The Rosenbaum Law Firm P.C. Blog

No retirement plan provider is perfect. If you’ve been in this business long enough, you’ve made a mistake. The difference between firms that keep clients and firms that lose them isn’t whether errors occur—it’s how they respond when they do.

Clients can usually forgive an honest mistake. What they struggle to forgive is silence, finger-pointing, or excuses. Waiting days to disclose a problem or trying to minimize its impact almost always damages trust more than the original error.

Ownership means calling the client promptly, explaining what happened in plain English, outlining the potential impact, and presenting a solution. It means taking responsibility for your part while focusing on resolving the issue rather than defending yourself. That approach demonstrates professionalism and builds credibility.

Ironically, some of the strongest client relationships are forged after a problem has been handled well. When clients see that you’re transparent, accountable, and committed to making things right, they gain confidence that you’ll stand beside them when something unexpected occurs.

Mistakes are inevitable in a business built on complex regulations, changing laws, and countless moving parts. Character is revealed in the response.

Your reputation isn’t built on the days when everything goes according to plan. It’s built on the days when something goes wrong and your client discovers exactly who they’re doing business with. Those moments define trust far more than years of routine administration ever will.

The biggest mistakes in the retirement plan industry usually don’t come out of nowhere. They often start as close calls that someone caught just in time. A payroll file almost included the wrong compensation. An employee was almost excluded from the plan. A loan repayment was nearly missed. Nothing bad happened because someone noticed the issue before it became a correction program or a DOL inquiry. Too often, firms breathe a sigh of relief and move on.

That’s a mistake.

Every near miss is an opportunity to improve your processes. Ask why it almost happened. Was there a gap in training? An outdated checklist? A breakdown in communication? A system that relies too heavily on one employee’s memory? The goal isn’t to assign blame. It’s to make sure the same situation doesn’t happen again when nobody catches it.

The best TPAs and retirement plan providers build cultures that encourage employees to report close calls without fear. They understand that learning from a mistake that never actually became a mistake is far less expensive than cleaning up one that did.

Clients rarely see the near misses, but they benefit from the improvements that follow them. Better procedures lead to more accurate administration, fewer corrections, and greater confidence in the service they receive.

Perfection isn’t achieved by never making mistakes. It’s achieved by constantly learning from the ones you almost made.

Technology has transformed the retirement plan industry. We have automated workflows, integrated payroll systems, online participant portals, artificial intelligence, and countless ways to make administration more efficient. Yet one competitive advantage hasn’t changed in decades: answering your clients.

Plan sponsors don’t expect perfection. They do expect responsiveness.

When a client sends an email asking about a failed contribution, a participant loan, or a payroll question, they aren’t necessarily expecting an immediate solution. Often, they simply want to know that someone has seen the issue and is working on it.

A quick response saying, “I received your email and will get back to you tomorrow,” is far better than two days of silence.

Responsiveness is also about setting expectations. If a correction will take a week, say so. If you’re waiting on information from a recordkeeper or payroll company, let the client know. People are generally patient when they understand the process. They become frustrated when they’re left guessing.

The irony is that being responsive costs very little. It doesn’t require new software or expensive technology. It simply requires discipline and respect for the client’s time.

I’ve always believed that communication is part of the service clients are paying for. They aren’t just buying compliance expertise; they’re buying confidence that someone is looking out for their retirement plan.

In a marketplace where many providers offer similar services and comparable pricing, responsiveness remains one of the easiest ways to stand out. It builds trust, reduces anxiety, and strengthens relationships.

Fast answers won’t solve every problem. But silence has never solved one.

For years, Congress has debated whether retirement accounts were being used for retirement or as unlimited tax shelters. A newly introduced bill would take direct aim at that issue by restricting additional contributions and increasing required distributions for high-income individuals with exceptionally large retirement account balances.

The proposal targets a relatively small group of taxpayers. Under the bill, individuals with aggregate IRA and defined contribution plan balances exceeding $10 million would generally be prohibited from making additional contributions if their income exceeds specified thresholds. The legislation would also require additional distributions from those oversized accounts, with even more aggressive distribution requirements once balances exceed $20 million.

From a policy standpoint, it’s easy to understand what Congress is trying to accomplish. Retirement plans receive favorable tax treatment to encourage Americans to save for retirement—not necessarily to accumulate hundreds of millions of dollars tax deferred. Supporters argue that the proposal simply places reasonable limits on tax preferences for the wealthiest savers.

Whether you agree with the proposal or not, there are practical concerns. Recordkeepers, plan administrators, and participants would face additional reporting and compliance challenges because the rules aggregate balances across IRAs and employer-sponsored defined contribution plans. That means information residing with multiple financial institutions would need to be coordinated in ways that don’t exist today.

