The Rosenbaum Law Firm P.C. Blog

I have about a half dozen corporations where I need to file a corporate tax return by March 15. Every year, I panic and get the work done. I think one year, I was on an extension. So I don’t understand when I have clients with multiple years missing of a Form 5500 being filed.

The problem is there is no statute of limitations for failing to file a tax return, so missed returns from 6 or 7 years ago, are still outstanding. The current penalty from the Department of Labor for a late 5500 filing is $2,670 per day, with no limit. The Internal Revenue Service penalty for the same missing form 5500 is up to $250 a day, up to a maximum penalty of $150,000 per plan year.

So if you have missing returns, contact your third-party administrator and/or ERISA attorney and get those forms filed through the Delinquent Filer Voluntary Compliance Program, where the fees for forgiveness are way less than penalties that can be in 6 digits.

Consolidation in the recordkeeping business will continue.

Ascensus and Mutual of Omaha have an agreement where Ascensus will acquire Mutual of Omaha’s 401(k) recordkeeping business, according to a March 27 announcement by the firms.

Through the deal, Ascensus will assume full responsibility for Omaha’s recordkeeping business, which serves more than 2,300 retirement plans and 65,000 savers, and has more than $3.9 billion in assets under administration.

According to a MetLife survey, 91% of plan sponsors are concerned that their future retirees will run out of money in retirement.

I’m surprised that it’s more than 90 percent, but the fact remains that we have a retirement crisis in this country and we are not doing our best to alleviate it. Of course, someone will joke that many of these plan sponsors had pension plans that they eliminated because of cost, but that is another argument for another day.

My daughter works at a local restaurant and I think it doesn’t look good when employees there, order out. I also understand why a mutual fund company puts their mutual funds in a 401(k) plan, even if it makes them look like easy targets for an ERISA class action lawsuit.

A federal judge in New York just dismissed an ERISA lawsuit against AllianceBernstein and the company’s 401(k) plan fiduciaries, rejecting allegations that offering their proprietary investments was imprudent and an example of self-dealing.

Their class action was a complaint that AllianceBerenstein funds were underperforming. “Plaintiffs do not allege specific facts that directly demonstrate … defendants acted for purposes other than providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan,” Federal judge Lewis J. Liman wrote. Their allegations of underperformance by several investments “is not of sufficient duration or magnitude to create an inference of misconduct,” he wrote.

I’m becoming more like Larry David as I get older. Not the hypocritical part of Larry, but the part that says what he feels without a filter.

Years ago, I worked at that Fakakta law firm, and one of the named partners, came up to me and asked what law I practiced. I said ERISA and he said he didn’t know anything about it, and walked away. You can laugh, but he was one of the smart ones. Going to law school doesn’t mean you know every facet of the law. I know that, every time I talk to my wife, who drafts motions and appeals.

The most difficult clients for me, are attorneys. Just because they don’t know ERISA, doesn’t mean anything. I was on a call with an advisor and a tax attorney on their client’s matter with a husband and wife. The tax attorney treated me like I was sort of an idiot when I talked about the controlled group rules and the limited spousal exception to those rules, that his client didn’t meet. Rather than accept what I was saying, this tax attorney asked about my experience and whether I ever heard of some attorney, that I never have.

I suspect that most plan providers will agree with me or if they don’t, that they’re most difficult clients are doctors. But that’s a post for another day.

My son loves autograph signings. The enjoyment for me is dependent on whether the show is run well. That means the signees show up on time and there is a process in place to hold the showgoers in a manageable line.

I can tell you having a process in place and following it, is a big deal for me. I’ve had experiences at shows that were miserable, just because it was not managed properly. When I was at the 2022 Sports Collectors National Convention in Atlantic City, it was no fun even if I saw Reggie Jackson again when it was people on top of people, and I joked that if I didn’t get COVID then, I was never going to get it.

My son and I go to these local shows in Westchester and Hofstra, managed by the same company. Usually, it’s managed well. For the big Westchester shows, they call by number and things run smoothly. Unfortunately, we just attended a show with 5 current New York Rangers and a handful of Rangers legends including Phil Esposito. Let us just say, it was a hot mess. They let the customers storm the stage and the idea of calling numbers was thrown out the window. Didn’t matter how low my numbers were for guys like Adam Fox or Igor Shesterkin, there was a breakdown in the process.

As we say with plan sponsors, it’s all about a process and following it. You can’t let it break down, no matter how overwhelmed you are.

The controlled group rules, basically say that in many circumstances, companies with similar ownership will be considered as one company. The rules were put in place to stop abuses of excluding rank-and-file employees from retirement coverage while benefiting the highly compensated.

When your plan provider explains the rules to you, they’re trying to screw you out of some humongous retirement benefit, they’re just parroting a law that has been on the books to prevent retirement plan discrimination in favor of highly compensated employees.

According to a recent study, there are 29.2 million forgotten participant 401(k) accounts that hold $1.65 trillion in assets, up from 24.3 million and $1.35 trillion in 2021. That is 25% of all 401(k) plan assets. That is an incredible number and that’s a lot of assets where former participants aren’t managing their retirement savings.

This is what the Department of Labor and plan providers are going to create tools for former participants of 401(k) plans to find their money, which will be useless for the participants who don’t bother to look, just like how people don’t check their state unclaimed funds program to see if they have money owed.

Nationwide is teaming up with Morningstar Retirement by offering a new managed account service that merges custom retirement strategies with direct advisor involvement. Financial advisors who work with retirement plan clients will be able to leverage Morningstar Retirement’s advisor-managed accounts service through Nationwide.

With participants indicating difficulty in managing their 401(k) account, it’s not surprising more providers are offering managed account services.

Empower announced partnerships with several asset management and insurance providers to offer a range of in-plan and out-of-plan guaranteed income solutions to its defined contribution (DC) plans.

Partnerships with American Century, American Funds, and other providers will offer annuity and target date solutions for plan participants.

These new products are consistent with the push in the business and the government for more income solutions.