The Rosenbaum Law Firm P.C. Blog

When you meet retirement plan sponsors just at different networking events and they find out that you’re a retirement plan provider, they may volunteer that their retirement plan is in perfect shape. As we know as retirement plan providers, they often don’t know if that is true. However, they volunteer that information because they don’t want to talk about their retirement plan and don’t want to be solicited.

I’m not saying that you should harass them, but I certainly don’t think you should take their word for it. I had an advisor call me up to where he approached a company and was told that they had a $1 billion 401(k) plan and everything was fine. Of course, the advisor checked and the plan was about $930 million short of $1 billion. It was also on an expensive bundled platform and had 95 investment options on them.

What’s the advisor likely to do? Take that information and approach the plan sponsor in a delicate manner and how they’re probably paying too much in plan expenses.

The point is that you can have multiple bites at the apple and that just because a plan sponsor is trying to dismiss you, doesn’t mean you shouldn’t check up to see if they’re telling the truth about their plan.

I worked at the college newspaper and if you said something to one staff member, they would tell someone else in 5 minutes. However, like the game of telephone, the story would get misconstrued. I remember telling someone about possibly seeing Aerosmith for New Year’s Eve in Boston and hearing back that the story going around was I’d see Aerosmith in Boston and then kill myself (I didn’t end up going).

Sometimes, the retirement plan business is no different than the Stony Brook Statesman. Sometimes, words swirl, and stories are created, that isn’t close to reality. Recently, I heard about one plan provider being upset with me because I vetoed their selection as third-party administrator because I didn’t want to lose my position as a plan fiduciary. The only problem is that it never happened. I’m not certain, but I think the situation arose because it was the plan’s advisor that nixed it, concerned that I’d be pushed to the side.

You can’t worry about what you can’t control. So rumor and innuendo and the game of telephone are hard to control. The only you can do is be in communication with people around the industry, which can allow you the opportunity to separate fact from fiction.

One of my king beliefs is that giving away, anything of value for free is a mistake because people place no value on something free. That could be the tax return that a relative wanted me to prepare for a significant other, or the law partner that wanted free U.S. Open tickets, or the advisor that wanted a free legal review with the promises of paid reviews down the line.

There will always be a segment of the public that you interact with, that will love you and what you bring to the table, they just don’t want to pay for that. As long as you recognize that and separate those people out, you will be fine.

The proposed merger of Aon and Willis Towers Watson (WTW) has been terminated.

Both firms say they have agreed to terminate their business combination agreement and end litigation with the U.S. Department of Justice (DOJ). The proposed combination was first announced on March 9, 2020.

The DOJ had filed a civil antitrust lawsuit to block Aon’s proposed $30 billion acquisition of WTW, a transaction that would have brought together two of the “Big Three” global insurance brokers. The largest national insurance broker currently is Marsh McLennan, which owns Mercer, followed by Aon and WTW.

In connection with the termination of the merger agreement, Aon will pay a $1 billion termination fee to Willis Towers Watson.

Some birds aren’t mean to be caged (a line from The Shawshank Redemption) and some attorneys weren’t meant to be law firm associates. 3 years working for two law firms was 3 years too long.

I have a 50/50 rule about law firm partners. 50% are amazing attorneys and the other 50%, well you wonder who juiced them in.

President Joe Biden plans to nominate attorney Lisa Gomez to be Assistant Secretary of Labor for Employee Benefits. Gomez is a partner with Cohen, Weiss, and Simon LLP and the Chair of the Firm’s Management Committee.

If you know my biography and my books, you know of my short stint there. It wasn’t a great fit (for me and for them), but I can say that Lisa Gomez is a heck of a pick to lead EBSA. Lisa knows her stuff, but she is approachable and is the kind of person that EBSA needs.

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

About 75% of large 401(k) plan sponsors would rather keep the assets of retired employees in the plan, rather than have these retirees roll over their plan assets into an individual retirement account (IRA), according to a PIMCO survey of 47 retirement plan advisory firms.

It’s clear that plan sponsors don’t know what they’re talking about. Sure, more assets may equal better fees for the plan, but who needs the headache? It’s hard enough to manage a plan with current employees, but why would anyone want to deal with the headaches of keeping track of retirees and making sure they get all the required notices?

Plan sponsors need to say goodbye when employees leave and hope they take their 401(k) money with them. They don’t need the challenges of dealing with former employees, especially with the Department of Labor cracking down on the huge issue of missing participants.

When you’re a financial services company that offers proprietary mutual funds within your 401(k) plan, expect to get sued.

Current and former participants of the MetLife 401(k) Plan have filed a lawsuit alleging the plan’s fiduciaries violated the Employee Retirement Income Security Act (ERISA)’s duties of loyalty and prudence by using MetLife Index funds in the plan.

According to the lawsuit, MetLife’s action has cost plan participants millions of dollars over the period defined in the lawsuit. The complaint includes charts that show that the MetLife index funds are considerably more expensive than otherwise identical alternatives being used in other large plans. The complaint also alleges that the MetLife index funds were of lower quality than other options when it came to tracking the underlying index.

The IRS has updated the Employee Plans Compliance Resolution System (EPCRS) with the release of Revenue Procedure 2021-30. The EPCRS is used to correct certain plan qualification failures. EPCRS contains the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP).

The EPCRS has expanded the period of time through correcting through the SCP Program by one year. The new deadline is the last day of the third plan year (instead of the second plan year) following the plan year for which the failure occurred.

Effective January 1, 2022, the current anonymous submission procedure will be eliminated. However, on that date, the IRS will have the discretion to make anonymous VCP pre-submission conferences available to discuss correction methods not described as safe harbor methods in the Revenue Procedure.

Plan sponsors can now provide overpayment recipients with the option of repaying an overpayment 1) in a single sum payment, 2) through an installment agreement, or 3) through an adjustment in future payments.

EPCRS usually requires the full correction of operational errors but makes an exception for certain de minimis amounts. Effective July 16, 2021, the de minimis threshold increases from $100 to $250, and erroneous contributions (plus earnings) of $250 or less will not need to be pulled from a participant’s account or recouped after distribution to a participant.

The Revenue Procedure also expands the self-correction of certain operational failures through a plan amendment that retroactively reflects how a plan has been operated. Such retroactive amendments have to increase benefits, rights, or features under the plan, rather than reduce them. In the past, it has been required that the benefits increase or enhancement apply to all eligible participants under the plan, which made many proposed corrections unaffordable. The new Revenue Procedure lifts the universality requirement, so that a retroactive amendment may increase benefits only for those participants affected by the operational error.

The big just got bigger.

Empower Retirement is now buying the retirement plan business of Prudential Financial Inc. for $3.55 billion.

The purchase would increase Empower’s retirement plan footprint to more than 16.6 million participants and assets under administration to $1.4 trillion on behalf of 71,000 workplace savings plans.

The deal would also include Prudential’s defined contribution, defined benefit, non-qualified and rollover IRA business, as well as its stable value and separate account offerings. The deal is expected to close in the first quarter of 2022 pending government regulatory approval.