The Rosenbaum Law Firm P.C. Blog

I’ve been working with organizations—political, civic, religious, and business—since my days at Stony Brook, back when I was involved with student political groups and the school paper. I’ve written ad copy, designed flyers, and helped companies craft their messaging. And while advertising has its place, let me say this loud and clear: advertising is not a cure-all.

Too many organizations think that a slick ad campaign or a boosted social media post is the key to growth. But if your business is struggling or your group can’t keep members engaged, chances are the real issue isn’t visibility—it’s culture.

You can’t fix poor customer service with Google ads. You can’t fix an unwelcoming civic group by running a promo in the local paper. If you’re running your organization like a private club instead of an inclusive community, new members will come once—and never return.

The same goes for retirement plan providers. If you’re not growing, you need to look inward. Is your pricing competitive? Are your services aligned with what plan sponsors want? Do you build real relationships or just chase transactions?

Advertising might get people in the door, but it won’t keep them there. Fix the culture first, then advertise. Not the other way around.

When it comes to your health, there are signs—little warnings your body gives you—that something might be off. You don’t ignore chest pain, blurry vision, or persistent fatigue (at least, you shouldn’t). The same is true with your company’s 401(k) plan. There are symptoms that, while not always catastrophic on their own, can be early warnings that your plan is unhealthy and potentially heading for serious compliance trouble.

As someone who’s been in the trenches of the retirement plan world for more than two decades, let me walk you through the signs I look for when assessing the health of a 401(k) plan. If your plan checks just one of these boxes, it’s time to schedule a checkup. More than one? You’ve got a real problem.

1. Late Deposit of Salary Deferrals

This is the equivalent of chest pain in the 401(k) world. Participant contributions must be deposited as soon as reasonably possible—often within days. Late deposits aren’t just bad form; they’re a prohibited transaction and one of the first things the Department of Labor will flag.

2. Low Average Account Balances

If your plan has been around for years and participant balances are still anemic, that’s not just a sign of low wages—it’s a sign of low engagement, poor education, and possibly bad plan design.

3. No ERISA Bond in Place

This one’s simple: if your plan doesn’t have a fidelity bond, it’s out of compliance. It’s the most basic ERISA requirement. No bond, no excuse.

4. Low Deferral Participation Rate

If only a fraction of eligible employees are contributing, something’s wrong—either with communication, plan design, or company culture. Auto-enrollment and re-enrollment features can help, but only if someone is actively managing the plan.

5. Compliance Testing Failures, Corrective Contributions Made

One failed test might be forgivable. Chronic failures that require annual refunds to highly compensated employees? That’s a sign of poor plan design. There are ways to fix this—safe harbor, automatic enrollment, better education—but it starts with someone paying attention.

6. Too Many Hardship Requests

While hardships happen, a steady stream of them may indicate deeper financial instability among your workforce—or that the plan is being used like a piggy bank instead of a retirement vehicle.

7. Too Many Defaulted Plan Loans

Defaults aren’t just unfortunate—they’re taxable events for participants and administrative headaches for employers. If participants are consistently defaulting, it’s a sign your loan policy needs tightening and your education efforts need strengthening.

8. No Benchmarking of Fees

If you haven’t compared your plan’s fees to market standards in the last three years, you’re failing as a fiduciary. High fees chip away at participant balances, and plaintiffs’ attorneys love to find overpaying plans.

9. No Review of Plan Providers

If your TPA, recordkeeper, or advisor hasn’t been evaluated in years, that’s a red flag. Loyalty is fine, but blind loyalty leads to stagnation. Providers should be reviewed—not necessarily replaced—but reviewed regularly.

10. No Formal Fiduciary Process Followed

If your plan doesn’t have documented investment reviews, meeting minutes, or a clear process for decision-making, it’s not a matter of if you’ll get in trouble—it’s when. A formal fiduciary process protects the plan, the participants, and you.

When I draft a new 401(k) plan for a client, one of the first provisions I’ll recommend—including with some reluctance—is a loan feature. Not because I enjoy dealing with it. On the contrary, it’s an administrative pain. But because I believe, deeply and stubbornly, that participants should have access to their own money if they find themselves in a bind. Life doesn’t schedule emergencies around retirement planning. People don’t always have the luxury of waiting until age 59½ to solve a crisis.

