all.” It starts with “we do this part well.” Because in this industry, the best plans aren’t the ones with the fewest vendors — they’re the ones where every vendor knows their lane and stays in it.

Every plan provider has crossed paths with one — the advisor who talks a big fiduciary game but couldn’t tell you the difference between an ADP test and a CPA firm. He’s polished, personable, and occasionally sends you client leads, but when the 5500 deadline hits, he vanishes faster than a match in a down market.

He’s the one who promises, “I’ll handle all the client communication,” and then forwards your compliance emails to the HR intern with the subject line: “Can you deal with this?” He loves calling himself the “quarterback” of the plan, even though he’s never actually read the playbook — the plan document.

To be fair, not every advisor needs to be a technical ERISA savant. But the problem comes when they pretend to be. They assure clients that everything’s “taken care of” while the plan fails testing, the audit’s late, and the participant statements show Roth deferrals in pre-tax accounts. Then the plan sponsor calls you — the provider — wondering how the quarterback managed to throw the ball into the wrong end zone.

Here’s the truth: collaboration works only when everyone knows their role. The best advisors I’ve ever worked with admit what they don’t know. They lean on their TPAs, ERISA attorneys, and recordkeepers instead of bluffing through compliance questions like they’re on Jeopardy!

So, if you’re a provider stuck with a know-it-all advisor, document everything, stay professional, and keep your humor handy. Because at the end of the day, when the plan sponsor realizes who actually did the heavy lifting, it won’t be the “quarterback” getting the thank-you email — it’ll be you.

Every few months, I hear a plan sponsor brag, “Our provider said the 401(k) is free!” And every time, I have to resist the urge to reply, “So is lunch—if you’re on the menu.”

Let’s be clear: there’s no such thing as a free retirement plan. Somebody, somewhere, is footing the bill. If it’s not you, it’s your participants. The trick is figuring out where the money’s actually coming from—and whether it’s being disclosed in a way that would make a DOL auditor smile.

“Free” plans usually work like this: the recordkeeper builds their costs into fund expenses. So instead of writing a check, you’re just letting investment fees quietly chip away at employee returns. It’s like saying your accountant is free because their fee is buried in your tax refund. It sounds clever until you do the math.

I get it. Nobody likes writing checks, especially for something as unglamorous as plan administration. But let’s not confuse convenience with transparency. Paying a fair, visible fee for service isn’t a bad thing—it’s honest. And honesty is the cornerstone of fiduciary prudence.

Here’s the danger: the minute you call a plan “free,” you stop asking questions. You don’t compare costs, you don’t benchmark performance, and you don’t check what’s being deducted from participant accounts. Then, one day, you get a plaintiff’s attorney explaining the difference between “free” and “fiduciary breach.” Spoiler alert: that conversation isn’t free either.

So next time a provider pitches you a “no-cost” 401(k), smile politely and ask, “Who’s paying?” If they can’t answer that in one sentence, you’ve just learned the most expensive lesson in retirement plan management: free never is.

We’ve all heard it: “Don’t leave free money on the table.” It’s the classic pitch to get employees to participate in their 401(k) plans. Employers proudly offer a match, expecting that phrase alone will light a financial fire under their workforce. And yet, participation rates still stall. Apparently, even free money isn’t exciting enough anymore.

Maybe it’s not that employees don’t want the match. Maybe they just don’t believe it’s really free. After all, this is a world where “free” Wi-Fi comes with a privacy clause longer than War and Peace. People have been burned by too many “free trials” that cost them $19.99 a month for eternity. So when HR says, “We’ll match your contribution,” employees assume there’s a catch—like hidden fees, complicated vesting schedules, or that one coworker in accounting who insists the company is tracking them through their 401(k) app.

The truth is, the match only works if the plan design and communication work with it. If employees don’t understand the math—or worse, if they think the plan is a bureaucratic maze—they’ll tune out faster than a bad PowerPoint presentation. A 3% automatic deferral, auto-escalation, and plain-English education materials do more to boost participation than another flyer shouting “FREE MONEY!”

Here’s the irony: plan sponsors spend thousands on recordkeeping, audits, and investments, but many still rely on outdated enrollment meetings and PDFs from 2011. You can’t sell the value of the match with a presentation that looks like it came from dial-up Internet.

So, what’s the takeaway? If your employees aren’t contributing enough to get the full match, don’t just blame them—look in the mirror. Maybe the problem isn’t that the match isn’t generous enough. Maybe it’s that your messaging is as dry as an ERISA disclosure.

Free money may not be exciting, but clarity and engagement still are. Give your employees a story they can trust, and they’ll take the match every time.

Here’s the straight talk: smaller employers—those with under roughly $50 million in plan assets—are getting left behind when it comes to automatic enrollment in workplace retirement plans. And as long as that gap persists, too many workers will continue missing the retirement train altogether.

What the Numbers Show

Only about 24 percent of small plans had adopted auto-enrollment by the end of 2024, compared to 61 percent of large plans. Among those that did adopt it, 57 percent included auto-escalation, while 69 percent of large plans did the same. In small plans with voluntary enrollment, participation hovered around 52 percent; in those with auto-enrollment, it jumped to 82 percent.

