The Rosenbaum Law Firm P.C. Blog

I love Las Vegas. Great restaurants, great shows, and five trips in a row without dropping a nickel into a slot machine. Why? Because I hate gambling. I hate losing even more. Honestly, just getting out of bed every morning is risky enough for me.

That said, I see a lot of plan sponsors who seem to love gambling a whole lot more than I ever could. They make a bet that a compliance error will just quietly disappear. Instead of self-correcting, they cross their fingers and hope the statute of limitations on that year’s Form 5500 runs out before the IRS or DOL comes knocking. That’s not strategy—that’s a Vegas-style long shot with terrible odds.

Here’s the thing: when the cost of fixing the problem is a fraction of what the government could hit you with if you get caught, refusing to correct it is a fool’s bet. You’re not gambling with the house’s money—you’re gambling with your own. And in this game, the house (a.k.a. the IRS or DOL) doesn’t lose often.

Self-correction and the Voluntary Compliance Program exist for a reason—they’re your best path out when you’ve made a mistake. Betting on getting lucky with an audit isn’t just bad compliance; it’s a great way to get fired by any third-party administrator that knows what they’re doing. Worse, if you do get audited, you’ve lost all credibility, and now you’re at the mercy of someone with the power to levy real pain.

Vegas is for shows and steak dinners—not your retirement plan compliance strategy.

I always say that plan sponsors need a solid team: an experienced financial advisor, a competent third-party administrator (TPA), and a knowledgeable ERISA attorney. But let’s talk about that word—experienced. Like “reasonable fees,” it’s one of those terms that gets thrown around like it actually means something. The problem? It’s vague.

Experience isn’t just about how many years someone’s been in the game. Years in the business is just one data point. I’ve met financial advisors with 30 years under their belt who still couldn’t tell you what an investment policy statement is. Real retirement plan experience might mean how many plans a provider actually works on, how well they understand plan design, or whether they do the little things that others overlook—like participant education or staying on top of fee disclosures.

A few years back, a financial advisor—who’s made quite a name for himself—pushed back when he heard I stress “experience.” He had 3½ years in the business and took offense, thinking I was just talking about years. He told me his commitment to doing the right thing for clients beat out plenty of 35-year veterans. My response? Preaching to the choir, buddy—I’ve seen what “experienced” really means.

Let me take you back. I spent 2½ years at a law firm. We had ERISA partners who were supposedly the best in the business. But they came from the multiemployer (Taft-Hartley) world—a whole different animal than single-employer 401(k) plans. Some of them didn’t know the first thing about revenue sharing, plan fees, or participant education. One of these partners even served as a trustee on the firm’s 401(k) plan. He never hired a financial advisor, never reviewed investments with the other trustees, and never gave participants any education. The firm’s fiduciary liability? Through the roof. Would you hire that guy to advise your plan just because he’s a partner and has “ERISA” in his title? I wouldn’t.

At another firm, I worked with one of the top ERISA attorneys in the country—again, from the multiemployer side—who didn’t know what revenue sharing was or why plan sponsors should care about administrative fees. Let that sink in.

Same story for financial advisors. You can have someone managing a billion dollars, but if they don’t have any real experience with retirement plans—or worse, they’ve got dozens of plans but do nothing beyond showing up for the annual review—it doesn’t mean much. No investment policy statement, no participant education? That’s not retirement plan support, that’s checking a box.

And TPAs? Some are great, but others can’t handle anything outside the cookie-cutter box. Daily valuation? Forget it. Defined benefit? Out of their depth. New comparability? Not a clue. Just because someone can administer a plan doesn’t mean they should.

The bottom line: “experience” isn’t one-size-fits-all. Plan sponsors need providers with the right experience for their plan’s size, structure, and complexity. That doesn’t always mean the longest résumé—it means the best fit.

So how do you find the right fit? Word of mouth helps. So does asking the right questions. Don’t be afraid to dig. Ask about plan design experience, fee benchmarking, participant education, and compliance support. If they stumble? That’s your answer.