For most plan sponsors, this legislation will never affect the overwhelming majority of participants. Even many executives will never approach the proposed thresholds. However, sponsors with highly compensated employees or significant owner balances should keep an eye on the bill as it moves through Congress.

As always, the retirement industry has a way of turning simple ideas into complicated administration. The policy debate may be about fairness, but if enacted, the operational burden will fall on plan providers, recordkeepers, and plan sponsors responsible for implementing the rules correctly. That’s where the real challenge begins.

One of the biggest misconceptions in retirement plan administration is believing that a small mistake will stay small.

It rarely does.

A payroll employee accidentally misses one participant’s salary deferral. Someone figures they’ll catch it next pay period.

Six months later, the mistake has affected dozens of payrolls, employer matching contributions, earnings calculations, and participant notices. What could have been fixed in a few minutes has become an EPCRS correction project.

I’ve seen eligibility dates entered incorrectly. Loan repayments coded to the wrong participant. Automatic enrollment accidentally turned off after a payroll conversion. None of those errors looked significant on day one.

They became significant because nobody noticed them.

That’s one reason I encourage plan sponsors to perform periodic operational reviews instead of assuming everything is working correctly.

Retirement plans are built on thousands of transactions each year. Even if your providers do an outstanding job, mistakes happen. The question isn’t whether an error is possible. The question is how quickly it’s discovered.

Time is rarely your friend when it comes to operational failures.

The longer an error continues, the more participants it affects, the more calculations become necessary, and the more expensive the correction becomes.

I’ve learned that successful plan sponsors don’t ignore small issues because they’re small.

They investigate them precisely because they understand what experience has taught them.

Small mistakes have a way of growing.

The good news is that the opposite is also true.

Small habits—reviewing payroll reports, asking questions, documenting decisions, and conducting periodic compliance reviews—also grow over time. They become a culture of compliance that protects both the plan and its participants.

Experience has taught me many lessons over the years.

Perhaps the most important is this: don’t underestimate the little things. In retirement plans, they rarely stay little.

After nearly three decades working with retirement plans, I’ve noticed something.

The plan sponsors who sleep best at night aren’t necessarily the ones with the biggest companies, the most sophisticated plans, or the highest-paid advisors. They’re the ones who consistently do a handful of simple things well.

First, they ask questions. They don’t pretend to know every ERISA rule, and they aren’t embarrassed to admit when they need help. Good fiduciaries understand that asking a question before making a decision is much cheaper than fixing a mistake afterward.

Second, they document everything. Committee meetings, provider reviews, investment decisions, and operational changes all find their way into written records. Memory fades. Documentation doesn’t.

Third, they review their providers every year. They don’t automatically replace them, but they also don’t assume everything is running smoothly simply because nobody has complained. Good providers welcome those conversations.

Fourth, they pay attention to payroll. Most operational failures begin with payroll. Missed deferrals, incorrect matching contributions, and eligibility errors often trace back to one payroll mistake that went unnoticed for months.

Finally, they don’t wait until something goes wrong to call their ERISA attorney or TPA. The best clients ask for advice before implementing changes, not after they’ve already created a correction project.

None of these habits are complicated. None require expensive software or a large HR department.

They simply require discipline.

I’ve seen clients with thousands of participants run exceptionally clean plans because they built good habits. I’ve also seen much smaller employers spend thousands of dollars correcting problems that could have been prevented with one phone call or one checklist.

The clients who sleep best at night aren’t lucky.

They’ve built processes that reduce surprises.

In the retirement plan world, peace of mind isn’t an accident. It’s usually the result of consistently doing the little things right.

Sometimes the best career lessons don’t come from a mentor.

They come from someone you promise yourself you’ll never become.

Early in my career, I worked for a retirement plan firm where employee turnover was so frequent that I joked we should install a revolving door at the front entrance.

The reason wasn’t difficult to identify.

The COO viewed talented employees as threats instead of assets.

People with new ideas were ignored. Employees who solved problems weren’t rewarded—they were viewed with suspicion. Instead of building a stronger organization, management seemed more interested in protecting titles and egos.

The result was predictable.

One by one, good people left.

Some started their own firms. Others joined competitors. Many became successful because they were finally allowed to do what they were good at.

Watching that unfold taught me far more than any management seminar ever could.

Leadership isn’t about making sure you’re the smartest person in the room.

It’s about hiring smart people and giving them every opportunity to succeed.

If you’re afraid someone will outshine you, you’ve already failed as a leader.

The strongest organizations I’ve encountered aren’t built around one indispensable executive. They’re built around teams where people trust one another, share ideas, and celebrate each other’s success.