Employees in small-business plans also tend to earn less—about $59,000 in median income compared to $89,000 in larger companies. Lower income correlates with lower savings rates, making automatic plan features all the more critical for leveling the playing field.

What It Means (and Why I Care)

If you’re a small-plan sponsor reading this, let’s call it like it is: failing to include an auto-enrollment feature isn’t just a missed opportunity—it’s a strategic misstep. Smaller companies already face limited HR resources, less formal plan education, and tighter budgets. Those factors make it harder to get employees to sign up voluntarily. Auto-enrollment fixes that.

From a fiduciary standpoint, this also raises questions. If you know that auto-enrollment dramatically increases participation—and the data proves it—then why wouldn’t you adopt it? At some point, ignoring that evidence might not just look negligent; it might be negligent.

Why This Matters to the 401(k) Industry

The lag in adoption among small businesses highlights a fundamental inequality in the 401(k) system. Large employers benefit from economies of scale, recordkeeping sophistication, and consultants who push best practices. Small employers often rely on bundled providers or local advisors who don’t emphasize behavioral plan design. That’s not an excuse—it’s a challenge.

The SECURE 2.0 Act and future legislation are already nudging auto-enrollment toward the default standard. The question isn’t if small employers will need to catch up—it’s when.

Lessons for Plan Sponsors

1. Adopt auto-enrollment now — before regulators or market competition force your hand.

2. Add auto-escalation — small increases over time make a huge difference in long-term balances.

3. Review your match structure — use incentives that reward continued participation.

4. Educate and communicate — even automatic features need explanation to build trust.

5. Measure outcomes — track participation and deferral rates so you can prove the design works.

Final Word

Auto-enrollment isn’t a luxury anymore—it’s table stakes. For small-plan sponsors, it’s the single most effective way to boost participation and improve outcomes without spending a dime more on education campaigns or incentives.

As I often tell clients: if you want to help your employees retire with dignity, stop making them opt in—make them opt out. That one design change can turn a struggling plan into a successful one.

Here’s what’s happening — and what every plan sponsor, consultant, and fiduciary should take to heart.

What the Facts Say

IBM’s 401(k) plan is under fire. A lawsuit alleges that the plan fiduciaries retained proprietary target-date funds (TDFs) and target-risk funds — the “Life Cycle Suite” — that underperformed comparable peer funds by as much as 20–30 percentage points over various vintages. About one-fifth of the plan’s $60 billion in assets — roughly $13.4 billion — were invested in those proprietary funds.

The complaint argues that the benchmarks used were “custom” benchmarks that compared the funds to themselves or to other in-house constructs rather than to true peer funds, making them misleading. Plaintiffs claim those imprudent selections cost participants around $1.9 billion in lost returns.

My Take

Folks — if you’ve been saying “we have a process” and checking boxes, this case demands your full attention. Because when participants lose not because of a market crash but because of the plan’s own construction, the ERISA war horn blows.

Let me say it bluntly: the plan sponsor lived by the mantra “default into the house brand,” while the house brand quietly underperformed every credible outside alternative. If I had been in that boardroom, right about the moment someone asked, “why do we use our own funds rather than the low-cost, high-performing peer alternatives?” I’d have raised my hand and asked, “where’s the fiduciary memo?”

Let’s break down the key red flags:

· Proprietary fund dominance: When a plan’s default lineup leans heavily on its own brand, you must ask if this benefits participants or simply keeps fees in-house.

· Custom benchmarks: Fancy benchmarks may make you look good on paper — until they don’t. A benchmark only works if it’s a fair reflection of the real market.

· Comparative underperformance: When your target-date fund is returning 57% while peers are earning 74% or 88%, you’ve got a serious fiduciary problem.

· Disclosure, monitoring, and governance: Failing to review alternatives or swap out underperformers is exactly what ERISA litigation thrives on.

Why This Matters for the 401(k) Industry

For plan sponsors and service providers, the IBM case isn’t just another lawsuit — it’s a mirror. Even the biggest, most sophisticated plans aren’t immune from fiduciary missteps. The lesson is clear: process isn’t paperwork. It’s active oversight, genuine benchmarking, and a willingness to challenge your own assumptions.

Too often, large plans build their own fund suites and assume that “internal equals efficient.” But when participants see years of lagging returns, efficiency turns into liability.

Lessons for Plan Sponsors

1. Revisit your default funds. Don’t assume “house” means best.

2. Scrutinize benchmarks. Make sure they reflect a fair comparison.

3. Document decisions. Meeting minutes and due diligence memos are your best defense.

4. Prioritize outcomes. Participants care about results, not branding.

5. Act when evidence demands it. Delaying fund changes only compounds risk.

Final Word

This isn’t just about IBM. It’s about every sponsor who believes their internal process is beyond question. Fiduciary complacency is the quiet killer of participant outcomes.

As I often tell clients: you can’t call yourself participant-focused if your plan lineup consistently underperforms. Fiduciary duty means putting participants first — even when that means questioning your own products.