The Rosenbaum Law Firm P.C. Blog

A federal judge in Kentucky threw out a case against Humana Inc., claiming former employees had failed to provide sufficient evidence that the company charged excessive record-keeping fees and failed to adequately search for a less expensive record keeper.

U.S. District Judge Rebecca Grady Jennings accepted the expert testimony of the defendants’ expert Pete Swisher that Humana had a prudent process while rejecting the comparisons put forth by the plaintiffs’ expert. The judge excluded the testimony of Veronica Bray.

“Because Bray provides no reasonable explanation for her selection of the six plans and herself acknowledges they are not comparable to the Humana plan, the Court will exclude her testimony,” Jennings wrote in Moore et al. vs. Humana Inc. et al.

The judge claimed that the plan’s record keeper offered the lowest fees of any provider solicited via an RFP and that annual benchmarking revealed as “still reasonable” the record-keeping fees. Again, it’s all about a process.

According to a new Government Accountability Office (GAO) report, only a third of plan participants receive an important notice that could help them make a decision about their retirement savings.

The GAO claims that about 80% of eligible 401(k) participants aren’t aware of all four of their distribution options after terminating employment, which are 1) if above the plan cash out limit, leave the retirement savings in the former employer’s plan, 2) roll the money to the new employer’s plan, 3) roll the savings into an IRA, and, 4) take a lump sum taxable distribution.

My two cents are that it’s the result of the legalese of the 402(f) notice that participants are supposed to get. I always felt it’s written an ERISAese and an executive summary for someone who isn’t a tax expert would go a long way.

One of the plan providers sponsors for the Arlington That 401(k) Conference gave me some compliments on LinkedIn and someone else posted the same on the same thread.

I’ll be honest, I don’t do well with compliments. Some would say I’m bashful, I just think it’s because I didn’t get many compliments from my parents. I remember taking the 11th-grade high school regents exam as an 8th grader, getting an 82, and it was treated as some sort of failure. Whatever it was, it was never good enough. But yet I’m sure my mom still thinks my brother-in-law folds well and is proud of that (he worked at the Gap once).

I know we are supposed to do work, but we should just accept that compliment and say thank you. Just like when my grandmother would tell me to shut up and say thank you when I protested the gift she gave.

On the flip side, we should give compliments. For those close to me, I’m not good with that. Again, not getting compliments probably had something to do with that. I can assure you that people in the service industry are likely to get more complaints than compliments, so a compliment goes a long way.

I’ll get the referral from and advisor or third party administrator (TPA) with the plan that hasn’t been restated for 15 years and haven’t filed for a 5500 in just as long. They introduce me to the potential client, I offer them my help, and then crickets.

Even when presented with possible plan disqualification and 5500 penalties that can be thousands of dollars a day, I hear nothing. They’re looking for the one provider who suggests they can terminate the plan or merge into a new plan, to cover the “dead bodies.” Even with all their issues, they still think they can skimp.

The older I get, the more I’ve become Larry David in Curb Your Enthusiasm. I’m at the point where I won’t stop by withholding complaints when something annoys me.

I’ve been in my practice for 14 years, and I’ve been an ERISA attorney for 25 years. So safe to say, I knew quite a few financial advisors. Heck, I’ve run almost two dozen events around the country to meet advisors.

Yet, I’ll still get a phone call from an advisor who claims they want to know what I do and almost all the time, they want to know if I could refer them business. To be explicit here, most of my business is from referrals from advisors and third-party administrators (TPAs) mainly because my articles over the years have helped my reputation and might have helped them in business. Plan sponsor clients coming to me directly, happens, but not as often as I would like. Many have an advisor already, some don’t. Let’s be honest, if I had referrals to make to make plan sponsors for advisor referrals, am I going to refer someone I’ve known for a long time or someone I just got off the phone with?

