The Rosenbaum Law Firm P.C. Blog

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.

Recordkeepers love to talk scale: billions of dollars, millions of participants, thousands of plans. But scale cuts both ways. When something breaks, it breaks everywhere. Ask anyone who survived the great Mapping Error Debacle of whichever year you choose—every provider has one.

What plan sponsors need—and what smart providers deliver—isn’t a shiny interface or a list of “innovations” born in the marketing department. They need process discipline. They need someone who understands that data errors turn into operational failures, which turn into lawsuits. The system can automate enrollment, communication, investments, and loans; what it can’t automate is accountability.

Your platform should be your advantage, not your liability. If you don’t test it, validate it, document it, and audit it, it’s not a recordkeeping system—it’s a roulette wheel. And roulette rarely favors the house.

Plan providers hear it all the time: “Our employees don’t care about the 401(k).” That’s usually employer-speak for “We haven’t communicated anything in three years and HR is tired.” Employees aren’t apathetic—they’re overwhelmed, confused, and suspicious of anything that sounds like homework.

This is where providers shine—if they choose to. Show the sponsor that participation isn’t a personality trait; it’s a communication strategy. Auto-features help, but they don’t replace explanation. A simple, consistent message beats a glossy brochure every time.

Employees care when they understand why something matters. They care when the provider doesn’t speak in actuarial haiku. They care when the enrollment experience isn’t designed like a 1997 tax program. And they care when the plan doesn’t feel like a trap.

Providers can coach sponsors on messaging, simplify enrollment, humanize the process, and give employees actual reasons to engage. When employees see progress, contributions rise, complaints fall, and HR stops blaming “apathy” for what was really a communication vacuum.

Employees don’t lack interest—they lack clarity. Your job is to give them a reason to care.

Everyone in the retirement plan world claims to be “participant-centric.” It’s the industry’s version of “gluten-free”—proudly announced, poorly understood. The truth is, most providers focus on the plan sponsor relationship because that’s where the contract lives. Participants? They get a login, a call center number, and whatever canned webinar got approved in 2019.

But being truly participant-centric means designing services around the people who actually need help: the employees who don’t know Roth from pre-tax, think loans are free money, and believe their target-date fund is guaranteed. Providers who elevate participant support—real education, real engagement, real results—don’t just help participants; they make sponsors fiercely loyal.

Here’s the catch: providers are afraid to price participant services because they assume no one will pay. Wrong. Sponsors will pay for outcomes. They will pay for fewer errors, fewer complaints, fewer escalations, and fewer moments where payroll calls saying, “Participants are confused again.”

Make participant support measurable, meaningful, and proactive—not an afterthought. Do that, and you won’t just be participant-centric. You’ll be revenue-centric too.

One of the most persistent myths in the 401(k) universe is the idea that the third-party administrator (TPA) is the plan administrator. If I had a dollar for every time a plan sponsor insisted this was true, I could probably buy that Dallas Cowboys stadium Jerry Jones keeps pretending is a football team. But here’s the reality: unless your plan document specifically names your TPA as the plan administrator—and almost none do—that job belongs to you, the plan sponsor.

This comes as a shock to most HR and finance teams. They’re convinced the TPA handles everything. And to be fair, TPAs do handle a lot: compliance testing, Form 5500s, distributions, loans, payroll files, and more. But the Department of Labor didn’t write ERISA to make your life easy. They wrote it to make someone accountable. And that someone is the named fiduciary and plan administrator—which is usually the employer.

Being the plan administrator means you’re responsible for the accuracy of everything the TPA produces. If payroll sends over a file with 12 employees missing and the TPA processes it exactly as received, guess who the DOL is looking at? Not the TPA. You. If the TPA uploads the wrong amendment and you sign it without reading it, guess whose problem it becomes? Yours again.

This isn’t to say TPAs aren’t valuable—they are. A good TPA is the difference between operational compliance and a multi-year correction project that feels like Shawshank without the happy ending. But a TPA is a partner, not a shield.

The easiest way to avoid trouble is simple: know your role. Review what your TPA sends. Understand your plan document. Ask questions before signing anything. Hold annual meetings and document decisions. And for the love of ERISA, don’t assume “the TPA handles it” is a defense that will survive even 10 seconds with an auditor.

At the end of the day, it’s your plan, your fiduciary duty, and your name on the line. The TPA can guide you, but they can’t save you from responsibilities you didn’t know you had. So embrace your role—or at least acknowledge it—because pretending otherwise won’t save you when the correction costs start piling up.