Blue Ridge Associates announced today that it has acquired Qualified Retirement Plan Services, Inc. (QRPS) based in Raleigh, North Carolina.

Founded in 1988, QRPS manages over 1,000 retirement plans that serve more than 31,000 participants, with assets exceeding $2 billion, primarily within the small and middle-market business community.

In comparison, Blue Ridge Associates manages 8,700 plans, serving over 875,000 participants.

For years, I observed that federal courts were growing weary of cases involving fee litigation, but then the Supreme Court changed that perspective.

The Supreme Court issued a unanimous decision in Cunningham v. Cornell University, a landmark case concerning the management of retirement plans under the Employee Retirement Income Security Act of 1974 (ERISA). This ruling significantly lowers the requirements for plaintiffs to file ERISA claims, potentially transforming the landscape of retirement plan litigation.

The case stemmed from a lawsuit involving 28,000 Cornell University employees who alleged that the university’s retirement plan fiduciaries engaged in prohibited transactions by paying excessive fees to service providers such as TIAA and Fidelity Investments. The plaintiffs argued that these arrangements violated ERISA’s prohibitions against certain transactions with interested parties. Lower courts had previously dismissed the case, requiring plaintiffs to address potential statutory exemptions under ERISA § 408 in their initial pleadings. However, the Supreme Court reversed this position.

Justice Sonia Sotomayor, writing for the Court, clarified that plaintiffs need only allege the elements of a prohibited transaction under ERISA § 406(a). Any exemptions under § 408 are considered affirmative defenses that defendants must assert and prove. This decision has resolved a division among federal appellate courts regarding the pleading requirements for ERISA claims. By shifting the burden of proving exemptions to the defendants, the ruling may lead to an increase in ERISA litigation, as plaintiffs encounter fewer obstacles at the early stages of a lawsuit.

Justice Samuel Alito, in a concurring opinion, acknowledged this possibility, noting that more claims might survive early dismissal, thereby increasing pressure on defendants to settle. The Cunningham decision highlights the Supreme Court’s commitment to ensuring that employees have a fair opportunity to challenge potential mismanagement of retirement plans. As the case returns to the lower courts for further proceedings, it sets a precedent that could influence how retirement plan fiduciaries manage and document their decision-making processes to withstand judicial scrutiny.

For employers and plan administrators, this ruling serves as a vital reminder of the importance of transparency and diligence in managing retirement plans. It also underscores the evolving legal standards governing fiduciary responsibilities under ERISA.

Whole Foods Market has agreed to settle a class-action lawsuit that alleged the company failed to prudently manage the administrative fees of its $1.9 billion 401(k) plan, resulting in millions in losses for employees.

The lawsuit, filed in 2023 by former employees under the case name: Winkelman v. Whole Foods Market, Inc., accused the Amazon-owned grocery chain of breaching its fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Specifically, the plaintiffs claimed that Whole Foods allowed excessive recordkeeping fees charged by Fidelity Investments, the plan’s recordkeeper, between 2016 and 2020. These fees reportedly ranged from $31 to $34 per participant annually, which the plaintiffs argued were significantly higher than those charged by comparable plans at companies like Apple, Costco, Lowe’s, Google, and Macy’s, where fees ranged from $8 to $23 per participant.

The plaintiffs contended that given the size of Whole Foods’ 401(k) plan—classified as a “jumbo” plan due to its substantial assets and participant count—the company had significant bargaining power to negotiate lower fees but failed to do so. They asserted that this oversight constituted a breach of the company’s fiduciary responsibilities to plan participants.

After a private mediation session, both parties reached an agreement to settle the lawsuit. While the specific terms of the settlement have not been disclosed to the public, the parties plan to file details for court approval by mid-June 2025.

I have experienced several bear markets as an ERISA attorney, and it’s never easy, especially with the current volatility due to tariffs.

If you are concerned about the stock markets and your 401(k) plan, you may not need to worry—unless you are nearing retirement. The only time you should be worried about falling stock prices is if you need to withdraw money from your 401(k) right now, either for living expenses in retirement or for emergencies. If you do not need to take money out soon, there is usually no reason to panic.

