Tell your TPA the whole story

There are good third-party administrators (TPAs) and bad ones. No matter how good your TPA is, they’re not a mind reader. So when it comes to providing information to your TPA, you need to level with them. If you don’t provide the necessary information about the census, ownership, ownership in other entities, and other qualified plans you maintain, your TPA can’t do their job credibl

There are good third-party administrators (TPAs) and bad ones. No matter how good your TPA is, they’re not a mind reader. So when it comes to providing information to your TPA, you need to level with them. If you don’t provide the necessary information about the census, ownership, ownership in other entities, and other qualified plans you maintain, your TPA can’t do their job credibly.

 I’ve seen too many TPAs discover errors, just because the plan sponsor didn’t provide the necessary information. Corrective contributions might be owed if you did the employee census incorrectly or if you didn’t provide all the companies you own.

The easiest errors to avoid are the ones you can avoid by providing the information your TPA asks and by volunteering information that you should think they should know.

There are good third-party administrators (TPAs) and bad ones. No matter how good your TPA is, they’re not a mind reader. So when it comes to providing information to your TPA, you need to level with them. If you don’t provide the necessary information about the census, ownership, ownership in other entities, and other qualified plans you maintain, your TPA can’t do their job credibly.

 I’ve seen too many TPAs discover errors, just because the plan sponsor didn’t provide the necessary information. Corrective contributions might be owed if you did the employee census incorrectly or if you didn’t provide all the companies you own.

 The easiest errors to avoid are the ones you can avoid by providing the information your TPA asks and by volunteering information that you should think they should know.

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401(k) Plan Sponsors Aren’t Aware Of Their Own Mistakes

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

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The new normal will be here for a while or will it?

The problem with the Coronavirus pandemic is that for every 4 medical experts, there seem to be 8 medical opinions. 

They say the virus can be killed by heat, then they say it can’t. They say it can travel 6 feet,26 feet, or it can’t travel it all. They say that social distancing may have to continue 2 months, 4 months, or 18 months. They say it came out of a wet market and they say it came out of a lab.

The problem with looking at potential ramifications from the virus on the 401(k) industry in the short or long term. Is that your guess is good as mine. It can be over in 2020 or it can take as long as getting a vaccine. What I do know is that you need to take a close look and identify any changes in the business landscape. You can’t afford to ignore an ever-changing landscape.

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10 Years In

LinkedIn notified me that it’s been 10 years since I started my own law practice in April 2010. It’s hard to believe it’s been 10 years, but it has been a wild ride, full of highs and lows and my own series of branded 401(k) advisor conferences)

Dissatisfied with my role as an associate at a mid-sized law firm, I’m sure I surprised many including family members when I decided to go out on my own. I went on my own because I had enough of the mid-sized law firm model. It was a model based on bureaucracy and high billing, in order to support a huge overhead of fancy offices and too much staff (did we really need 3 people in billing?) Before I started on my own, I had talks with another mid-sized law firm about a job and they told me that to support a salary of $150,000, I’d have to bring in $400,000 worth of business. If I could bring in $400,000 in business, why would I need a law firm to waste away $250,000 of it?

10 years later, I’m still bitter over my experience as a law firm associate. While I should take pride in my success over the last 10 years, I dwell on the failure I experienced in trying to bring in business for Meyer Suozzi English & Klein (Meyer Suozzi). I knew I had the skills to bring in business, but I was dealing with a bureaucracy that would take six months to approve an article I wrote and I wasn’t even allowed to use social media because the law firm advertising guru (who was an associate who drew no business and had no idea what social media is (it isn’t advertising Rob)).

The law firm was managed by a lawyer who was a snob and had such disdain for social media, even though her husband used it for his own law firm to great success. In addition, it was a mid-sized law firm made up of many former solo lawyers who didn’t want to introduce me to their clients even though they would make a 50% bonus of any fees I’d bring in.

I knew when I opened up my own law practice in 2010, that I would succeed and Meyer Suozzi would falter. I wasn’t being arrogant, I just knew that writing articles that plan providers could use for their own marketing would engender enough goodwill that these grateful providers would refer me business. I knew Meyer Suozzi would falter because they had a managing partner who still thought it 1985 and a bumbling law firm administrator (who since left) who misused the marketing department by having them publish his law administration articles that drew no business.

When I left in 2010, Meyer Suozzi had 65 attorneys, they are down to 39 and lost many practice areas including New York Government law, ERISA (hi, there), most of their labor law department (Hi, Rick), and almost their entire Bankruptcy Department. All of the law firm partners in the New York office that didn’t treat me well are gone too, some struggling in Of Counsel positions with other firms.

