Seven years ago, I was asked to look at a $25 million 401(k) plan that was in complete disarray and I was flabbergasted because it belonged to a law firm that claimed to have an ERISA practice. There was no financial advisor on the plan, no investment policy statement, no education to plan participants, and it didn\u2019t seem that the investment lineup for the plan has been changed since the go-go days of the 1990s.<\/p>\n
The two trustees followed most of the path that I set up for them except for the fact that they didn\u2019t pick a financial advisor among the pool I recommended to interview. What was rather insulting to me is that I was not consulted about their process in selecting a new third party administrator (TPA) until it was already done and I was disappointed that they selected a bundled provider without considering someone unbundled for a plan that size.<\/p>\n
Fast forward 7 years and I get a call from an accountant that this plan is going through a lot of trouble. There was an issue with them owing over $100,000 in contributions, which was odd to hear since the plan was using new comparability and safe harbor. Well, my services were not requested because one of the trustees is still mad that I made her a punch line for the past 4 years in my articles and in my book. I understand people having thin skins and not enjoying my barbs, but the fact is that the reason that the plan has always had issues is because of her and the other trustee who don\u2019t seem to fully understand the grasp of their role as the decision makers of the Plan.<\/p>\n
I\u2019m sure she didn\u2019t want to hear the \u201cI told you so line\u201d from me, but ultimately the plan sponsors are at fault for about 100% of the problems they may have with their retirement plan. The plan sponsor goofs and forgets to include people in their plan,; it\u2019s their fault. The TPA does the same; it\u2019s still the plan sponsor\u2019s fault because they hired that TPA.<\/p>\n
We live in a world where no one has any responsibility, it\u2019s always someone else\u2019s fault. We see that in politics all the time, you can be office for two terms and it\u2019s still the fault of the guy before you. Well I\u2019m telling you that when it comes to retirement plan sponsors and the fiduciary responsibility, it\u2019s always their fault.<\/p>\n
I don\u2019t know how the law firm will correct these errors, but I\u2019m sure the legal fee they are paying is far greater than what I\u2019d charge. What is still amazing is that that these two plan trustees are still the trustees, especially since the woman who dislikes me also happens to be that law firm\u2019s human resources director. To properly manage a 401(k) plan is usually a human resources function. I\u2019m sure in that law firm; associate attorneys have been fired for less. Actually, I know for a fact that they have been fired for less and some of these associate attorneys end up becoming household names in their legal field. But that\u2019s another story for another day.<\/p>\n
<\/span><\/p>","protected":false},"excerpt":{"rendered":" Seven years ago, I was asked to look at a $25 million 401(k) plan that was in complete disarray and I was flabbergasted because it belonged to a law firm that claimed to have an ERISA practice. There was no … Continue reading