History has shown that markets can rebound quickly; short-term drops often do not indicate long-term trends. The stock market has encountered many periods of declining prices over time, such as the dot-com bubble of 2000, the events of September 11th, and the subprime mortgage crisis from 2007 to 2010, to name a few. However, overall stock market returns have averaged about 9% from 1994 to 2024, even including these downturns.

So, if you are a baby boomer approaching retirement and your 401(k) has recently taken a hit, try not to panic. Remember the saying: stock markets can go down as well as up. History suggests that, in the long run, it’s wise to work with a trusted financial adviser to strategize about your 401(k) retirement savings, especially during tumultuous times like those we’ve recently experienced in the stock market.

Growing up, I was a pessimist. I don’t know why, but I let every little thing get to me, and I realized that being negative often scares people away.

That’s why I recommend that when dealing with potential clients, you shouldn’t dwell on the negatives of their current plan. Always approach the conversation from a positive standpoint, highlighting how your services can significantly improve their situation.

Decision-makers often have egos, and no one likes to be reminded of poor decisions, even if those decisions are evident. Years ago, a certain third-party administrator (TPA) was going through a very public crisis. During that time, many other advisors and TPAs were calling this TPA’s clients, simply spreading negativity about them.

I can’t imagine those providers gained many clients this way because successful selling is all about what you can do for the client, not about how poorly the current plan provider is performing. While you need to differentiate yourself from the incumbent provider, it’s essential to do so from a positive perspective.

Nothing surprises me much anymore, neither should the results of the survey that a Nasdaq 100 survey supports the inclusion of Nasdaq 100 index funds.

According to the Annual Nasdaq-100 Retirement Plan Survey, nearly 80 percent of 401(k) plan participants recognize the importance of including a Nasdaq-100 product in their investment options. This finding suggests a new market opportunity for retirement plans.

The survey, which included 1,000 401(k) participants and reflected the 2023 U.S. Census data regarding gender, age, and region, revealed significant demand among investors for the index within retirement plans.

As of December 31, 2024, Americans held $12.4 trillion in all employer-based defined contribution retirement plans, with $8.9 trillion of that in 401(k) plans, according to a quarterly report from the Investment Company Institute published on March 25, 2025.

However, data from over 700,000 401(k) plans shows that the allocation to Nasdaq-100 Index mutual funds accounts for less than 1% of all 401(k) assets. This is a notable underrepresentation compared to allocations in the S&P 500 and other large-cap growth indexes, as indicated by BrightScope Beacon.

T. Rowe Price announced today the launch of in-plan emergency savings accounts (ESAs) for participants in retirement plans.

This ESA solution was made possible by the SECURE 2.0 Act of 2022, which includes a provision for pension-linked emergency savings accounts. This allows non-highly compensated employees to save up to $2,500 for emergency expenses within their 401(k), 403(b), or governmental 457(b) plans, if permitted by their plan.

Once participants reach the $2,500 limit, any additional contributions will be automatically converted to non-ESA Roth contributions for their retirement accounts.

As famously quoted in *This Is Spinal Tap*, there is a fine line between stupidity and cleverness. I can assure you that Michael McKean, who played David St. Hubbins in the movie and co-wrote it, was not involved in plan administration.

From my observations in drafting planning documents, that line certainly applies. The distinction between stupidity and cleverness is particularly evident in plan provisions that deviate from standard administration practices. Complex provisions related to eligibility, compensation, and vesting are more likely to result in errors than those that adhere to conventional norms. For instance, excluding certain forms of compensation from employer contributions or salary deferrals often leads to mistakes, as do unique eligibility requirements and entry dates. While there are many conventional choices for plan provisions, striving for uniqueness and creativity in plan document preparation is usually not beneficial.

As I always say: keep it simple, stupid. Unusual plan parameters tend to increase the likelihood of errors, and correcting those errors can be costly. Therefore, creativity is not a desirable trait when it comes to plan provisions.