Ironically, the COO who tried so hard to protect his position ended up teaching me one of the most valuable business lessons of my career.

Leadership isn’t measured by how many people work for you.

It’s measured by how many talented people choose to stay.

There’s bipartisan legislation making its way through Congress that would move the Form 5500 deadline for calendar-year plans from July 31 to October 15, while also eliminating the need for most plans to file Form 5558 extensions and allowing electronic signatures. On paper, it sounds like a simplification effort.

I understand the reasoning.

What I don’t understand is why so many people think this solves the real problem.

In my opinion, it simply kicks the can down the road.

Today, many providers operate as though the deadline is October 15 anyway because they routinely file extensions. If October 15 becomes the statutory deadline, what incentive is there to finish returns in July, August, or even September?

There isn’t one.

Instead, we’re likely to create an even bigger bottleneck.

Right now, providers have two target dates. Some returns are completed by July 31, while others are extended and completed by October 15. Spread that work over two deadlines, and at least there’s some separation.

Make October 15 the only deadline, and you’ve just concentrated an enormous amount of work into one filing season. Auditors, TPAs, accountants, recordkeepers, and plan sponsors will all be chasing the same date.

I’ve spent enough years in this business to know how deadlines work.

People don’t finish work because they have extra time.

They finish work because the deadline forces them to.

That’s human nature.

The legislation also includes electronic signatures, which I think is long overdue. That modernization makes sense and should reduce unnecessary administrative headaches.

But moving the filing deadline? I’m skeptical.

If Congress really wants to improve the Form 5500 process, I’d rather see initiatives that encourage earlier completion, improve data sharing among providers, and reduce the amount of back-and-forth needed to prepare an accurate return.

Changing the calendar doesn’t necessarily improve the process.

Sometimes all it does is change the day everyone starts panicking.

And if you’ve worked through enough October 15 filing seasons, you know exactly what I’m talking about.

I’ve spent nearly three decades working with retirement plans, and one thing has become painfully obvious.

Almost every operational failure starts with one word:

Assume.

Someone assumed payroll was withholding correctly.

Someone assumed another employee sent the notice.

Someone assumed the plan document allowed it.

Someone assumed HR handled the eligibility calculations.

Someone assumed accounting deposited the deferrals.

Nobody checked.

Retirement plan administration isn’t difficult because the rules are impossible to understand. It’s difficult because people convince themselves someone else has already handled it.

That’s how missed deferrals happen.

That’s how incorrect employer contributions get allocated.

That’s how participants get left out of the plan.

Every correction I’ve ever worked on started with an assumption that turned out to be wrong.

Successful plan providers build systems that don’t rely on assumptions. They use checklists. They document procedures. They require a second review. They ask questions even when they think they know the answer.

Experience helps, but experience without verification is just confidence.

I’ve learned that “trust but verify” isn’t just good advice. It’s an operational philosophy.

The providers that consistently avoid expensive mistakes aren’t necessarily smarter than everyone else.

They’re simply less willing to assume.

Before every filing, every payroll, every amendment, and every compliance project, someone should ask one simple question:

“How do we know that’s correct?”

That question has probably prevented more operational failures than any software program ever will.

Every plan provider has heard it.

“Your fees are too high.”

Maybe they are. Maybe they aren’t. But when a prospect immediately focuses on price, it’s often because nobody has explained the real cost of making a bad decision.

The cheapest TPA isn’t the cheapest if they miss eligibility, botch a plan merger, fail ADP testing, or disappear when the DOL comes calling. The lowest recordkeeping fee means little if participant service is terrible and payroll integration creates headaches every pay period.

Plan sponsors don’t lose sleep over paying an extra few basis points. They lose sleep wondering whether they’re going to receive an IRS letter, fail an audit, or learn that employee deferrals weren’t deposited on time.

That’s where plan providers need to change the conversation.

Don’t lead with fees. Lead with risk reduction.

Explain how your procedures catch mistakes before they become corrections. Explain your quality control process. Explain how often you review plan documents. Explain why cybersecurity, fiduciary governance, and operational consistency matter.

The value isn’t in preparing a Form 5500. The value is making sure the information is right before it’s filed.

Anyone can claim they’re less expensive. That’s not much of a competitive advantage because someone will always come along willing to charge less.

Very few providers can explain how they help clients avoid costly mistakes.

That’s the sales pitch.

Price gets attention. Trust wins clients.

When sponsors understand that your job is to reduce risk, not just process paperwork, the discussion changes. Instead of asking, “Why do you cost more?” they begin asking, “What happens if we don’t have someone like you?”

That’s a much better conversation to have.