The Rosenbaum Law Firm P.C. Blog

My latest newsletter geared towards financial advisors can be found here.

My latest JDSupra.com article can be found here.

If you are a third party administrator (TPA) and you’re overburdened with the restatement process, may I suggest you call my Firm?

I have 17 years experience in preparing plan documents and been through a handful of restatement processes from that time frame.  We offer restatements using a Relius Volume Submitter document at a reasonable price. Volume pricing is available.

So instead of burning the midnight oil, you could delegate drafting plan documents to the National ERISA law firm that charges reasonable flat fees.

Give me a call if you’re overburdened with plans and not enough time until the April 30^th deadline,

My favorite professor at law school Bernie Corr said it best when he joked that the Bankruptcy Code changes to keep bankruptcy attorneys employed.

I’m sure people think that the Internal Revenue Service (IRS) requires retirement plans to be restated every 6 years to keep ERISA attorneys like me employed.

Maybe that’s true in part, but the Internal Revenue Code consistently changes when it comes to retirement plans, so the IRS requires retirement plans to be restated every 6 years.

If you sponsor a defined contribution plan using a ready-made prototype or volume submitter plan, you need your plan to be restated by April 30^th. If you fail to amend and restate your plan by that deadline, your plan will be penalized on audit and risk disqualification of the plan which would mean that all benefits would be immediately taxable to plan participants and business deductions for contributions disallowed. So get that plan restated.

If you need a plan restated, I know a pretty decent ERISA attorney (cough, cough) who can restate your plan document at a reasonable, flat fee. Give me a call.

I always believe that the retirement plan business is a relationship driven business. It’s also a small world of industry where providers know providers nationwide. This belief has certainly helped my law firm practice grow as I’ve always had an open door policy in fielding questions from financial advisors and third party administrators without nickel and diming them with invoices for services provided.

The problem with any relationship is that it will conclude at one point and knowing when it’s over.

When I started my law firm practice 6 years ago, one of my marketing campaigns is when I advertised my legal services for financial advisors and third party administrators (TPAs) where I would charge a flat fee such as $500-$1,0000 per month in providing general ERISA legal advice. While I haven’t advertised this service as much as I should, I have three financial advisory fees and one TPA that pay that fee.

The first client I ever signed up for that fee was a TPA who eventually thought so much of my work and used my services, that they upped their payment to $2,000 a month. Through some of the projects I worked with them, they became my biggest client in 2012. The owner of the TPA said we’d be rich with his plans for plan design.

When it came time to restating their defined benefit clients for the EGTTRA restatements that were that April 30^th, they needed my services and I performed around 40 restatements in less than two weeks time. The $40,000 I billed was around 2.5 times what I normally billed per month.

Billing $40,000 that month for that TPA client was amazing and it would have been more amazing if I actually collected that money. You see, the TPA was claiming that because of infighting with key employees that left the firm, they would have a hard time in paying that bill all at once.

I’m not a stubborn man when it comes to business relationships, so I’d let them float as long as they gave me work. Pretty soon after that, they couldn’t pay the $2,000 a month anymore. A reasonable businessperson would have referred the matter to collections, but I wasn’t reasonable because I thought that relationship was more important.

When Hurricane Sandy destroyed almost half my home, I was nearly broke. It happens when you have no flood insurance. So I reached out to this TPA and asked whether I’d get paid. I was told I would.

Thanks to the generosity of the Federal Government and whatever savings I had left, we were able to rebuild better than ever. I was chasing that TPA with phone calls and messages on whether there was going to be further work for me. I was promised there would be. But my biggest client in 2011 and 2012 was becoming a client where there were no fees coming in for 2013 and 2014 from them. I should have referred the matter out to collection, but I still felt like the relationship mattered and that there were fees that were going to eventually come my way.

In late 2015, they referred me a client that needed to restate their 401(k) plan. I did the work in July and finalized all the work in January. I still haven’t paid in full from their client. So my deadbeat client was referring me more deadbeat clients.

A few weeks back, I texted the owner of the TPA that maybe it was best to go our separate ways and that I refer the matter to collections. He promised to call Washington’s Birthday, He always promised to call, he rarely did, Weeks would go by where he would promise to call every other day and months would go by before we ever talked and he never seemed to want to talk about the money he owed me.

I knew he wasn’t going to call President’s Day and he didn’t. I finally referred the matter to collections last week. Once I referred the matter to collections, I felt 1,000 pounds off weight lifted off my shoulder. Of course, I’m beating myself for not seeking the money a few years back, but I thought I was doing the right thing with a business partner. You can bend over backwards for people and there were always be that one or two people who will take advantage of that. The problem is identifying those people and when to end it.

In the end, it’s all about teaching a lesson. You do good work, you deserve get paid. Excuses and promises are nice, but they don’t pay your expenses. Don’t be like me,; pull the plug before 4 years pass by.

