The Rosenbaum Law Firm P.C. Blog

I can’t tell you how many times I’ve heard someone say, “It’s in our employee handbook.”

That’s great.

But if it conflicts with the retirement plan document, the handbook usually loses.

Your employee handbook is an important HR tool. It explains workplace policies, benefits, attendance rules, and company expectations. Your retirement plan document, however, is the legal document that governs how your qualified retirement plan operates.

The two are not interchangeable.

I’ve seen handbooks describe eligibility incorrectly, explain matching contributions that no longer exist, or promise features the plan doesn’t actually provide. Sometimes the handbook was written years ago and never updated after the plan was amended.

That’s where problems begin.

Employees read the handbook and expect those provisions to apply. Payroll relies on it when administering the plan. Then an audit or operational review reveals that the handbook says one thing while the plan document says another.

Guess which document the IRS and Department of Labor will look at?

The plan document.

This doesn’t mean your handbook isn’t important. It means someone should review it whenever your retirement plan changes. If eligibility, matching formulas, automatic enrollment, vesting schedules, or other plan provisions are amended, make sure your handbook reflects those changes.

Consistency matters.

Your handbook is designed to communicate benefits to employees. Your plan document is designed to satisfy ERISA and the Internal Revenue Code. Both have a purpose, but only one governs the operation of your retirement plan.

Don’t assume they’re saying the same thing.

Verify it.

One of the biggest misconceptions I encounter is that finding an operational error means someone must have done a terrible job. That’s simply not true.

Retirement plans are governed by thousands of pages of statutes, regulations, IRS guidance, and plan-specific provisions. Even the best HR departments, payroll personnel, TPAs, recordkeepers, and advisors make mistakes from time to time.

What separates a well-run plan from a poorly run one isn’t whether mistakes occur. It’s how they’re handled once they’re discovered.

The IRS recognizes this reality, which is why it created the Employee Plans Compliance Resolution System (EPCRS). The correction program exists because the IRS understands that errors happen. The goal is to encourage plan sponsors to identify problems, correct them promptly, and preserve the tax-qualified status of the plan.

I’ve worked with clients who discovered missed deferrals, incorrect matching contributions, eligibility errors, and plan document failures years after they occurred. While no one enjoys finding these issues, almost every problem has a correction method if it’s addressed in a timely manner.

The worst response is denial. Hoping a mistake disappears rarely works. Ignoring an error often makes it more expensive and complicated to fix later. Addressing it immediately demonstrates good fiduciary governance and protects both the plan and its participants.

If your advisor, TPA, or ERISA attorney tells you that a correction is necessary, don’t view it as evidence that your plan has failed. View it as evidence that your compliance process is working. You found the problem before the IRS or the Department of Labor did.

Perfection isn’t the standard. Prudence is. A plan sponsor who promptly corrects mistakes and learns from them is usually in a much better position than one who assumes nothing could possibly be wrong.

If I had a dollar for every time a plan sponsor asked me a question that was already answered in their plan document, I’d probably have enough money to retire.

The retirement plan document isn’t something you sign once and toss into a filing cabinet. It’s the legal blueprint for how your 401(k) plan is supposed to operate. Yet many plan sponsors have never read it beyond the signature page.

That’s where problems begin.

I’ve seen employers accidentally exclude eligible employees because they misunderstood the eligibility provisions. Others have made matching contributions that didn’t align with the formula in the document. Some have allowed distributions or loans that weren’t even permitted under the plan’s terms. None of these mistakes were intentional, but good intentions don’t eliminate fiduciary responsibility.

Your service providers should know your document inside and out, but ultimately the plan sponsor is responsible for ensuring the plan is operated according to its written terms. That’s one of the fundamental requirements of ERISA.

I’m not suggesting every business owner become an ERISA lawyer. I am suggesting you spend an hour every year reviewing the provisions that matter most: eligibility, entry dates, employer contributions, vesting, distributions, and loans. If something doesn’t make sense, ask your TPA or ERISA attorney to explain it.

A plan document shouldn’t be a mystery. It should be a resource. The more familiar you are with its provisions, the less likely you’ll encounter operational failures that require costly corrections.

Your retirement plan is one of the most valuable benefits you provide your employees. Make sure you understand the rules that govern it. Reading your own plan document may not be exciting, but it could save you a great deal of time, money, and frustration down the road.

One thing I hate about social media is that the loudest voices are often the least interested in having an actual conversation. They’re not looking to exchange ideas or learn something new. They’re looking for clicks, comments, and outrage. That’s the entire business model behind rage bait.

I recently came across a post claiming that 401(k) plans are a scam because participants generally can’t access their money before age 59½ without restrictions. Anyone who understands retirement plans knows that’s an oversimplification designed to provoke a reaction. There are hardship withdrawals, loans in many plans, exceptions to the early distribution penalty, and, most importantly, the entire purpose of a 401(k) is to encourage long-term retirement savings. But facts weren’t the point. Anger was.