That said, experience has taught me where to draw lines. A loan feature in a retirement plan without limits is like handing out aspirin in a hurricane—unhelpful, possibly dangerous, and guaranteed to create more work later. That’s why I always set a $1,000 minimum loan amount. I don’t want participants draining their accounts $250 at a time, especially not when each loan is subject to a $50–$75 fee. Borrowing small amounts ends up being self-defeating. Those fees are disproportionately high, and frankly, if someone’s emergency is a $250 problem, there might be better ways to help them than with a retirement loan.

I also insist on a one-loan-at-a-time rule. I’ve seen plan records—some managed by large providers, mind you—where participants were juggling eight or nine loans simultaneously. That’s not a retirement plan; that’s a shadow banking system, and it’s a compliance disaster waiting to happen. Every additional loan increases the chances that something goes wrong, and trust me, things do go wrong.

Even with those guardrails, loan provisions cause headaches. Payroll mistakes are common. One missed payment and suddenly you’ve got a prohibited transaction on your hands. If quarterly payments aren’t made, the loan defaults. That’s when the dreaded 1099-R gets issued to the participant. There’s no joy in handing someone a tax form that essentially says, “Congratulations, your loan is now a taxable distribution—and you might owe penalties, too.” Especially when that happened not because they failed to pay, but because someone in payroll missed a line in a spreadsheet.

The worst part? These loan errors usually don’t come to light right away. They hide in the weeds. You only find them during a government audit or—more likely—when the plan changes third-party administrators. Then it’s a forensic exercise. You’re piecing together loan histories from years ago, trying to reconstruct amortization schedules and payroll feeds from a different HR system. It’s a migraine, not just for the TPA or advisor, but for the plan sponsor who now has to correct a problem they didn’t even know existed.

So yes, I include a loan provision. Not because I like them, but because sometimes the human element of retirement planning matters more than pristine administrative simplicity. But like anything in this business, good intentions are useless without strong procedures. Want a loan provision in your plan? Fine. Just be prepared to babysit it like it’s your firstborn child.

UnitedHealth Group is the latest big-name employer to get hit with a class action lawsuit over how it handles 401(k) forfeitures. The case, Kotalik et al. v. UnitedHealth Group Inc., accuses the company and its plan fiduciaries of violating ERISA by using more than $19 million in forfeited funds to offset employer contributions—without applying any of it toward plan expenses.

The plaintiffs, representing over 250,000 participants in a $22 billion plan, claim this cost-cutting move shortchanged participants by more than $25 million in compounded value. The lawsuit alleges five ERISA violations, including breaches of loyalty, prudence, and failure to monitor fiduciaries.

This isn’t UnitedHealth’s first brush with ERISA trouble—they recently settled a separate case for $69 million over mismanaged target-date fund investments.

Here’s the lesson: Forfeitures aren’t free money. They’re plan assets and must be handled according to the plan document and ERISA’s exclusive benefit rule. If you’re a plan sponsor, now’s the time to review your forfeiture practices—or risk being next in the litigation spotlight.

Empower recently made headlines by announcing a bold new initiative: giving defined contribution (DC) retirement plan participants access to private market investments. On the surface, it sounds like a win—more choice, broader diversification, and the chance to tap into investment strategies once reserved for institutional players.

But if you’ve been in this business as long as I have, you learn to read between the lines. And what I see here isn’t just a shiny new investment opportunity. It’s a potential red flag.

What Empower Is Pitching

Empower has teamed up with some of the biggest names in finance—Apollo, Goldman Sachs, Franklin Templeton, Neuberger Berman, PIMCO, Partners Group, Sagard. Together, they plan to offer private equity, private credit, and private real estate investments via collective investment trusts (CITs). The promise? Limited exposure, reduced fees, and more diversification for your retirement plan lineup.

Sounds exciting. But let’s pause for a moment.

The Reality Check

Private investments aren’t like mutual funds or index funds. They’re complex, opaque, and illiquid. They often require long holding periods. They involve higher fees. And they rely on valuation models that aren’t always easy to verify.

Using CITs to offer these investments doesn’t magically make them “retirement ready.” It just gives them a new wrapper.

And let’s be honest—these private market firms aren’t offering access out of charity. They see a new revenue stream in the massive DC plan market. If they can get their slice of that $10+ trillion pie, they will.

What It Means for Plan Sponsors

Here’s the part where fiduciaries need to pay attention.