Relationships take time, they don’t happen overnight. It requires time and trust. I met a few advisors in Texas, I’m sure it will take time for them to refer me, to clients, because they’re probably trying to see if I can be trusted with their clients. Trust and relationships are a big thing in this business and they don’t happen overnight.

When I was a kid in Hebrew day school, I enjoyed going to the synagogue services for kids, that were led by kids. Then my parents attended service too. It was to the point that my father met a bunch of synagogue insiders and was invited to the special club, called the Kaddish Club, which meant you had one dead parent that you could say the Kaddish memorial prayer. What was great about it was their own special Kiddush meal after services ended.

My father quit in a huff because another member criticized his role as a membership director and was upset that none of his friends spoke in his defense. The other member never criticized my father by name and my father wasn’t the only membership director. Most importantly, he didn’t speak up in his defense if he thought the criticism was directed at him.

Years ago, I left a third-party administrator (TPA) to join a law firm. If you’ve read my books, you’ll know it was not amicable and we all took things personally. Let us just say that TPA no longer exists. None of my former co-workers spoke in my defense. I wasn’t upset by that because they never spoke up in their defense when they were mistreated by the guy running the place.

There may be people that criticize you and no one may defend you, but you should defend yourself. You can’t expect people who are. Passive to speak in your defense when they don’t speak in their own defense.

The Federation of Americans for Consumer Choice (FACC) has filed a second lawsuit against the Department of Labor (DOL), in an effort to stop the new fiduciary rule.

The FACC, along with other independent insurance agents, filed for a preliminary injunction in the U.S. District Court for the Eastern District of Texas. The suit argues that if applied, the new fiduciary rule would cause “dire consequences for tens of thousands of independent insurance agents and their clientele if not stopped.” Therefore, its implementation should be delayed until the first lawsuit is settled, plaintiffs maintained.

The insurance advocacy group has sued the Department of Labor (DOL) in May, where they accused the DOL of violating the Fifth Circuit Court of Appeal’s previous rule that vacated the 2016 fiduciary rule. FACC’s lawsuit claims that the DOL is again attempting to regulate industries outside of retirement plan advisors through the new rule and the PTE 84-24 amendment.

Blue Ridge Associates (“Blue Ridge”), a third party administrator (TPA) for ESOP and qualified retirement plan benefits, announced that they have acquired Tax Sheltered Compensation, Inc. (“TSC”). TSC is a TPA, serving 3,100 plans covering over 152,000 participants across the small and middle-market business community.

When it comes to business, I say that I’m not competing with any other ERISA attorney out there, I’m competing against myself.

I will say that the biggest obstacle to getting business has been my opinion. Being frank and espousing what you believe in, can certainly rankle people, especially those who think ADP and Paychex are great at plan administration.

Whether it’s producing third-party administrators, or payroll providers, or opining that an auditor had to be truly independent from other plan providers, my opinions can offend. I should say less and only nice things, but that’s not me. If something bad in the business is going on, like a lack of fee transparency before fee disclosures or punitive termination fees, I’m going to say something. That’s me. You need to realize that expressing an opinion, no matter how popular, can offend and draw away business. There is a cost for “free speech.”

There are a lot of great 401(k) services out there that I haven’t used, so touting them isn’t going to be a big thing for me. I will tout the folks at PEP-HUB (PEP-HUB.com).

I came across Robb Smith and Jerry Conway a few years back when they were tabulating information on pooled employer plans (PEPs) and pooled plan providers (of which I serve as one). I understood they also conducted Requests for Proposals for those looking for PEP solutions. As an ERISA attorney for aa multiple employer plan that wanted to transition to a PEP, I couldn’t recommend my solution (conflicts of interest are a big thing for me to avoid), so I recommended PEP-HUB to conduct the RFP so that the process was on the up and up.

Robb Smith and Jerry Conway conducted a very economically reasonable and thorough RFP process. Impressed with their work and handling of the process from beginning to end. Anyone looking for PEPs should seek their guidance.