The Rosenbaum Law Firm P.C. Blog

In the retirement industry, one of the most persistent, and convenient, myths is the idea that there exists a single fiduciary solution that solves every problem for every plan. A package, a platform, a program that checks every box, eliminates every worry, and wraps the entire fiduciary burden in a tidy bow.

It’s a great marketing concept. It’s just not reality.

Fiduciary duty, by definition, involves prudence, process, and ongoing oversight. Those three words cannot be automated, outsourced, or replaced by dashboards alone. Technology is transformative, yes. Tools are indispensable. Templates, policy statements, and playbooks are valuable, but they are not a substitute for judgment. A committee can’t point to software screenshots and call it governance.

The truth is that every plan is its own ecosystem. A professional services firm with high earners, a manufacturing company with hourly turnover, and a nonprofit with grant-based funding all operate under different pressures, payroll patterns, and participant needs. The right investment menu, the correct auto-enrollment level, or the timing of employer contributions may differ dramatically, even if the plan size doesn’t.

Providers who promise certainty are selling comfort, not compliance.

The most effective providers don’t guarantee perfection, they guide decision-making. They remind sponsors that fiduciary protection comes from process: reviewing fees, documenting rationale, benchmarking regularly, monitoring vendors, and revisiting decisions as conditions evolve. A provider’s true value is not in eliminating risk, but in helping sponsors understand, evaluate, and manage it.

The retirement industry doesn’t need one-size-fits-all solutions, it needs right-size solutions. And right-size requires conversation, education, and collaboration. It’s more work than selling an all-in-one package, but it delivers something better: clarity for the sponsor, protection for the plan, and ultimately, better outcomes for the participants who depend on it.

That’s not a slogan, that’s fiduciary reality.

Every plan sponsor knows the feeling, employees come and go, but their 401(k) balances often stay behind like unpacked boxes from a move three years ago. It seems harmless, even administrative convenience at first. Then reality hits: more accounts, more notices, more fees, more fiduciary responsibility, and more opportunity for something to go wrong.

The problem isn’t personal. it’s structural. Former employees still count when calculating audit thresholds, per-participant fees, disclosures, and cybersecurity exposure. They remain beneficiaries of plan decisions long after they’ve stopped badge-swiping into the building. And if there’s uncashed checks or missing participants? That’s your problem too.

Encouraging former employees to roll over or cash out (within the rules, without advice, and without coercion) isn’t about pushing people out, it’s about plan health. A streamlined participant base means:

· Lower administrative burden

· Reduced audit costs

· Fewer abandoned accounts and lost participants

· Less fiduciary risk on stale records

A 401(k) plan is not a storage facility. When former employees leave their accounts indefinitely, sponsors shoulder ongoing responsibility without the ongoing relationship.

Helping people transition their savings cleanly and efficiently isn’t just housekeeping — it’s good governance. And sometimes, the best way to take care of a retirement plan is to help those who’ve already walked out the door keep walking, right into their next account.

Just when the 401(k) frontier seemed to be getting a new sheriff , tougher advice standards, greater accountability, the DOL has quietly dropped its appeal defending the 2024 fiduciary rule. That regulation would have expanded fiduciary duty to rollover guidance and plan-menu advice, but with the DOL withdrawing its defense in the Fifth Circuit, the rule is effectively dead… at least for now.

For sponsors, that news could feel like a gunshot echoing through an empty town. Some may see relief, fewer regulatory constraints, more flexibility, less fear of litigation triggered by “one-time advice.” Others may sense danger: this isn’t clarity, it’s uncertainty. The frontier just shifted again.

What should plan sponsors do as the dust settles? Lean on solid fundamentals. Governance, documentation, independent plan oversight, these aren’t optional just because the rule died. Fiduciary duty under Employee Retirement Income Security Act (ERISA) still applies. A sound plan doesn’t depend on regulatory headlines, it depends on consistent discipline, documented process, and unwavering commitment to participants’ best interest.

So treat this moment not as a freedom from responsibility, but as a reminder why the true “action plan” must always come from you, not Washington. Because when regulators ride off (or change their minds), the town doesn’t fix itself. The 401(k) world keeps spinning. And a good fiduciary doesn’t wait for rules. He builds the rules himself , with governance, integrity and prudence.

Just when the 401(k) frontier seemed to be getting a new sheriff , tougher advice standards, greater accountability, the DOL has quietly dropped its appeal defending the 2024 fiduciary rule. That regulation would have expanded fiduciary duty to rollover guidance and plan-menu advice, but with the DOL withdrawing its defense in the Fifth Circuit, the rule is effectively dead… at least for now.