Just because Empower is offering it doesn’t mean it’s prudent. Under ERISA, plan sponsors have a duty to act in the best interest of plan participants. That means doing serious due diligence:

· Can these investments be properly valued?

· What are the true costs after layering in all the fees?

· Are participants equipped to understand what they’re investing in?

· How will the plan handle liquidity if things go south?

If the answer to any of these questions is “I’m not sure,” that’s a problem.

A Word of Caution

I’m not against innovation. And I’m not saying private investments should be off-limits forever. But throwing them into DC plans without a clear roadmap for transparency, education, and fiduciary oversight is reckless.

This isn’t just about adding another fund to your plan menu. It’s about fundamentally changing what kind of risk you’re exposing participants to—and what kind of liability you’re taking on as a fiduciary.

Final Thoughts

Empower is calling this a “landmark initiative.” I call it a potential minefield.

If you’re a plan sponsor or advisor, proceed with extreme caution. Ask the hard questions. Demand clear answers. Don’t get swept up in the hype. Because in the retirement plan world, there’s a fine line between opportunity and overreach—and crossing it could cost your participants dearly.

When I titled my new book Full Circle, I didn’t just pick a catchy phrase—I picked a truth.

In life and business, we often think progress means always moving forward. But the longer I’ve worked in the retirement plan industry, the more I’ve realized that growth often means coming back to where we started—this time with clarity, experience, and purpose. Full Circle is about that return. It’s about rediscovering why we got into this business in the first place—to help people. To do the right thing. To build something meaningful.

It’s about survival and the neveending desire to pull through.

This book is for the plan providers—the advisors, TPAs, ERISA attorneys, recordkeepers—who want to grow their business the right way. It’s about how to navigate the noise, avoid the pitfalls, and keep your compass pointed toward value and integrity. I talk about the mistakes I’ve made, the battles I’ve fought (sometimes with myself), and the moments where everything came together to remind me why I do this.

Full Circle will be available in paperback and Kindle on Amazon starting June 9th. But if you’re as impatient as I am, Kindle pre-orders are open now.

And because this book isn’t just a book—it’s a conversation—I’m hosting a free webinar to talk about the ideas inside it. What does it mean to go full circle in this business? What does sustainable growth really look like? How do we help plan providers not just survive, but thrive?

Join me for the webinar here: Free Webinar Registration

Whether you’ve been in the industry 30 years or 30 days, Full Circle has something for you. Not just strategy—but purpose.

See you there.

If there’s a Mount Rushmore of ERISA class-action litigators, you better believe Jerry Schlichter’s face is carved into it—probably right next to a 408(b)(2) disclosure and a stack of mutual fund fee charts. And once again, the law firm of Schlichter Bogard LLC is back, targeting an old friend: Northrop Grumman. This makes lawsuit number three.

Yes, that Northrop Grumman. The one that’s been down this road before—with a 2006 excessive fee case, and again in 2019. Apparently, the third time is the charm, or maybe just déjà vu with different plan language. This time, the suit is about how forfeiture assets were handled. Or, more specifically, mishandled.

The complaint, filed on behalf of Brian Clouse, Steven Kawakami, Douglas Hoffelt, and Michael Winkler, accuses Northrop Grumman, its Benefit Plan Administrative Committee, and the obligatory John Does 1–17 (because ERISA litigation wouldn’t be complete without some mystery fiduciaries), of breaching fiduciary duty by misallocating plan forfeitures in violation of ERISA and the Plan Document.

Now here’s where it gets interesting—because, as is often the case, it’s not just about what the fiduciaries did, but what the Plan Document told them to do. According to the plaintiffs, Section 7.04 of the plan required a strict forfeiture order of operations: first, restore unvested balances of rehired participants; second, pay plan administrative expenses; and only then, if there’s any money left, reduce employer contributions. Pretty straightforward. No discretion. No wiggle room.

But according to the lawsuit, Northrop didn’t just miss a step—they skipped the first two entirely. For six straight years, the complaint alleges, all forfeiture assets were funneled directly into reducing employer contributions. Plan expenses? Ignored. Reinstatement reserves? Nonexistent. The Plan allegedly said “must,” and the fiduciaries allegedly said “nah.”

