The Rosenbaum Law Firm P.C. Blog

I first started paying for my car when I got my first job as an ERISA attorney, It was a brand new 1998 Toyota Camry. I was looking for car insurance and the best rate was through an insurance company that my father’s business partner used for the business.

I used the same car insurance company since then, 6 different cars. They were great at paying claims, namely, the two vehicles totaled during Hurricane Sandy. Over the past few years, I saw my rates go up while my cars got older. I never got a call from the agent about the increase in rates or what I can do to lower them. So I shopped around and found insurance that cost me $150 less a month. That’s a good chunk of change.

The point here is that when you have clients, you just can’t sit around and ignore the fees that they’re paying. I’m not saying you should lower your fees,I’m saying that you should always have a discussion with clients about fees and when assets can lower the percentage of assets that pay fees. You just can’t stand pat and do nothing, further incentivizing plan sponsors to look elsewhere. In every relationship I’ve ever had that ended, the blame always rests on a lack of communication. People and clients like to know that they are appreciated and that their continued loyalty isn’t taken for granted. The best way to show they are not being taken advantage of is by not ignoring the fees they pay.

In the 30 plus years of investing, investing in cryptocurrency has been a wild ride. Mostly ups, but lots of downs. What makes sense as a small portion of investments that I’m willing to lose makes no sense as a 401(k) investment.

What we do in our private lives for investments in our business, what we allow as an investment in a 401(k) plan is different if we are a plan fiduciary or if we counsel them. The wild ride of Crypto, especially the negative volatility makes it clear that it’s a bad investment for most plan participants. When the crypto market plunged on a particular Sunday, I bought. Many 401(k) participants would have panicked and locked in their losses rather than wait the next day, only to see prices spike over 25% as a rebound.

Crypto is a highly speculative and unregulated investment, it doesn’t belong on a 401(k) fund lineup anytime soon.

When there is a plan restatement process, every retirement plan document provider adds some tweaks and removes some tweaks from their plan document.

For the Cycle 3 restatement process, I’ve noticed that most plan documents have removed the separate bonus deferral election that could allow participants a separate election where they could defer up to 100% of their bonus (not that I ever got one).

So if a plan sponsor has the election or still allows the same treatment of bonus deferrals like they do ordinary deferrals, I think now is the time to see what they’re doing and what they should be doing with the plan statement process underway.

In the 30 years that I’ve been an investor, I’ve always strived for the best performance, that’s me. Other people may want to strive for performance, but make a difference and I think they should have that right. So do some folks in Congress. 

U.S. Senators Tina Smith, D-Minnesota, and Patty Murray, D-Washington, and U.S. Representative Suzan DelBene, D-Washington, have introduced legislation in Congress that they say definitively approve retirement plans to have the choice that they can choose to consider environmental, social, and governance (ESG) factors in their investment decisions or offer ESG investment options.

The bill, called the Financial Factors in Selecting Retirement Plan Investments Act, would amend the Employee Retirement Income Security Act (ERISA) to allow retirement plans to consider ESG factors in their investment decisions, as long as they consider such investments in a prudent manner consistent with their fiduciary obligations. The legislators note that this is the same legal standard that ERISA already applies to non-ESG investment factors.

As an ERISA attorney, I like certainty and I think any change to ERISA to allow ESG funds for the plans and plan participants for those that want it, is something I could get behind.

T. Rowe Price has announced plans to transfer responsibility for its retirement technology development and core operations to FIS National Information Services.

T. Rowe Price said it was expanding its 30-year relationship with FIS, leveraging FIS’ scale and extensive experience in retirement technology and operations while focusing on its own strengths in investment management and client service to “grow its defined contribution business in a scalable and efficient manner.” In English, that means T. Rowe is scaling back on the back end of their recordkeeping business. 

T. Rowe Price already uses FIS’s recordkeeping platform, so that means that there will be no conversion or transition for any clients. However, some 800 T. Rowe employees (about 10% of the company’s workforce) are being offered the same roles within FIS that they have today, effective Aug. 1, 2021—at the same T. Rowe Price offices in Owings Mills, MD, and Colorado Springs, CO where they work now. 

Plan sponsors will continue to be served by their same client service teams and T. Rowe will retain accountability for all recordkeeping services.

This is similar to what Vanguard has done and I assume that many of these large providers will do as well. Unloading responsibilities and expenses that aren’t exactly the most profitable part of the business makes sense. However, what does this do for FIS? I use FIS for plan documents and I know so many third-party administrators (TPAs) that use FIS software for recordkeeping. Plan providers are a paranoid bunch and will FIS lose customers because they’re essentially in competition with the TPAs that use their software? Time will tell, but I think there will be plan providers that will be extremely cautious about this move.

I have spent 11 years on my own in a solo ERISA practice and if you read anything since that time I started on my own, you will know that I still have a chip on my shoulder for the two years I worked at a mid-sized Long Island law firm. That chip on my shoulder is the size of Mount Rushmore.

I know my shortcomings in my life and not getting past that experience is one of them. I went there with the best of intentions and the best of myself in terms of trying to develop relationships with the partners there in building a big national practice. I hate failure and I failed there. There was probably nothing there that could have avoided that failure, but it’s a failure nonetheless. There have been other times in my life where I might have had similar resentment, but those were times where I wasn’t at my best (law school, for example).

I know it’s one of my shortcomings that can’t let go of that failure, that disappointment and I think the reason is that it created self-doubt in family and friends who thought I would fail in starting my own practice. “If Ary couldn’t get clients with that law firm behind him, how could he get clients on his own?,” I’m sure they thought that. I only succeeded in starting my own practice because I believed myself and that relationships I developed in the retirement plan business were more important than the name of the law firm behind me.

There is nothing wrong with having that chip on your shoulder as long as it’s not a big enough distraction. I use that chip as a badge of honor and a learning lesson for the people in the retirement plan business that I’m trying to help.

When it comes to business, I always say that. you should stay in. your lane and that’s why. I won’t. be offering a third-party administration service anytime soon.

One of the many things that annoy about Facebook is the non-lawyers opining what their constitutional and/or HIPPA rights are and they’re completely wrong. You don’t have a constitutional right to enter Target without a mask. The Constitution isn’t a suicide pact, there are limits to any of our rights. The same goes for non-medical professionals giving medical advice. If you don’t have medical training, I could care less about your medical opinion or your view on vaccines. I find that people who need to express their view on vaccines and whether other people should take it or not have deep insecurity of their beliefs, so they want validation by garnering support or trying to convert people to support their side.

My father-in-law said that when you keep your mouth shut, people will think you’re stupid, and when you open your mouth, they will know.

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

My latest newsletter for plan providers can be found here.

New York City Mayor Bill de Blasio signed into law legislation that will require private-sector employers located in New York City to provide a mandatory retirement savings program for their employees.

The legislation creates a mandatory auto-enrollment payroll deduction IRA program for employees of private-sector employers that employ five or more employees and do not currently offer a qualified retirement plan.

While employers aren’t going to be required to contribute employer contributions to the plans, the law will require employers to enroll employees who are age 21 or over and work at least 20 hours a week.

Under this new law, the default employee contribution rate will be 5% but will allow employees to opt-out or adjust the rate as they deem fit, up to an annual IRA maximum of $6,000 (or $7,000 for those age 50 or above) (2021 numbers).

I’m all for increased retirement plan coverage and I believe that this new law will spur New York City employers that will be required to offer a Mandatory IRA will seek a pooled employer plan or single-employer plan, rather than dealing with a government IRA program.