The Rosenbaum Law Firm P.C. Blog

I’m not ashamed to admit when I think someone has a good idea and I think that the folks at Evoshare offer something that every plan sponsor and plan provider should consider adding to a 401(k) plan because I believe anything that makes more deferrals possible is a good thing.

EvoShare is a financial platform that enables employees to save for their 401(k) or 403(b) while shopping online and locally at stores, bars, and restaurants. Evoshare allows employees to spend at their favorite businesses, and receive up to 30% cash-back towards their retirement plan through their employer. So it’s more than just a website, a plan participant can take their linked credit card and shop at their favorite local stores and have that cash back go towards retirement.

How does it work? Every quarter, EvoShare sends the employee a check for the total cash back or transfers the funds electronically. At the same time, a one-time payment for that amount is taken from the employee’s paycheck and deposited in the 401(k) plan, so the employee comes out even in terms of take-home pay. I’ve taken a look at their site and it’s easy for a 401(k) plan to set up.

If interested, contact EvpShare and tell them Ary sent you.

When you get pulled over by the police while driving, the best way to handle is to be pleasant and not be argumentative. You listen to the officer as to why he pulled over. Being belligerent and non-cooperative will only lead you to a ticket.

When a plan sponsor is contacted by the Internal Revenue Service (IRS) or the Department of Labor for a questionnaire or a request for information, it’s best for them to be cooperative and immediately have them contact an ERISA attorney. Being unresponsive or curt with them may lead them to sniff further and look closer at the plan for potential ERISA or Internal Revenue Code violations.

I had a client that had committed a serious breach of fiduciary duty and their cooperation of the Department of Labor (DOL) agent investigating the matter went a long way into correcting the error and avoiding some serious penalties. The DOL agent was very diligent in her role and was actively finding solutions that the client could pursue in rectifying this matter. Stonewalling the DOL would have been a headache and possible litigation by the DOL. In the end, we came to an agreement and rank and file plan participants were made whole.

A few years back, a potential client who advised me that the DOL was seeking information as to why the defined benefit plan that his bankrupt company had sponsored failed to prepare audits and 5500 filings for the past several years contacted me. This potential client refused to answer the DOL’s request and informed me that he had bankrupted the plan to benefit his personal expenses. I had advised him that he should immediately cooperate and the criminal attorney at my old firm recommended to same to avoid certain jail time for embezzlement. This potential client ignored our advice and declined our representation. He was arrested a year or so later and was convicted and sent to jail for 18 months. Had he played ball with the DOL instead of hiding it, he might have avoided jail time.

Cooperation with the IRS and DOL can go along with defusing problems that threaten the qualification of the plan and increase the liability for the fiduciaries. So if a plan sponsor is targeted for an audit or a request for information, the best bet is to contact an ERISA attorney. I hate to say it, but IRS and DOL agents act differently when working with an ERISA attorney than a client with no retirement plan background. Regardless of the problem, it’s always best to cooperate. So if your client gets contacted by the IRS or DOL, pick up the phone and give an ERISA attorney like me, a call.

Small to medium-sized businesses really need to be up to date with human resources issues that include 401(k) plans. Employers can get into trouble with the Department of Labor just by placing their I-9 forms in an employee’s files.

They need legal resources to rely on whether it’s an attorney or perhaps a PEO. Whatever the resource it is, they do need one.  Having been an employee once, I can state that most employers have no clue about human resources and most of these companies didn’t even have a person dedicated to serving in an HR capacity.

So whether it’s using a lawyer, a PEO, or my affiliated That HR Association, it’s important for employers to understand the legal ramifications of human resources and that there is a lot of stuff that they don’t know in that area.

So the afternoon before Thanksgiving, my Verizon FIOS went down and wasn’t coming back so quickly. That means the Internet, TV, and my phone went down when the main unit showed fail.

I called FIOS tech support and they said that they couldn’t communicate with the unit and I needed to remove it from the outlet and then reset. It still wasn’t working and they told me that they would have to send a technician out. The problem is that thanks to the holiday, the technician wouldn’t be coming until Saturday. That meant no TV, Internet, and phone for Thanksgiving and Black Friday. Despite our pleas for earlier help, Verizon had no help for us even when we threatened to cancel the service.

