The Rosenbaum Law Firm P.C. Blog

Bonuses are nice, I wouldn’t know because in the 11 years I was an employee, I got $300 for the holidays after I started in September 1998 and never received one again. This article isn’t about my lack of bonuses, but it’s about bonus payments and 401(k) plans because if you pay one, you might have a problem that you didn’t realize.

401(k) plans are governed by their plan document and most plan documents use W-2 compensation (plus deferrals) as the point to measure salary deferrals and employer contributions. W-2 includes bonuses, so that means that salary deferrals and employer contributions should be made from bonuses (unless the plan document excludes it).

So I have found many plan sponsors having issues because they forget that, which means they owe corrective contributions for missed deferral opportunities and employer contributions that should have been made. The problem with those errors is that it’s usually discovered after years and years of failing to account for bonuses as compensation, which will require a lot of corrective contributions that will also have to be adjusted for earnings.

If you regularly hand out bonuses, make sure that your definition of compensation meets what you are currently doing.

A class action complaint over the Clorox’s handling of forfeitures in their 401(k) plan was mostly dismissed.

The plaintiff would need to file a revised complaint, to support that Clorox committed fiduciary imprudence or disloyalty.

The plaintiff claimed that Clorox’s use of reallocating forfeited contributions to reduce contributions effectively used plan assets to offset the company’s expenses, which he argued was improper under the ERISA. Clorox in its motion to dismiss, claims that redirecting forfeitures within the plan is allowed.

ERISA’s anti-inurement provision mandates that plan assets solely benefit participants or cover plan costs. The judge in this case noted that incidental benefits to employers don’t violate this rule.

Bitcoin investors love Donald Trump because he fully supported Bitcoin and invited people in the industry to flush his campaign with cash.

So now that he’s back in the White House in January, don’t be surprised that Bitcoin will be allowed as an investment in a 401(k) plan. As I write this, Bitcoin is $76,000 and with spot, exchange-traded funds out there, how is a Trump-run Department of Labor going to say no?

Yogi Berra said it best, “It’s like déjà vu all over again.” We have a new fiduciary rule and an unexpected Trump victory (I expected it).

I’m sure a new fiduciary rule isn’t at the top of President-Elect Trump’s list, but my guess is that the new rules will be withdrawn, Lisa Gomez will be leaving her job, and we will talk about the new proposal, comment periods, and everything else.

Time will tell.

The United States Government Accountability Office (GAO) released a report on the impact of Department of Labor Regulations (DOL).

The report involved talking to plan sponsors and plan providers. It stated the obvious impact of fee disclosure regulations that were implemented in 2012: fee disclosure is one factor that has led to a decrease in 401(k) fees. That’s really the obvious and unliked many critics, I knew that fee disclosure regulations wouldn’t cause the sky to fall.

iRS announces 2025 Limits

Even back then in college, I knew when things weren’t right. I was the Managing Editor of the Stony Brook Statesman and the top editor made copies of our Newsday Awards and was mailing someone a response to a letter, criticizing our typos. When you draft a 16-page paper at 4 am, there are going to be errors. Rather than accept the criticism, the editor claimed we were an award-winning newspaper, which still didn’t mean anything when confronted with our typos.

I write and use an AI proofreading tool. People criticize my typos and I accept it, as a one-man shop. When you are out there as a person or a plan provider, criticism is part of the job. We have school board members and other political leaders in our village and I’m amazed how thin-skinned they are. When you’re a public official, being criticized is part of the job. The same with being a plan provider, things go wrong, and take criticism.

There are good third-party administrators (TPAs) and bad ones. No matter how good your TPA is, they’re not a mind reader. So when it comes to providing information to your TPA, you need to level with them. If you don’t provide the necessary information about the census, ownership, ownership in other entities, and other qualified plans you maintain, your TPA can’t do its job credibly.

I’ve seen clients not tell the TPA that they have additional retirement plans or additional companies, which can be catastrophic.

I’ve seen too many TPAs discover errors, just because the plan sponsor didn’t provide the necessary information. Corrective contributions might be owed if you did the employee census incorrectly or if you didn’t provide all the companies you own.

The easiest errors to avoid are the ones you can avoid by providing the information your TPA asks and by volunteering information that you think they should know.

When I was in college and law school, I loved TGI Fridays. Whenever I was in New York, D.C., Boston, or traveling to California, the beauty of this chain restaurant was that you’d get the same quality meal. I always went for the Chicken Caesar Salad and the Rockslide Pie was a great dessert.

Like Bennigan’s before it, it looks like the near end of Fridays. From 600 plus restaurants, down to a little more than 100, TGI Friday’s just filed for bankruptcy and it looks like it will be the end. The Fridays by me just closed suddenly, and while I loved the chain, I’ve only been there a couple of times over the past 5 years. While they cite the pandemic, Friday’s has been eclipsed by other restaurants like The Cheesecake Factory and Chili’s. Even Ford’s Garage opened up shop in Suffolk County, and they will be the next booming chain. What happened to Fridays is that they stayed stagnant, didn’t offer much enticing food on their menu, and always seemed to change their loyalty program.

You have to continuously fine-tune things and deal with the competition. Chili’s is doing gangbusters with their business because of their $6 Margaritas and Triple Dippers. If you don’t evolve, you run into trouble and end up out of business.

When looking at organizations, both businesses and charitable places, I’m always amazed why people stay on, even when it’s time to go. I was a part of a Hebrew school where the PTA President no longer had kids in schools. Same with the current school board where I live. I don’t think I’d mind these things if they were doing their job, but it hurts when they aren’t.

I have been very lucky in life, I know from jobs and other organizations, when it was time to go. Whether you have accomplished what you have done or things aren’t going the way you want, it’s important to recognize when you should be leaving. Give someone else a shot.