For sponsors, that news could feel like a gunshot echoing through an empty town. Some may see relief, fewer regulatory constraints, more flexibility, less fear of litigation triggered by “one-time advice.” Others may sense danger: this isn’t clarity, it’s uncertainty. The frontier just shifted again.

What should plan sponsors do as the dust settles? Lean on solid fundamentals. Governance, documentation, independent plan oversight, these aren’t optional just because the rule died. Fiduciary duty under Employee Retirement Income Security Act (ERISA) still applies. A sound plan doesn’t depend on regulatory headlines, it depends on consistent discipline, documented process, and unwavering commitment to participants’ best interest.

So treat this moment not as a freedom from responsibility, but as a reminder why the true “action plan” must always come from you, not Washington. Because when regulators ride off (or change their minds), the town doesn’t fix itself. The 401(k) world keeps spinning. And a good fiduciary doesn’t wait for rules. He builds the rules himself , with governance, integrity and prudence.

A new study examining how retirees manage annuity payouts from defined-contribution plans should make every 401(k) plan sponsor sit up and pay attention. We spend so much time focused on accumulation, deferral rates, employer contributions, fund lineups, that we sometimes forget the entire point of the plan: income in retirement. And income isn’t just about having assets. It’s about making them last.

The research highlights a simple but often overlooked truth: many retirees, particularly women and those with longer life expectancies, may benefit from converting a portion of their savings into guaranteed lifetime income. Others, especially men or participants with shorter life spans, are more hesitant, and for good reason. Traditional annuity pricing doesn’t reflect individual differences in longevity, leaving some participants feeling like they are subsidizing everyone else.

For plan sponsors, the lesson is clear: accumulation-only thinking is outdated. Retirement doesn’t end at the final paycheck, it begins there. And as longevity increases, so does the risk that a retiree outlives their savings. Market volatility, health-care expenses, long-term care needs, all of these pressures turn a lump sum into an unpredictable journey.

This is the moment for sponsors to reevaluate whether their plan design supports retirement income. That doesn’t mean every plan needs an in-plan annuity tomorrow. But it does mean assessing whether participants have access to tools, education, income projections, stable withdrawal options, or yes, optional lifetime-income products, that help them turn savings into security.

Sponsors also need to communicate clearly. Participants often misunderstand how annuities work, what longevity risk means, or how steady income can complement Social Security. A plan that prepares participants for retirement must also prepare them for what comes after.

Because a 401(k) plan isn’t just a place to save money. It’s a bridge to independence. And a responsible fiduciary makes sure that bridge doesn’t collapse halfway across.

The recent complaint against One Brooklyn Health System Inc. hits like a cold gust in a dusty frontier town, sudden, sharp, and full of consequences. The plan is accused of mismanaging its 403(b) by offering expensive “retail” share classes of mutual funds when cheaper, institutional classes were freely available.

From 2014 onward, participants were placed into a target-date fund whose expense ratio ranged between 0.86 % and 1.03 %. Meanwhile, a nearly identical institutional version was out there with fees as low as 0.05 %–0.67 %. Over the years, that discrepancy alone, especially in a plan that covers thousands of participants, allegedly cost retirees millions.

What’s jaw-dropping isn’t just the mistake. It’s the fact that the cheaper option was obvious. The institutional funds were disclosed, clearly available — but ignored. That’s not oversight. That’s negligence.

Sponsors, take note. This isn’t academic theory. It’s a warning shot. If you run a 401(k), 403(b) or similar plan and you don’t routinely — and ruthlessly — evaluate share-class costs, fund-lineup fees, and provider revenue-sharing agreements, you’re sitting on a landmine waiting to blow.

Prudence isn’t optional. Under Employee Retirement Income Security Act (ERISA), fiduciaries are legally required to act in participants’ best interests — which means choosing the lowest-cost equivalent when available, documenting the decision-making process, and reviewing that decision regularly.

Let the One Brooklyn case be the kind of lesson no plan sponsor wants to learn the hard way.

· Review every fund and every share class on your menu.

· Compare institutional vs retail share classes — don’t assume your recordkeeper automatically picked the cheapest.

· Document the rationale for any costlier investment or vendor, and be ready to justify it if challenged.

· Monitor revenue-sharing and conflicts of interest — because those are the hidden bullets in any 403(b) or 401(k) negotiation.

