The Rosenbaum Law Firm P.C. Blog

According to Fidelity, Retirement account balances have reached all-time highs. At the end of 2024, the average balance in 401(k) plans was $132,300, and in 403(b)s, it was $119,300. The average overall contribution rates are also increasing, nearing Fidelity’s guideline of saving 15% per year for retirement (including employer and employee contributions).

More than two-thirds (69%) of employees and 67% of employers endorse retirement plans as a must-have employer benefit.

Rising numbers are great, but the average balance is far too little to fund someone’s full retirement.

In life, choice is usually a good thing. However, when it comes to daily valued 401(k) plans, too many choices aren’t a good thing. It sounds counter-intuitive, but too many choices offered to plan participants is usually a mistake.

Offering participants the right to self-direct their own 401(k) account sounds like a great idea because plan sponsors are giving plan participant a choice in shaping their retirement. The problem with these choices is that plan participants get paralyzed by being offered too many choices; they tend to get overwhelmed. For example, people assume offering so many different mutual funds on a plan’s investment menu is the way to go. However, studies have shown that the more investment options offered under the plan, it tends to depress the deferral rate of plan participants. Offering 57 mutual funds on a lineup sounds like a good idea on paper, but it overwhelms plan participants to the point that they don’t want to participate and defer their income.

The same can be said by offering participants a self-directed brokerage account. Allowing plan participants the right to a brokerage window within the 401(k) plan allows them to purchase stocks and other investments apart from the typical mutual fund menu offered under a 401(k) plan. Again, a study has shown those plan participants who use a brokerage window tend to have a worse rate of return on their 401(k) account than those participants who stick to the core fund lineup.

Offering 25+ versions of Tide detergent probably has done well in selling detergent, offering too many choices within a 401(k) plan isn’t a great thing.

Candidly, an AI-driven student debt and savings optimization platform issues a report on the effectiveness of their Student Loan Retirement Match program, which was allowed SECURE 2.0.

The SECURE 2.0 provision that enabled employers to match employees’ student loan payments with retirement contributions led to a 13.5% increase in first-time retirement plan participation and a 27% increase in employees maximizing their employer’s 401(k) match offering.

The report also indicated that 401(k) participants in Candidly’s program had average annual retirement contributions of $3,300 per participant; projected additional retirement savings of $48,800 per participant by the time of retirement; and a 58% reduction in the likelihood of turnover among participating employees.

Daniel Aronowitz, president of Encore Fiduciary, was nominated by President Trump to become the next Assistant Secretary of Labor and lead the Employee Benefits Security Administration.

Aronowitz has 30 years of experience in the professional liability industry as a coverage lawyer and underwriter. He has served as president of Encore Fiduciary for more than 13 years.

A federal judge in Amarillo, Texas, rejected arguments made by 26 attorneys general in Republican-led states challenging the legitimacy of the Biden Administration’s so-called ESG rule.

The attorney generals had asked the court to reconsider its earlier decision to affirm the rule after the U.S. Supreme Court overturned the Chevron doctrine.

The Department of Labor rule would allow plan fiduciaries to select sustainable investment options in 401(k)s, relying on environmental, social, and governance factors to act as a “tiebreaker” when all other considerations involving competing investments are equal.

The decision might be moot if the DOL withdraws the rule, which has been expected since President Trump was inaugurated.

Daniel Aronowitz, president of Encore Fiduciary, was nominated by President Trump to become the next Assistant Secretary of Labor and lead the Employee Benefits Security Administration.

Aronowitz has 30 years of experience in the professional liability industry as a coverage lawyer and underwriter. He has served as president of Encore Fiduciary for more than 13 years.

Years ago, I was irritated when a person from my community was appointed to an elected position because of a vacancy. I never met the man, but I’m a little disgusted by him because of his past posts on Facebook. Borderline racist, disparaging comments to those in the community who have another viewpoint, and just other disturbing posts suggest that he isn’t someone that I want as an elected official. Luckily those posts cost him re-election.

My wife says I post too much on Facebook and she is probably right. I may post a lot, but I try to watch what I post. I avoid any comments that could be misinterpreted and considered hateful or in poor taste. I’m a little shell-shocked because I was accosted by my law firm’s managing attorney about some innocuous posts when I worked there. Your reputation in business means everything and you can’t let some silliness on social media get the better of you. Everyone loses their temper, but going online with diatribe posts means it’s likely to be preserved in one fashion or another.

I’ve seen way too many businesses and respected individuals who have suffered because they said way too much in social media posts that they couldn’t take back. I know I certainly say too much in many of my posts concerning old places I worked or organizations I belonged to, but I always see that as a teaching moment. I try to avoid political comments on my business social media, but no one could accuse me of social media posts that could land me in hot water for being insensitive or divisive. The point is to avoid any social media posts that make you look like a creep.

On whether to recommend Bitcoin and other digital assets for clients, financial advisers are wary about their fiduciary duty to clients, according to a CoinShares survey.

62% of 250 advisers in the survey think that recommending Bitcoin and digital assets doesn’t align with their fiduciary obligation to act in their client’s best interest, and 79% of advisers believe their role is shifting toward risk management, as their clients may seek cryptocurrency investments independently of them.

While advisors are considering digital assets, they believe there is a need for independent education on assets.

This is a concern as we may eventually see the Department of Labor approval of digital assets in 401(k) plans.

Every time I’ve spoken to other plan providers about certain things they are working on, all I later see are missed opportunities. There are no sure things in this business, there are opportunities.

Even when you have a signed contract with certain retirement plan projects such as starting a new pooled employer plan, it’s still not a sure thing because you still have to bring assets over to make a go of it. The sales process is long, tedious, and at certain points, not fun. It’s a marathon with enough twists and turns because selling retirement plans isn’t the same as selling products that are impulse purchases like candy at the supermarket checkout line.

I’ve seen many opportunities fall by the wayside that was supposed. To be sure things because of the cockiness of the provider and them counting their eggs before they’re hatched.

I sound like a broken record, but I won’t stop until 401(k) plan sponsors understand the issue of a late Form 5500 and Internal Revenue Service (IRS) and Department of Labor (DOL) penalties.

If you are late with filing a Form 55009, that Form 5500 needs to be filed coincident with an application to the Department of Labor’s Delinquent Filer Voluntary Compliance Program that allows you to file the form late and pay a nominal fee. Otherwise, you may get a bill from the IRS and/or DOL that you owe tens of thousands in penalties.

On the 5500 website, you have to log in and file a Form. 5500 will tell you as much when you try to file. Just had a plan sponsor send me a screenshot of that, together with a $40,000 penalty from the IRS.

Did you get a letter or do you have a late 5500? You know where to reach me.