The bitterness is about failing to draw enough business to sustain a growing National ERISA practice, but also because I tried to make friends with and bring in business for law firm partners, who clearly had no interest in having a relationship with me. Whether it was giving out free U.S. Open Golf tickets or introducing partners to people they should network with, it was a one-sided relationship and it took me until I went on my own to recognize that. People suggested that I shouldn’t have burned my bridges with Meyer Suozzi, but my rationale was that if they didn’t refer me business when I was there, why would they start now? The bitterness is still there, yet it has inspired me to work hard and do well. Every day is to prove all of them wrong, again and again.

I know I should enjoy the moment of 10 years in business (most of it successful), but my time at Meyer Suozzi reminded me of a few times in life when the relationship was one-sided (on my end) and I cared too much and I got hurt because I didn’t see it even though the signs were always there. The success has helped with the bitterness because Meyer Suozzi’s loss is my gain and I never would have had the success there that I have on my own because I’d still be dealing with people who might be good lawyers but are just terrible business people.

I built my law firm (not on rock-n-roll, my wife hates that Starship song) by not being like Meyer Suozzi, that’s my reward. Like Andy Dufresne in The Shawshank Redemption, who had to crawl through a 1.5-mile sewer pipe, I came out cleaner, bigger, and better on the other side, 10 years in.

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Filing for 5500s for off calendar year plan extended

The Internal Revenue Service (IRS) has increased the filing and payment relief provided under prior guidance.

IRS Notice 2020-23 extends the due date for employee benefit plans required to make the Form 5500 series filings due on or after April 1, 2020, and before July 15, 2020. Plans with original due dates or extended due dates falling within this period now have until July 15, 2020, to file their information reports.

Plan Administrators with original (un-extended) filing due dates falling within this announced 2 ½ month period who need additional time to file may request extensions by filing Form 5558 by July 15, 2020. This relief does not extend to calendar year plans and the 5500 for the December 31, 2019 Plan Year. Depending on how this pandemic continues, the IRS may issue further guidance.

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Abbott Case Proves Cyber Theft Is A Serious Matter

With everything 401(k) related being online, cyber security is important for plan sponsors, plan providers, and plan participants.

A former employee of Abbott Laboratories sued the company and its record keeper, Alight Solutions LLC, accusing plan fiduciaries and Alight of violating their ERISA duties because her 401(k) account was looted by an impostor.

Heide K. Bartnett, a former Abbott employee alleges that $245,000 was transferred from her account without her knowledge, blaming the defendants for allowing the money to be transferred to an internet address in India before she could take steps to stop the fraud. Bartnett alleges an unknown user accessed her account online, changed the password and initiated a transfer to a new bank account, after getting additional personal information from Alight customer service representatives over the phone, according to the complaint.

Bartnett left Abbott in 2012 and had been trying for more than a year to get the north suburban medical products giant to restore her 401(k) account, which she alleges was the target of such a fraud. Alight is supposedly under federal investigation for allegedly processing unauthorized retirement plan distributions through cybersecurity breaches.

Cybersecurity issues are extremely important because the last thing a plan sponsor and their provider will want to have to deal with is the theft of participant assets.

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No shock, employers are suspending their matches

In the time of financial turmoil, one constant is that employers cut back on their employer contributions in the 401(k) plan they sponsor.

Among 152 sponsors surveyed by the Plans Sponsor Council of America, almost 22 percent of 401(k) plan sponsors with 1,000 or more participants in their retirement plans have either suspended or are considering suspending employer matches to those plans. That is just weeks into this Coronavirus pandemic, I expect numbers to grow as financial results will lead employers to further conserve money and cut back on the employer contributions. While this number is in line with the numbers seen in 2008, I believe that this pandemic will have a far greater negative impact on the economy and the matching contributions that employers fund.

 

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Tales Of A Former Law Associate Nothing

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

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The Road To Hell Is Paved With Good Intentions For 401(k) Plan Sponsors

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

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The free distribution package problem

A lot of the bundled third-party administration (TPA) firms are offering free distribution packages to participants who need a distribution because of Coronavirus. They can afford to because their TPA business has only been ancillary for the distribution of their mutual fund or insurance-based. Products. As an unbundled TPA, I suggest you don’t.

You need to be compensated for your time and no matter what people may think, it is a lot of work. Why waive a fee for people taking money on plans that will negatively impact your business? More importantly, it’s a lot of work and you need to be compensated for your time. My point is that when you give away free services, you are showing that your services essentially have no value. In this day and time when many of us are struggling, I don’t think it’s wise to offer free distributions.

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