If you treat your plan like a sloppy afterthought, participants will pay — often with their retirement income. If you treat it like what it truly is — a promise of security and dignity — you act with discipline, transparency, and respect.

That’s what being a fiduciary really means.

Every plan sponsor owns a plan document. Very few read it. Fewer understand it. And almost none use it as the operating manual it was designed to be.

Instead, many rely on “tribal knowledge”, the memory of someone in HR who has been there since the Clinton administration. That’s how operational errors happen. The plan document governs eligibility, contributions, vesting, loans, QDROs, and distributions. If you operate differently than the document dictates, it’s not “close enough.” It’s a compliance failure.

Plan sponsors should review the document annually, especially after mergers, acquisitions, or workforce changes. Make sure operations match the words on paper. When in doubt, ask the TPA or ERISA counsel. A plan document isn’t meant to sit on a shelf. It’s meant to keep you out of trouble.

If I had a dollar for every time a plan sponsor told me, “We’ve always done it that way,” I’d have a retirement plan without recordkeeping fees. Tradition might be great for Thanksgiving recipes, but it’s a disaster for plan administration.

Most operational failures start with routines no one has questioned in years. Eligibility rules that no one updates. Payroll codes no one checks. Service agreements everyone assumes say something they don’t. “Always” is not a compliance strategy, it’s a liability.

The 401(k) world changes constantly: regulations shift, workplace demographics evolve, and technologies improve. If your internal processes haven’t changed since the Bush administration (pick your Bush), it’s time to rethink your approach.

Good fiduciaries challenge habits. They don’t assume last year’s process fits this year’s workforce. They ask questions, update procedures, and document every improvement. “We’ve always done it that way” is a sentence that belongs in a museum. A plan sponsor’s job is to retire it.

Years ago, back when I was still at that fakakta law firm, I did what good people are supposed to do: I helped someone. I referred a 401(k) plan to an advisor. I even introduced him to the law firm partner — the big networker, the rainmaker, the tax certiorari superstar who everyone wanted face time with. It was a solid opportunity for the advisor, the kind most people would kill for.

Then I left the firm.

And that same partner, the one who benefitted from my introduction, apparently told the advisor that I was a “loose cannon.” Not in a cool, action-movie way. In the “don’t work with him, he’s trouble” way. I didn’t hear it directly. I heard it from the advisor’s employee, who then was instructed to “never work with Ary again.”

No one asked me what happened. No one asked whether any of it was true. They just accepted the narrative because it was convenient.

And here’s the punchline: When I later had the opportunity to do something about it ethically and appropriately, the advisor was terminated from the 401(k) plan I had originally helped him get. Not out of revenge, but because he showed his hand. If you’ll believe unvetted gossip about someone who helped you, you’ll mishandle bigger things too. He lost the client all on his own.

I think about that every time I take my son to the local card and autograph show. If you’ve ever walked those aisles, you’d swear memorabilia dealers are like Hatfields and McCoys. Everyone dislikes someone. Everyone has a feud. Everyone’s mad about a trade from 1997.

Yet I get along with all of them. And it’s not complicated. I treat people well, and they treat me well. I stay out of fights that don’t involve me. And I’m way too old to inherit anyone else’s grudge.

The 401(k) world, the memorabilia world, the actual world, they all work the same way. Relationships are currency, reputations are fragile, and gossip is cheap. People who build their opinions on hearsay eventually sabotage themselves. People who treat others decently usually find the road gets easier, not harder.

I’m not perfect, but I’ve learned this: You can’t control what others say about you. You can control how you treat people and who you choose to be.

And if you’re consistent, fair, kind, straightforward, you won’t need to defend your reputation. Your actions will do it for you.

Everything else is just noise.

There’s a frontier-town cliché: a chain is only as strong as its weakest link. In the 401(k)/403(b) world, that weakest link is often the administrator or recordkeeper when they cut corners.

Mistakes from sloppy recordkeeping, incorrect deferrals, mis-applied vesting rules, or mismatched plan-document operations are the hidden landmines. And when those mines blow, the provider’s name becomes part of the blast radius.

Good administrators understand that each data point, every payroll integration, every eligibility check, every contribution posting, matters. They build robust systems, run regular audits, reconcile records, and test payroll integrations long before a crisis hits.

If you’re a provider who sees compliance and plan health as a burden, you’re not a partner — you’re a liability. Providers worth their salt see themselves as co-fiduciaries: caretakers of other people’s futures. They don’t wait for the town to burn. They patrol the streets, inspect the buildings, and keep the peace.