I always talk about how plan sponsors need to work with experienced financial advisors, third party administration (TPA) firms, and ERISA attorneys on their plan needs.

Like with reasonable fees, I believe that the term “experienced” is vague. Experience doesn’t just mean years of service as a service provider. Years of experience are just one measure of retirement plan experience. Retirement plan experience could be number of plans that a provider is currently working on or even something as performing good practices in an industry where not many providers do that. So I was kind of taken back when a financial advisor I assumed that I said experience means years because this advisor (who has made a name for himself as being excellent) protested that he had 3 ½ years experience and his commitment to his clients in doing the right thing was better than what many with 35 years experience as a financial advisor who put their needs ahead of the client. I told him that he was preaching to the choir because I’ve been there and done that.

I worked at a law firm for 2 ½ years. You had some law firm partners who were excellent and then you had some that you knew that either fell through the cracks or more likely, were “juiced in” because a senior partner took their fancy. At one point, our firm had about 5 ERISA partners. All of these partners were from the multiemployer world (union Taft Hartley plans), which is a different creature from the single employer world. I bet none of these attorneys knew what revenue sharing was or how a single employer 401(k) plan because one of these partners was our 401(k) plan’s trustee and he never bothered to hire a financial advisor or review investments with the other two trustees or have participants in the plan get investment education that only increased the law firm’s fiduciary liability as a plan sponsor. So if you sponsor a 401(k) plan, would you hire one of these ERISA attorneys? At another firm, I once worked for one of the best ERISA attorneys in the country (in the multiemployer world) and didn’t know what revenue sharing was an why plan sponsors need to be concerned about administrative costs.

The same can be said of financial advisors. A financial advisor may have a billion dollars or management or have been in the business for 30+ years, but it’s irrelevant if they don’t have more than one retirement plan on their books. Even if they have a load of retirement plans on their books, it doesn’t mean anything if they don’t help their clients with an investment policy statement or giving education to participants in participant directed 401(k) plans.

Same with TPAs. Some can’t handle daily valued 401(k) plans, some can’t handle defined benefit plans, and some can’t handle any retirement plan outside of the box like new comparability form of allocation.

The point is that levels of experience may vary and it’s important to find the retirement plan provider with the right experience. It has to be the right fit for the plan based on the plan’s size and type. How do you that?  Nothing beats word of mouth and asking the potential retirement plan provider the right questions, especially if they have the experience to handle your type of plan.

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

I always talk about my open door policy with financial advisors and third party advisors where I will help these plan providers out without me actively seeking their business. I kind of have that liberty because it’s my own law practice and I don’t have the stress to bill when everything at the end of the month is mine anyway.

The reason that I take the phone calls and respond to the e-mails is the belief that the retirement plan business is a relationship driven business and I learned that by a friend of mine named Richard Laurita (may he rest in peace). He was the salesman at two TPAs I worked with. Rich was all about developing relationships in this business. I once joked that he probably couldn’t spell 401(k), but he didn’t need to because the relationships he developed over time brought him and his employers business. I follow the same approach and quite honestly, most of the plan providers I have talked to over the past 6 years never brought me business and that’s fine because some day they might. The help I give in these types of conversations are free and I can probably say on one or two fingers how many plan providers abused that free help. I believe that if you help people, they will remember you.

So here is the part where I talk about one of my success stories. There was a registered investment advisor with absolutely no retirement plan clients and he wanted in this business. For over two years, we spoke on the phone and met where he introduced me to people and I introduced him to people, but no business for me. I’m a patient man, that’s what happens when you go to school for 22 years straight. Over time, he took my advice on how he can partner with other advisors and he attended conferences that I suggested he attend.

Well that registered investment advisor who was honest that he didn’t know much about that retirement plan business and wanted to seek help from those that could, including yours truly, has netted a few retirement plan clients and is now an ERISA §3(38) fiduciary (hiring me to develop his service agreement at a flat fee).

This story isn’t about me. To me, it’s about how plan providers can get ahead just by being honest on what they don’t know and developing the relationships with those that do.

My latest JDSupra.com article can be found here.

It should come as no surprise that the Senate and the House of Representatives are trying to do their best to make sure that the Department of Labor (DOL) is thwarted with implementing a fiduciary rule for retirement plan and individual retirement accounts.

There is legislation in both houses to require congressional approval of any DOL fiduciary rule change.

Democrats and Republicans don’t agree on much, but they do when they are funded with money from investment brokerage houses that want no part of a fiduciary rule that would increase their responsibilities and liability exposure when their brokers won on retirement plans. Add an election year into the equation and you have some exciting times as to whether the DOL will attempt to publish a final rule and whether they have the political capital to stand up against the opposition. There will be a new President in the next 10+ months, so time is of the essence.