The Rosenbaum Law Firm P.C. Blog

I always say that picking a plan provider just on price is a bad idea and I will say that picking a provider just on your years of experience is another folly.

I have 26 years of experience and when I had a couple of years of experience, I noticed that there were some plan administrators and actuaries that had 20 plus experience, who had no idea what they were doing. Time doesn’t make someone any good, perhaps when they started, they didn’t get the proper training or they didn’t partake in any continuing education., Whatever it is, there are many people out there with lots of experience who don’t know what they do. Years of experience don’t matter, it’s the quality of the experience that does.

Years ago, I knew a young attorney who was a real estate and tax attorney. A potential client for a real estate sale didn’t hire him because she thought he was too young. She hired an older attorney, who then embezzled around $150,000 from the sale of her home.

There are so many criteria you should consider in hiring a plan provider and harping on one criterion is a mistake.

The Department of Labor announced that its Employee Benefits Security Administration has updated its Voluntary Fiduciary Compliance Program, allowing employers more efficient ways to voluntarily correct compliance issues in retirement, health, and other employee benefit plans.

The biggest change is allowing a self-correction tool that employers can use to fix delays in salary deferral contributions, and participant loan repayments to retirement plans. Employers and other plan officials can also fix mistakes related to participant loans from retirement plans, as provided by the SECURE 2.0 Act.

These updates take effect on March 17, 2025. Having done so many of these VFCP applications.

That 401(k) National Virtual Conference had its 5th edition on January 30-31. Over 110 people signed up for a free event with over 8 hours pf programming.

A wide variety of presenters broadcast worthwhile content to plan providers, as well as an edition of That 401(k) Virtual Bunch with Mike Webb, Bill Schories, and James Holland.

A broadcast of both days is available on YouTube. A date for the 2026 version will be announced.

There is this scene in Donnie Brasco when the crew has to make their take for the week and they try to hammer a New York City parking meter for the coins. This reminds me of certain ERISA litigators looking for more plan sponsor lawsuits.

Thanks to fee disclosure and Federal courts not interpreting high costs as a de facto breach, ERISA litigators need new avenues for litigation. The Black Rock Target Date Fund cases were a bust, as are most of these plan forfeiture cases. Perhaps there will be a case about notices to former participants or moving missing participants into IRA accounts.

Whatever it is, we must remain vigilant in keeping plan sponsors like you, out of potential harm’s way.

When I started my law practice almost 15 years ago, I started to look at what the competition was doing and I decided to do things differently. Other ERISA attorneys charge by the hour, they charge for every phone call, and I just didn’t want to nickel and dime clients’ potential referral sources. Helping plan providers on the house by providing articles and answering questions went a long way.

As a plan provider, you also need to stand out among the crowd. Look at other competing plan providers and do things differently because the competition is usually focusing on one area. If I were a financial advisor, I’d focus on participant education/enrollment meetings. If I was a third-party administrator, I’d focus on communication with the plan sponsor. I think those are areas that many providers aren’t, just a free suggestion.

I’m a long-suffering fan of the Mets and, I’ve had to deal with the underwhelming leadership of several former Mets managers. It seems we may have a winner with Carlos Mendoza.

The point is that when hiring employees, hire the best people for the job. Never let your ego or standing get in the way of hiring the best candidates available, period. If you’re incompetent and you just want to hire employees who are worse than you, they’re still going to eventually find out that you’re not up to the task.

A Texas federal district court ruled that American Airlines breached its fiduciary duty of loyalty, but not its fiduciary duty of prudence, in allowing its $26 billion 401(k) plan to be influenced by environmental, social, and governance (“ESG”) policies unrelated to the best interests of participants.

Judge Reed O’Connor found American Airlines fulfilled its duty of prudence and the airlines’ processes were “consistent with and, in many aspects, exceeded the processes of other fiduciaries.”

However, O’Connor said American Airlines acted disloyally.

The damages for the case are yet undetermined, but I expect an appeal.

Transamerica announced a brand revamp.

According to Transamerica, these changes include an update to their logo, which will start to feature the Transamerica Pyramid Center rising from a horizon, along with changes to their visual language.

The brand’s typography will also change to a new font called Forever Forma.

John Hancock has launched FutureStep, an open-architecture retirement plan offering powered by Vestwell.

The firm’s existing plan lineup is set to launch in the early 2025s. The FutureStep interface is designed to facilitate interactions between advisers, employers, and participants.

FutureStep will include competitive pricing and enhanced employer engagement. It supports personalized onboarding, ongoing administration, and payroll integration.

The Internal Revenue Service (“IRS”) issued proposed regulations regarding the provisions of the SECURE 2.0 Act of 2022 (“SECURE 2.0”) that relate to catch-up contributions.

The proposed regulations are for the requirement imposed by SECURE 2.0 that catch-up contributions for highly compensated employees in Section 401(k), 403(b), and governmental 457(b) plans be designated as Roth contributions (the “mandatory Roth catch-up” provision).

The Roth catch-up requirement was originally scheduled to become effective for taxable years beginning after December 31, 2023, but it was delayed until taxable years beginning after December 31, 2025.

The regulations will permit a 401(k) or 403(b) plan to provide that a participant who is subject to the mandatory Roth catch-up requirement is deemed to have irrevocably designated any catch-up contributions as designated Roth contributions. A plan could provide for such a deemed election regardless of whether it requires separate catch-up contribution elections or utilizes a spillover design. However, a plan that provides for such a deemed election must provide the participant with an opportunity to make a new election that is different from the deemed election.

The regulations hold that an individual who did not have any FICA wages from the employer sponsoring the plan for the preceding calendar year would not be subject to the mandatory Roth catch-up requirement under the plan in the current year.

The FICA wage threshold would not be prorated for an individual’s year of hire. So that means that a participant who worked for the employer sponsoring the plan for only part of the preceding year would be subject to the mandatory Roth catch-up requirement under the plan in the current year only if the participant had wages exceeding the full FICA wage threshold from the employer for the preceding calendar year.

The regulations also include two self-correction programs that a plan could use to correct a failure of the mandatory Roth catch-up provision. A plan could provide for either correction method but must use the same correction method for all participants with deferrals over the same applicable limit in a plan year. To use these correction methods, a plan must have practices and procedures in place that are designed to result in compliance with the mandatory Roth catch-up provision. As part of such practices and procedures, a plan must provide for a deemed Roth catch-up election for participants who are subject to the mandatory Roth catch-up provision. Plans would not be permitted to avoid mistakes by categorically requiring that all catch-up contributions be made as designated Roth contributions.

Where a participant’s Form W-2 for a year has not yet been filed or furnished to the participant, a plan is allowed to correct a participant’s pre-tax catch-up contribution that was required to be a designated Roth contribution by transferring the deferral (adjusted for allocable gain or loss) from the participant’s pre-tax account to the participant’s designated Roth account and reporting the contribution (not adjusted for allocable gain or loss) as a designated Roth contribution on the participant’s Form W-2 for the year of the deferral. The contribution would be includible in the participant’s gross income for the year of the deferral.

The other correction method is allowing the plan to correct a participant’s pre-tax catch-up contribution that was required to be a designated Roth contribution through an in-plan Roth rollover. Under this method, a plan would directly roll the deferral (adjusted for allocable gain

or loss) from the participant’s pre-tax account to the participant’s designated Roth account and report the amount of the in-plan Roth rollover on Form 1099-R for the year of the rollover. The contribution (adjusted for allocable gain or loss) would be included in the participant’s gross income for the year of the rollover.