That brings us to Section 7.05—another nail in the fiduciary coffin, if true. This section allegedly required maintaining a forfeiture reserve for five years in case former participants were rehired. Not only was this not done, but the suit claims every dollar of forfeitures was rerouted to benefit Northrop’s bottom line instead of serving participant interests.

Let me say this plainly: ERISA doesn’t care how expensive recordkeeping fees are or how many lawyers reviewed the plan design. If the document says “must,” and you treat it like “may,” you’re asking for trouble. And with over 100,000 participants and $36 billion in plan assets, that’s a big target.

So, what does this mean? Well, if these allegations hold water, don’t expect this to get to trial. Mandatory plan language is plaintiff gold. And if you’re betting on whether Northrop Grumman reaches for their checkbook before or after discovery heats up, take the “before.”

The takeaway? Always, always, check your forfeiture language. Fiduciaries don’t get to rewrite “shall” into “whatever seems reasonable at the time.”

The department store has been a dying business for 50 years. That’s not hyperbole—it’s a fact. Ever since the rise of the shopping mall, the explosion of discount retailers like Walmart and Target, and now online shopping, the traditional department store model has been on life support. And what has management done over the past five decades to stop the bleeding? Not much. It reminds me of A&P—the grocery giant that once ruled the U.S. market and then slowly faded into nothing over 60 years. Death by inertia.

Here’s the thing: your business probably won’t die tomorrow. Businesses rarely go out in a blaze of glory. Most of the time, the end comes slowly, and you won’t realize you’re in trouble until the doors are about to close. The issue is that dying businesses tend to follow the same script. They do nothing to change course. They’re stuck in a death spiral of outdated thinking, bad leadership, and fear of real change.

I’ve seen it firsthand. I worked for a TPA where the business was in a constant state of reorganization—every year, a new structure, new roles, same old problems. The guy running the place once said if this new structure didn’t work, he’d fire himself. Well, it didn’t work—and surprise, he stayed right where he was while the ship kept sinking.

The retirement plan industry isn’t immune to this. It’s an ever-evolving business. Regulations shift, technology changes, client expectations grow. If you’re not adapting, you’re falling behind. And if you keep running your business like it’s 2005, don’t be surprised when you’re treated like a department store in 2025.

Change with the times—or get left behind. The choice is yours.

When I first started my law practice, I’d get invited to sponsor networking events or plan sponsor forums. They’d ask for a check, promise big exposure, and deliver… almost nothing. The room would be filled with the wrong audience or not enough of the right people. It felt like I was throwing money into a hole, hoping someone on the other end needed an ERISA attorney. Spoiler: they usually didn’t.

So when I launched That 401(k) Conference, I built it around two principles:

1. Make the event something memorable for advisors—fun, engaging, and actually worth attending.

2. Don’t burn out the sponsors.

The top-level sponsorship at That 401(k) Conference is $1,500. That way, even if you don’t walk out with a dozen leads, you don’t feel like you mortgaged your marketing budget for nothing. The goal is to make connections that matter, not to sell pipe dreams with a hefty price tag.

Want to sponsor? You know how to find me. We’re in Milwaukee this September, and I’ll have ideas for 2026 by August. Let’s make it worth your while.

Businesses in the retirement plan industry don’t collapse overnight. It’s never sudden. Like Sears, the decline drags out over years—death by a thousand paper cuts. One day you’re a major player, the next you’re just a name people remember from a conference ten years ago. The truth is, most long-term failures in this business are slow and quiet, not loud and explosive.

And here’s the kicker: these businesses could change course, but rarely do. Why? Because real change requires a cultural shift, and that’s hard—especially when the same leadership that got the business into trouble is still firmly in control. You can’t expect a different result when the same people keep making the same decisions with the same mindset that’s already led to a slow death spiral.

Leadership inertia is a killer. If the people at the top refuse to acknowledge the need for transformation, nothing happens. Maybe you’ll get a new logo, maybe a shiny new website—but the core business, the stale strategy, and the tired value proposition? Still there. Still ineffective.

If your business has been stagnating for a while—losing clients, losing market relevance—the worst thing you can do is double down on what’s not working. The best option? Change course. Admit that what you’ve always done isn’t cutting it anymore. That’s not a weakness—it’s awareness. And it’s the first step in pulling out of the nosedive.

In this industry, survival isn’t guaranteed. But reinvention? That’s still possible—if the leadership has the stomach for it.