If there’s one consistent truth in the retirement plan world, it’s that nothing stays consistent—especially the Qualified Default Investment Alternative (QDIA). Yet for some reason, many plan sponsors treat picking a QDIA like picking a couch: choose it once, stick it in the corner, and hope it still looks good a decade later. The problem is, unlike a couch, a QDIA actually requires maintenance. It’s not supposed to collect dust; it’s supposed to collect returns.

Target-date funds (TDFs) are the most common QDIA, and rightfully so. They’re diversified, easy to explain, and—best of all—participants don’t have to do anything. Unfortunately, that same “set it and forget it” attitude has infected plan sponsors. A TDF lineup is not a Ronco rotisserie oven. You don’t pick it, walk away, and shout “Set it and forget it!” as if fiduciary responsibility begins and ends at the 404(c) safe harbor.

The truth is simple: markets change, fees change, glide paths shift, investment teams turn over, and participant demographics never stay still. A QDIA that made perfect sense in 2017 might be completely inappropriate in 2025. And if the Department of Labor ever comes knocking, “But our advisor picked it eight years ago” is not going to be the winning defense you think it is.

Reviewing your QDIA annually isn’t just good governance—it’s survival. Did the fund underperform? Did the glide path become too aggressive or too conservative? Are the fees still competitive? Did the investment manager leave for a competitor? Did your workforce suddenly skew younger or older? If the answer to any of these is “I don’t know,” congratulations: you’ve wandered into fiduciary danger territory.

A QDIA is one of the most significant decisions a plan sponsor makes, because it affects the people least likely to make their own investment decisions. That’s a lot of responsibility. And like any responsibility, it requires ongoing attention.

So don’t treat the QDIA like the treadmill in your basement—used enthusiastically once and then ignored. Check it. Review it. Document it. Your participants, your fiduciary file, and your future self will thank you.

If you’re a plan sponsor reading this, you can sit back, relax, and think, “I’ll never be that guy.” Except the guy in question just might be you. The case of Rick Case Enterprises Inc.—a Florida automotive group that allegedly lost roughly 9% of its 401(k) assets during a recordkeeper conversion—is the textbook cautionary tale of what happens when oversight takes the day off.

Here’s how the horror story went down: The plan switched from one major recordkeeper (Empower Retirement) to another (Principal Financial Group) in late 2022. During that transition, participants were placed in a blackout period—unable to access or change their accounts. When assets arrived at the new recordkeeper in early January 2023, the plaintiffs allege account balances were roughly 9% lower than before. For one participant, invested entirely in a stable value fund (which by design is supposed to preserve principal), that drop was all the more baffling.

Let’s translate that into fiduciary English: 1) You choose a vendor. 2) You execute a transition. 3) You fail to monitor the flow of assets, communications, or blackout procedures. Boom—now you’re looking at possible ERISA breaches, lawsuits, and reputational damage. The complaint alleges not only missing funds but conflicting communications: participants were told a “market value adjustment fee” applied; others were told missing assets would be returned—but then nobody got documentation or reimbursement.

The rubber-meets-the-road takeaway: A recordkeeper switch is not simply a checkbox for “vendor change”. It is one of the highest-risk operational events in a plan lifecycle. Blackout periods must be communicated clearly, participant funds must be accurately transferred, and plan fiduciaries must vigilantly follow every step of the process. If you hand off everything to your provider, and then treat the transition like a lunch meeting that maybe one of your folks attended, you are creating systemic risk.

Another layer: The alleged investment mishandling. Participants had been told their assets would default into age-based target-date funds (the plan’s stated designated default investment alternative), but instead, they claim assets were dumped into a “diversified mix of mutual funds” that didn’t align with the plan’s documented default investment rules. Now you’ve not only got missing money—you’ve got document-noncompliance, messaging mismatches, and possibly a breakdown of your investment governance.

So what should you do (and I mean now)? One: rigorously document your vendor-change plan—including blackout communications, transfer validation, reconciliation procedures, and participant access protocols. Two: audit the results post-conversion—did every dollar move, did every participant end up in the correct vehicle, were communications accurate? And three: treat your plan oversight like you would your house—don’t assume the vendor installed the windows properly and just walk away.

If you ignore these things, you may not get a law firm knocking—yet. But trust me: when the dust settles in your next transition, the legacy you’ll leave isn’t your firm’s reputation—it’s a

googled headline about “automotive group loses 9% of plan assets during switch.” And you’ll wish you’d done the dirty work ahead of time.

Your participants count on you. So act like someone who knows they’re responsible.