For 13 years, we used Optimum as our cable provider for phone, Internet, and TV. While they were more money, I was happy with the service and especially the complimentary WIFi in thousands and thousands of locations around the area. My wife for a few years was badgering me about FIOS and I succumbed to that in February.  Now I was faulting myself for making the switch.

To add insult to injury, the technician came that Saturday and fixed the problem within two minutes, apparently, a wire was sticking out of the unit. The diagnostics help by FIOS on the phone never mentioned anything about checking the wires and by the naked eye, everything looked fine. Maybe if the tech on the phone asked me to check the wires, maybe I would have discovered the loose one on the bottom of the unit.

So what happened? I ordered Optimum to come back where there will be $5 cheaper and will pay off my early termination fee from FIOS. I also ended my 20-year run using Verizon Wireless and got a free phone for my wife and I and saving $100 a month.  Maybe I was unreasonable to demand such quick service, but dropping the ball with scheduling and not giving me the chance to fix the problem on my home without some guidance cheated me out of a holiday watching football and being stress-free.

When providing a service to a client and they need help, provide the best help you can. If you can’t accomplish everything they need, at least be apologetic and sympathetic. Otherwise, you can lose a long time client.

When the local TV news does a report surrounding a snow storm, I always joke that they should recycle the reporting from supermarkets and hardware stores for barren shelves. It saves time and money.

The same can be said about the recent reports talking about the choppy stock market and participants losing money in their 401(k) plans. If this choppiness leads to a long term correction, expect more reporting and questions on whether the 401(k) plan is the right retirement savings vehicle. There will also be reporting about fees.

How do I know this? Like snowstorm reporting, it’s predictable. What is not predictable is how the industry deals with it and it should not be defensive about it. Until there is something out there that is better and cost effective for the employer, the 401(k) plan is still the most inexpensive option out there. The industry should just strive to improve where it needs to, which is participation and education; I think is where the industry needs the most improvement. Thanks to fee disclosure, you’ll see fewer articles about costs than we did in 2000-2001 and in 2008. I’m just warning you about the articles that come with bad investment news because I’ve lived through it before.

American Century Investments recently won a class-action lawsuit alleging that they profited from their company 401(k) plan at the expense of employees by loading the retirement plan with in-house mutual funds.

The judge in the case stated the trial evidence didn’t show American Century’s decisions were motivated by the desire to place their interests over participants. The judge also reasoned that it is common for mutual funds companies to offer their own investment funds in their retirement plans and there is no duty to offer more than one investment company’s funds.

While many other companies like Waddell & Reed, Deutsche Bank, and Citigroup settled for millions, American Century stood their ground and won the case.

It’s clear that plaintiffs failed to show that having those American Century funds in the plan was an actual breach of fiduciary duty. Like I’ve stated before, mutual funds companies that place their own funds in their 401(k) plan are easy targets for ERISA litigators, so I’m actually happy that a Judge said that just having those mutual funds doesn’t show that it was an immediate breach of duty. I think plaintiff’s counsel need to show an actual breach because, from a business standpoint, it would be bad for appearances if American Century didn’t place their own funds in their own 401(k) plan because competitors would use this to besmirch American Century. Not having your own proprietary mutual funds in your own 401(k) plan looks as bad as the restaurant workers that order takeout.

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

My newsletter for retirement plan professionals can be found here.

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

The only bad thing about smartphones is when you have to shop for another one. So my wife and I went to the local Costco and the representative there who works for an unaffiliated cell phone service selling company approached us with a great offer. If we switched from Verizon to TMobile, they would give us the new iPhone XR, which is better than the 7 I have now.

My wife was a little hesitant because she thought the best deal we could get at TMobile was a buy one, get one free. The representative told us that he had the special deal and all we would have to do is pay the tax on the phones. My wife wanted to shop, so she told the representative she’d come back after shopping. So when we come back shopping, the representative told us that his deal expired and the only one left was that buy one, get one free that every TMobile store had.  My wife and I left in disgust because either the representative was trying to scam us into buying the phones or more likely, he had no idea what the pricing was.

When dealing with potential clients, there is nothing worse you can do if you get the price quote wrong and you have to come back with a more expensive price. It betrays the growing confidence and trust that this potential client has in you. Trust and confidence are bug things in the retirement plan business and anything that chips away at it is going to hurt you in the long run. You need to be careful about how you price your services and if you make a mistake, I suggest you live with it.