Too many people take the bait. They spend fifteen minutes crafting the perfect rebuttal, only to help the original post reach an even larger audience. Every angry comment, every quote post, and every argument tells the algorithm that this content is engaging and should be shown to more people.

That’s why I increasingly believe the best response is often no response at all. Scroll past it. If you absolutely feel compelled to comment, don’t argue the merits of the ridiculous opinion. Simply point out that it’s obvious rage bait and that the poster succeeded in getting exactly what they wanted: engagement.

The internet has made everyone believe every opinion deserves a debate. It doesn’t. Some opinions aren’t sincere. They’re marketing. They’re designed to manufacture outrage because outrage drives traffic.

The easiest way to reduce rage bait isn’t better moderation or better algorithms. It’s for the rest of us to stop rewarding it. Sometimes the most effective response is the one you never post.

I’ve joked for years that I’m the turd in the punch bowl. I’m rarely afraid to say what I think, even when I know it won’t be popular. That’s not because I enjoy being contrarian. It’s because I’ve always believed that if you have expertise and conviction, you shouldn’t be afraid to use your voice.

Over the years, that has come with a price.

When I worked at a producing TPA, I believed the industry’s practice of hiding fees from plan sponsors had to end. Transparency wasn’t a radical concept to me, but it certainly wasn’t embraced by everyone. I’ve also never been shy about saying that many payroll provider TPAs simply don’t deliver the level of service or technical expertise that independent TPAs often provide. Those opinions don’t earn you invitations to every conference cocktail party. They don’t make you everyone’s favorite person.

What they do is make people remember your name.

Too many people are uncomfortable when someone has a different opinion. The most secure professionals will debate the issue on its merits. The insecure ones take it personally. They view disagreement as an attack instead of an opportunity to challenge their own thinking.

I saw that growing up as well. Whenever I disagreed with my parents on politics, sports, or just about anything else, the response was often that I had been “brainwashed.” It couldn’t simply be that I had reached a different conclusion. For some people, accepting that someone they care about thinks differently is harder than believing someone else must have manipulated them.

Having opinions won’t make everyone like you. It may cost you business opportunities, friendships, or invitations. But if your opinions are thoughtful, honest, and backed by experience, they’re worth expressing.

I’d rather be remembered for saying what I believe than forgotten for saying nothing at all.

When people ask me how to build a successful practice in the retirement plan business, they’re often looking for the magic answer. Is it social media? Conferences? Speaking engagements? Fancy marketing? Those things certainly help, but they aren’t what build a lasting reputation.

Your reputation is built on the problems nobody ever sees.

No plan sponsor calls me because their 401(k) plan is running perfectly. They call because someone missed payroll. A Form 5500 wasn’t filed. A merger created controlled group issues. A participant was excluded from the plan. A plan document wasn’t updated. Those aren’t glamorous assignments, but they’re the work that defines your value.

Anyone can look like a hero when everything is going according to plan. The professionals who earn trust are the ones who stay calm when things go sideways. Clients don’t expect perfection. They expect competence, honesty, and a solution.

One of the biggest mistakes I see is providers trying to hide problems. They worry about looking bad, so they delay telling the client or hope the issue somehow disappears. It rarely does. Retirement plans are heavily regulated, and small mistakes have a way of becoming expensive corrections if ignored.

I’ve always believed that bad news doesn’t get better with age. If there’s a problem, identify it, explain it, and develop a plan to fix it. Most clients are remarkably understanding when they know you’re being upfront with them.

Ironically, some of the strongest client relationships are forged during difficult situations. When you help a client navigate an IRS inquiry, correct an operational failure, or avoid a costly compliance mistake, you demonstrate something that no sales presentation ever could.

At the end of the day, your clients probably won’t remember the beautiful proposal you gave them five years ago. They will remember the day everything went wrong—and whether you picked up the phone, owned the problem, and helped them solve it.

In this business, your reputation isn’t built during the easy days. It’s earned during the difficult ones.

Recent data shows that Americans’ 401(k) balances reached record levels in 2025. Average account balances climbed to nearly $168,000, while median balances increased to more than $44,000. At first glance, these numbers suggest that retirement savers are in excellent shape. The reality, however, is a bit more complicated.

Strong market performance deserves much of the credit. When stocks perform well, account balances naturally rise. That’s good news for participants who stayed invested and continued contributing through market volatility. It’s also a reminder that successful retirement investing is often less about timing the market and more about remaining disciplined over long periods of time.

But average balances can be misleading. A participant who has been contributing for twenty-five years should have a significantly larger balance than someone who entered the workforce five years ago. Likewise, a participant earning $250,000 a year will likely accumulate retirement savings at a much faster rate than someone earning $50,000. Comparing balances without considering age, income, tenure, and contribution history rarely provides meaningful insight.

The report also revealed a trend that deserves attention. Hardship withdrawals reached record levels, with more participants accessing retirement savings to address immediate financial needs. While record balances make headlines, increased hardship withdrawals remind us that many workers continue to face financial challenges despite a strong economy and rising account values.

