The Rosenbaum Law Firm P.C. Blog

State automatic retirement programs have finally accumulated more than $1 billion in assets, according to data collected by the Center for Retirement Initiatives at Georgetown University.

That is a significant step, but not a huge sum when you figure 19 states have these automatic programs for employers that don’t have worksite plans.

As shown by the Pew Charitable Trusts, state-facilitated retirement savings plans for private sector workers that do not have workplace plans may have a positive effect on the creation and retention of private plans.

Not enough plan sponsors and plan providers talk about cyberattacks and they should.

The massive MOVEit cyberattack breached the personal data of millions of participants in public pension and private-sector workplace retirement plans.

The cyber attack by the Russian ransomware gang Clop, exploited vulnerabilities in the MOVEit file transfer application used by Pension Benefit Information LLC and other vendors to securely transfer encrypted files.

The breach has impacted public pensions systems in at least 10 states, including the California Public Employees’ Retirement System, Sacramento, and California State Teachers’ Retirement System, West Sacramento, affecting almost 1.2 million participants and beneficiaries; retirement plans in Tennessee, Rhode Island, Virginia and others. Several record keepers were also affected by the hack, including Fidelity Investments, Teachers Insurance and Annuity Association of America, and Corebridge Financial, formerly AIG Life & Retirement.

To date, at least 3.8 million participants in public pension and private-sector retirement plans are known to have been affected.

Stealing a line from Chris Rock, I once joked while working at a third-party administrator (TPA) that if you wanted to hide something from one of our inexperienced plan administrators, you should hide it in the plan document file.

So many TPA errors can be avoided if the TPA knows what’s in a client’s plan document. I use Relius’ volume submitter documents and one of the great things is a plan index file, which spits out a one-page summary of the plan document terms and which page in the plan document to find it. I’m sure other plan document drafters have the same type of index. Yet errors by plan sponsors and TPAs based on no review of the plan document are still a thing. Read the plan document because as the old Ed Asner RIF commercials, reading is fundamental.

The fact is that sometimes, bad things happen to good people. That can be said about retirement plans and the good plan sponsors and providers who do their job. No matter how great a job they do, the threat of potential liability is always there.

No matter how a plan sponsor takes care of their fiduciary responsibility and no matter how professional a plan provider is won’t preclude someone from suing them.

Just because a plan participant doesn’t really have a case against a plan sponsor or a plan provider that is doing their job., doesn’t mean they can’t sue. Competence doesn’t preclude frivolous lawsuits or litigation that have very little merit. Competence will only mean that there will likely be no liability, just the headache of a lawsuit.

I know a fiduciary who was sued because the previous plan fiduciary stole money the year before (that would be me). These things happen because sometimes when someone hires an overly ambitious litigator, people get sued when they do nothing wrong.

We can talk about how plan sponsors and providers can minimize their potential liability, but they can never eliminate the threat of litigation.

Over the past few years, more and more workers have become gig workers. In reality, they are just sole proprietors, that make a living, project to project.

Their retirement savings usually revolve around SEPs, SIMPLE-IRAs, and Solo 401(k)s. I once worked on a multiple-employer plan, made up of this gig, freelance workers. The only problem is way too expensive and not very good. I think if you have the distribution channel, a solo 401(k) PEP can be successful. It has the opportunity to offer assistance to gig workers when those other small plans give absolutely no investment help when they open an account at one of the brokerage firms.

January 1, 2024, will be 3 years of Pooled Employer Plans (PEPs). While new PEPs have been launched with lots of fanfare, I’m sure there are a few dozen PEPs that have quietly closed their doors.

Unless you’re a national advisor with lots of offices or another plan provider with a large distribution channel, you might be struggling for the PEPs to work if you don’t have the assets. I’m sure we will see a consolidation of smaller PEPs into larger ones and more PEPs just closing their doors.

If you are struggling with your PEP, I might have the solution for you. Please contact me.

Congressional Democrats have reintroduced bills in the Senate and House \o require spousal consent for 401(k) distributions.

The reason for a change is that since 401(k) plans are quite often a couple’s largest financial asset next to their house, spousal consent is needed to prevent one spouse from taking a 401(k) withdrawal from their account without the other spouse’s knowledge or consent.

I support it, but obviously, spousal consent could be tricky if there is no divorce, but issues regarding domestic violence and no filing of formal separation.

The plaintiff suing American Airlines for adding an ESG fund to the 401(k) plan has dropped the case to 2 defendants.

Plaintiff Bryan Spence dropped two defendants to the lawsuit that was initially filed against American Airlines, the employee benefits committee, Fidelity Investments, and Edelman Financial Engines for allegedly providing employees a 401(k) plan that sacrificed returns in favor of environmental, social, and governance factors.

Fidelity Investments and Edelman Financial Engines were dropped from the case. American Airlines, Inc. and the American Airlines Employee Benefits Committee remain defendants.

73% of 401(k) savers would like personalized investment advice for their retirement savings, according to annual survey from Charles Schwab Corp..

Among the 401(k) plan participants surveyed by Schwab, almost half (49%) said they were very confident in investment decisions with professional help, with a lower 27% expressing confidence in their own decision making. About 39% of workers said they are already receiving professional advice through their plan at work.

It’s 2023 and I think it’s a mistake not to offer plan participants, the opportunity to get investment advice.

The last real estate closing. I ever did the purchase of my home because of the unprofessionalism of the seller’s counsel. It soured on my closings and the real estate agent, who said nothing when she referred that attorney, to the business.

When dealing with an Internal Revenue Service or Department of Labor audit, I feel that being pleasant and cooperative goes a long way. Government auditors are doing their job of making sure that retirement plans voluntarily comply with retirement plan laws.

There is no point in being argumentative and. non-cooperative. There are times when you can certainly disagree, especially when the auditor gets the wrong conclusion, but that still must be within the limits of professionalism.