The Rosenbaum Law Firm P.C. Blog

On whether to recommend Bitcoin and other digital assets for clients, financial advisers are wary about their fiduciary duty to clients, according to a CoinShares survey.

62% of 250 advisers in the survey think that recommending Bitcoin and digital assets doesn’t align with their fiduciary obligation to act in their client’s best interest, and 79% of advisers believe their role is shifting toward risk management, as their clients may seek cryptocurrency investments independently of them.

While advisors are considering digital assets, they believe there is a need for independent education on assets.

This is a concern as we may eventually see the Department of Labor approval of digital assets in 401(k) plans.

Every time I’ve spoken to other plan providers about certain things they are working on, all I later see are missed opportunities. There are no sure things in this business, there are opportunities.

Even when you have a signed contract with certain retirement plan projects such as starting a new pooled employer plan, it’s still not a sure thing because you still have to bring assets over to make a go of it. The sales process is long, tedious, and at certain points, not fun. It’s a marathon with enough twists and turns because selling retirement plans isn’t the same as selling products that are impulse purchases like candy at the supermarket checkout line.

I’ve seen many opportunities fall by the wayside that was supposed. To be sure things because of the cockiness of the provider and them counting their eggs before they’re hatched.

I sound like a broken record, but I won’t stop until 401(k) plan sponsors understand the issue of a late Form 5500 and Internal Revenue Service (IRS) and Department of Labor (DOL) penalties.

If you are late with filing a Form 55009, that Form 5500 needs to be filed coincident with an application to the Department of Labor’s Delinquent Filer Voluntary Compliance Program that allows you to file the form late and pay a nominal fee. Otherwise, you may get a bill from the IRS and/or DOL that you owe tens of thousands in penalties.

On the 5500 website, you have to log in and file a Form. 5500 will tell you as much when you try to file. Just had a plan sponsor send me a screenshot of that, together with a $40,000 penalty from the IRS.

Did you get a letter or do you have a late 5500? You know where to reach me.

Schlichter Bogard, LLC represents participants of the $7 billion Charter Communications, Inc. 401(k) Savings Plan in a class action against Charter Communications, Inc.

The suit claims that rather than using the Plan’s forfeiture assets to pay all Plan administrative expenses, as required by the terms of the Plan, Charter used forfeitures to reduce the employer matching contributions.

The lawsuit claims that Section 6.9 of the Plan required, how Plan forfeiture assets would be used by Charter. Plan forfeiture assets were first required to be used to ‘pay Plan administrative expenses.

Charter reported in its 2019 Form 5500 that it used $16.3 million in Plan forfeiture assets to reduce its employer matching contributions, but in that same Form 5500 Charter reported that Plan participants were charged an allocation of administrative expenses paid by the Plan for $7.3 million. The suit says that Charter can only use forfeitures to reduce contributions after expenses have been paid.

As a 401(k) plan sponsor, you need to operate according to its terms. The concept is silly, but the fact is that most plan sponsors never read the plan document. You might think you’re excluding or including union employees, and it might turn out wrong.

A plan document excluding employees you included is one problem, but including employees in the plan document and you excluded in administration, is a costlier headache in potential corrective employer contributions.

I’ve seen too many of these plan document issues of late, so make sure the plan document is consistent in your administration of which employees you cover, and who you exclude.

Vanguard announced expense ratio reductions to 168 mutual fund and exchange-traded share classes across 87 funds. The reductions will save investors more than $350 million in 2025 alone, the largest annual expense ratio reduction in Vanguard’s nearly 50-year history.

In addition to Vanguard’s lineup of bond mutual funds and ETFs, these expense ratio reductions will lower costs across Vanguard’s U.S. equity, international equity, and money market funds.

The Department of Labor (DOL) has released Field Assistance Bulletin 2025-01 (the Bulletin), allowing ERISA fiduciaries to transfer retirement balances of under $1,000 to a state unclaimed property fund.

The Bulletin describes a DOL nonenforcement policy for fiduciaries that decide to transfer the account balances of missing participants (including uncashed checks) to a state’s unclaimed property fund, as long as the amount of the benefit is $1,000 or less. In addition, the plan’s fiduciaries must ensure that the state’s unclaimed property fund is a prudent destination for the participant’s balance.

The fiduciary also must have a prudent program in place to attempt to locate the missing participant, and the state selected for the transfer of the unclaimed property must be the state of the participant’s last known address. Finally, the state unclaimed property fund must meet other DOL requirements, including updating the plan’s summary plan description to include the possibility of transfer of benefits to an unclaimed property fund.

Imagine if Mark Zuckerberg hatched the idea for Facebook, yet all he did was talk about the site instead of developing it. Imagine if Jeff Bezos talked for a year or two about selling books on the Internet instead of going through developing the actual Amazon website.

It’s not enough to have a great idea in the retirement plan space, you need to develop a plan to carry it through to the marketplace. I will have to say that one of the most annoying parts of this business is hearing plan providers with terrific ideas, yet failing to come to the market with them. I once had a third-party administrator client who promised he’d make us all rich in the open multiple-employer space, instead, he dawdled long enough for the Department of Labor to put the kibosh on them in that TAG advisory opinion.

Great ideas aren’t enough, a plan to take those ideas to the marketplace is needed.

With the change of Presidential administrations, there was certainly a discussion on what the Department of Labor (DOL) may do under President Trump regarding 401(k) plans. As far as regulations, an Executive Order may halt any significant change.

Under a new Executive Order signed by President Donald, which is supposed to “unleash prosperity through deregulation,” whenever a federal agency promulgates a new rule, regulation, or guidance, it must identify at least 10 existing rules, regulations, or guidance documents to be repealed.

The executive order requires that the total incremental cost of all new regulations, including repealed regulations, be significantly less than zero.

If the DOL wants to unveil a regulation on the fiduciary rule, they would have to identify 10 regulations or rules to repeal. So don’t expect a lot of DOL regulaations this year.

George Carlin had a joke that to get off a jury, you should just tell the Judge that you can determine a person is guilty by just looking at them.

Abernathy Daley 401(k) Consultants claim that 84 percent of U.S.-based retirement plans have at least one likely ERISA red flag from a regulatory and/or fiduciary violation by looking at their Form 5500.

Honestly, it’s much ado about nothing. They cite as a reg flag for plans that don’t cite they are participant-directed for investment, but there’s no legal requirement that a plan be 404(c) compliant nor that they offer a QDIA. There are glaring errors that can be found on Form 5500, but these aren’t them.

I always say that every 401(k) plan has an issue that you can find if you want to, but it’s not usually gleaned from a Form 5500, because those are glaring errors such as late deferral deposits or not having the right bond amount.

You can be like Dean Wormer and place 84% of plans on double secret probation, but a Form 5500 isn’t such a smoking gun.