Perhaps the most encouraging finding is that contribution rates continue to increase. More employees are saving, more plans are utilizing automatic enrollment and automatic escalation, and participants are generally staying the course despite market fluctuations. Those behaviors, rather than market performance alone, are what ultimately drive retirement success.

Record balances are certainly worth celebrating. However, the real measure of retirement readiness is not how your account compares to someone else’s. It is whether you are consistently saving enough today to achieve your retirement goals tomorrow.

One of the biggest questions surrounding Trump Accounts has finally been answered.

The Department of Labor recently issued Technical Release 2026-02, concluding that Trump Accounts and most employer contribution programs associated with those accounts generally will not be treated as employee pension benefit plans under Title I of ERISA. This guidance provides much-needed certainty for employers that may be considering offering Trump Account contributions as part of their employee benefits package.

The concern was understandable. Whenever an employer establishes a program that involves contributions for employees or their families, the possibility of creating an ERISA-covered plan must be considered. ERISA coverage brings with it fiduciary responsibilities, reporting requirements, disclosure obligations, and potential liability. Many employers were hesitant to explore Trump Account programs until the DOL clarified how these arrangements would be treated.

The DOL’s reasoning is relatively straightforward. Trump Accounts are generally established for children or dependents rather than for employees themselves. As a result, the accounts typically do not fit within ERISA’s definition of a pension plan designed to provide retirement income or deferred compensation to employees. The agency also outlined conditions under which employer involvement would not result in ERISA coverage, including limitations on employer control and participation.

This guidance is significant because it removes a major regulatory obstacle that could have discouraged employer adoption. Employers may now evaluate Trump Account contribution programs without the concern that they are inadvertently creating a new ERISA-covered retirement plan. At the same time, employers should remember that the guidance does not eliminate all compliance responsibilities. Written contribution programs, contribution limits, and other requirements still apply.

For employers, service providers, and benefits professionals, the DOL’s message is clear: most Trump Account contribution arrangements will remain outside the ERISA framework. Whether Trump Accounts ultimately gain widespread adoption remains to be seen, but this guidance provides the certainty employers needed before seriously considering participation.

When plan sponsors think about retirement plan risk, they often focus on dishonest employees, cybersecurity threats, or regulatory changes. In my experience, the most dangerous employee in a retirement plan is often none of those things. It is the employee who knows just enough about the plan to be dangerous.

Every organization has one. They attended a webinar a few years ago, read an article online, or had experience with a previous employer’s plan. They become convinced they understand the rules and begin making decisions based on assumptions rather than the actual plan document. Before long, they are overriding payroll procedures, making eligibility determinations, approving distributions, or interpreting plan provisions without consulting the TPA, recordkeeper, or ERISA counsel.

Retirement plan errors rarely occur because someone intended to violate the rules. Most operational failures result from well-meaning individuals trying to solve a problem on their own. An employee decides a worker should be excluded because they are “part-time.” Another assumes a rehired employee must wait another year for eligibility. Someone else believes a payroll issue can simply be fixed next pay period. These decisions can create costly correction programs, additional employer contributions, and unnecessary audit findings.

The solution is not to discourage employee involvement. The solution is to establish clear processes and ensure everyone understands their role. Retirement plans operate best when responsibilities are defined, decisions are documented, and questions are directed to qualified service providers before action is taken.

One of the most important lessons I have learned in more than twenty-five years practicing ERISA law is that expertise matters. Good intentions do not correct operational failures, and assumptions do not override plan terms.

The most dangerous employee in your retirement plan is not the one who knows nothing. It is the one who believes they know enough that they no longer need to ask questions.

Many plan sponsors view an annual retirement plan audit as an isolated event. The auditor arrives, requests documents, asks questions, and eventually issues a report. In reality, the success or failure of a retirement plan audit is determined long before the auditor ever walks through the door.

A clean audit is the result of strong processes operating throughout the year. Eligibility tracking, timely deposit of employee deferrals, payroll reconciliation, loan administration, hardship distributions, and proper documentation all play a role. When these processes are functioning properly, the audit tends to go smoothly. When they are not, the auditor simply becomes the person who discovers the problem.

One of the biggest misconceptions among plan sponsors is that auditors create compliance issues. They do not. Auditors uncover issues that already exist. If employee deferrals were deposited late, if participants were improperly excluded, or if compensation was calculated incorrectly, those problems began months or years before the audit started.

The best way to prepare for an audit is not by scrambling to gather documents at year-end. It is by maintaining strong controls every day of the year. Establish written procedures. Reconcile payroll regularly. Review service provider reports. Conduct periodic internal reviews. Most importantly, document key decisions and maintain organized records.

An audit should never be viewed as a compliance exercise that occurs once a year. It should be viewed as the final examination of processes that operate continuously.

The retirement plans that experience the fewest audit issues are not necessarily the largest or most sophisticated. They are the plans with disciplined procedures, clear responsibilities, and a commitment to getting things right before an auditor asks questions.

Your retirement plan audit starts long before the auditor arrives. In many cases, it starts with the very first payroll of the plan year.