The Rosenbaum Law Firm P.C. Blog

When I travel to a stadium or a game, I’m a beer snob and I will walk around to find a beer that isn’t Bud, Coors, or Miller, or even Blue Moon. I always like to use beer as an example when it comes to the retirement plan business because there is a connection there,

So when you think of the beer industry, the big did get bigger. InBev merged with Anheuser Busch and Miller merged with Coors and Molson. A company like Samuel Adams or Yuengling didn’t decide that with these large beer manufacturers (not even considering the microbreweries that these major brewers own), that they should go out of business. Small craft brewers still had a place in the marketplace. There are still customers who want quality beer even if the masters want Bud Light and Coors.

The same can be said of the retirement plan business. While a few third party administrators and plan providers are buying up the world. There is still space on the shelf for your services, it’s all going to be about how you can differentiate yourself in the marketplace.

You’ve seen the logo for many of That 401(k) Conferences as a conference sponsor, but you don’t know much about That HR Association.

That HR Association is a human resource benefit corporation with the idea of providing human resource management and benefits to employers nationally. Besides a 401(k) multiple employer plan, the association will offer an automatic rollover IRA solution, a student loan management program, as well as insurance benefits for employees and other resources.

The website should be up soon and there will likely be some events nationally to introduce employers and plan providers to the association.

For more information, shoot me a line.

I call myself the “most dangerous ERISA attorney in America” because I’m not afraid to express my opinion. So I’m going to say something that will irk a few people.

As the Department of Labor is concerned with missing participants and having questions about the use of automatic rollover IRAs, I have one question: are we doing enough with automatic rollover IRA accounts? Are missing participants well served with an IRA product that maybe pays 30-50 basis points in savings account interest where the interest can’t afford to pay the custodial fee? I don’t think they are and I’m sure the DOL will agree with me especially when inflation outpaces any FDIC bank interest rate.

If you agree with me, contact me shortly about a new type of automatic rollover IRA that I’ve been working on with a well known IRA custodian that will make plan providers happier and missing participants even happier (if they’re ever found).

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

One thing I did with That 401(k) Conference is to have a price for admission. Sure, there have been advisors who scoffed at paying a fee to attend, but I’ve been to too many free 401(k) related events.

When you don’t charge for admission, it gives incentives for those who reserved the spot any reason to cancel at the last minutes. How many times did I sponsor a 401(k) event and half the reservations cancelled?

I believe that you need those who reserve a spot at your conferences should put something down to attend your event, what I call skin in the game. Charging some sort of fee does a job of making sure that someone who has reserved will actually attend.

Shelf space payments where mutual funds pay a platform a fee for space on their 401(k) shelf of investments is the newest thing, especially as a way to replace the loss of revenue sharing. One provider, in particular, is under investigation for these payments.

These payments are legal for the time being, but I always err on the side of caution. If you’re an advisor using these type of funds, my belief is that you should willingly disclose the arrangement even that you’re not involved in the arrangement. I’d rather have you disclose such information, rather than your competition because it’s all about appearances and not disclosing makes it look like you’re hiding something (and you’re not since it’s not your arrangement). Just my two cents.

In the retirement plan industry, we have rules and we have guidelines on what to follow. However, there is one gray area that the Department of Labor (DOL) has absolutely no guidance: uncashed checks.

Uncashed checks are becoming a real issue, mainly because the DOL is focusing on missing participants. Not many plan sponsors balance their checkbooks, let alone the plan’s trust. Plan sponsors and their plan providers rarely make sure that distribution checks are cashed. If they’re not, what happens?

Until the DOL opines, there is no definitive answer on what to do with uncashed checks. While I prefer allowing for an automatic Roth Rollover IRA, some in the industry want to allow uncashed checks to escheat to the state. Until the DOL gives some guidance, what we should definitively do with uncashed checks will be a mystery.

One of the biggest strikes against multiple employer plans (MEPs) may go the way of bellbottoms and Betamax.

The Internal Revenue Service is proposing an exception to the one bad apple rule, which means that the action of lack of action by one adopting employer could threaten the entire qualification of the MEP. The IRS’ proposed regulations, which were developed in consultation with the Department of Labor, that would provide an exception to the unified plan rule (the one bad apple rule) for certain defined contribution MEPs.  Under the proposed regulations, a defined contribution MEP would be eligible for the exception to the unified plan rule on account of certain qualification failures due to actions or inaction by a participating employer, if the conditions set forth in the proposed regulations are satisfied. The exception would be available if the participating employer in a MEP is responsible for a qualification failure that the adopting employer is unable or unwilling to correct. It would also be available if the participating employer fails to comply with the plan sponsor’s request for information about a qualification failure that the plan sponsor reasonably believes might exist. For the exception to the unified plan rule to apply, certain actions are required to be taken, including a possible spinoff of the plan assets and account balances attributable to participants who are employees of such an employer to a separate plan

I always felt the one bad apple rule was used by MEP critics as a slap against MEPs, but what is the practicality of the one bad apple rule where any plan, MEP or not MEP can seek correction through voluntary compliance and the IRS doesn’t disqualify many plans either?

My newsletter for retirement plan providers can be found here.

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