The Rosenbaum Law Firm P.C. Blog

Chief Justice John Marshall famously wrote in McCulloch v. Marylandthat “the power to tax is the power to destroy.” In today’s retirement plan business, I’d argue there’s a modern parallel: the power to assign a financial advisor to a particular Pooled Plan Provider (PPP) can be the power to get you fired.

Trust is everything in this business. Advisors hand over their clients, their reputation, and their livelihood to providers they assume are acting in good faith. When that trust is misplaced—especially in the PEP space—the consequences can be brutal. Pick the wrong PPP, or worse, one aligned with an unscrupulous TPA that has its own conflicts, and you may find yourself suddenly unnecessary.

That’s why the current PEP landscape sometimes feels like the TV show Survivor. Everyone smiles. Alliances are formed. And all the while, you’re just trying to make sure you don’t get voted off the island.

I know this from experience. I worked for years on a Multiple Employer Plan as a plan fiduciary and sponsor, alongside an advisor, trying to build something meaningful and sustainable. Then one advisor decided the plan should be converted to a PEP and expected me to “volunteer” to give up my fiduciary role—for nothing. That didn’t happen. And it never should.

Any transition—MEP to PEP or otherwise—has to preserve existing interests, roles, and value. If it doesn’t, someone is getting squeezed out, and it’s usually not the provider with the marketing budget.

The lesson is simple. Before signing onto any PEP arrangement, consult with ERISA counsel. Make sure assignment rights, fiduciary roles, and economic interests are clearly defined and protected. Because in this business, the wrong deal doesn’t just hurt—it can end your seat at the table.

Every few years, a new investment trend arrives with the same promise: higher returns, innovation, and the fear of being left behind. Bitcoin is the latest example, and while it may have a place in speculative portfolios, its volatility should give every 401(k) plan sponsor serious pause.

Plan sponsors are not venture capitalists. Under ERISA, their job isn’t to chase headlines or experiment with emerging assets. It’s to act prudently and in the best interests of participants—many of whom have limited investment knowledge and depend on their retirement savings for future income.

Bitcoin’s price swings are extreme, even by equity market standards. Double-digit gains and losses in short periods are not uncommon. That kind of volatility may be tolerable for investors who understand the risks and can afford to lose capital. For retirement plan participants—especially those nearing retirement—it can be devastating.

Sponsors also need to consider participant behavior. Even if Bitcoin is offered as a small, self-directed option, market hype can drive poor decision-making. Participants tend to buy high, sell low, and panic during downturns. When that happens inside a 401(k), the sponsor doesn’t get to shrug and say, “They chose it.” Fiduciary responsibility doesn’t disappear because an investment was optional.

Then there’s the litigation risk. Courts and regulators have made it clear that plan fiduciaries must carefully evaluate investment suitability. When a volatile, speculative asset is added to a retirement plan, sponsors should expect that decision to be second-guessed—especially after a market crash.

Bitcoin may be innovative. It may be fascinating. But innovation is not a fiduciary defense. For most 401(k) plans, stability, diversification, and long-term retirement security still matter more than chasing the next financial trend.

PEPs were sold to the retirement plan industry as the answer to everything—lower costs, better governance, and less fiduciary risk for employers. What doesn’t get enough attention is the new layer of conflicts that PEPs can introduce, especially when the same small circle of providers controls too much of the operation.

In many PEP arrangements, the Pooled Plan Provider, the TPA, the recordkeeper, and sometimes even the investment manager are economically tied together. That doesn’t automatically violate ERISA, but it should immediately raise fiduciary eyebrows. When oversight and execution live under the same roof, independence becomes a fiction.

Conflicts show up in subtle ways. Provider selection becomes “preferred” rather than prudent. Fees get justified as bundled efficiencies rather than benchmarked against the market. Advisors are told the arrangement is turnkey, while critical decisions are made without meaningful input. And when something goes wrong, accountability becomes a game of finger-pointing.

The danger for plan sponsors and advisors is assuming that PEP status magically eliminates fiduciary responsibility. It doesn’t. ERISA still requires a prudent process, and conflicts of interest are exactly the kind of issue plaintiff attorneys love to exploit. A PEP with conflicted providers isn’t safer—it’s riskier, because problems can scale quickly across dozens or hundreds of adopting employers.

For advisors, conflicts can be existential. If the PPP controls advisor assignment and also benefits from internal provider relationships, loyalty may run to the platform, not the advisor who brought the business.

PEPs can work. But only when conflicts are disclosed, managed, and monitored—not ignored. In the rush to scale, providers should remember that efficiency never excuses self-interest, and trust is the one asset a PEP can’t afford to lose.

If there’s one thing plan sponsors should never forget, it’s this: innovation doesn’t suspend fiduciary responsibility. With all the recent buzz about private equity, private credit, and other alternative investments creeping into 401(k) plans, regulators are reminding the industry that ERISA still runs the show.

The Department of Labor is working toward clearer guidance on how fiduciaries evaluate and monitor alternative investments inside defined contribution plans. That timing is no coincidence. As Wall Street pushes more complex products into retirement plans, the DOL wants to make sure plan sponsors don’t confuse “permitted” with “prudent.”

Alternative investments are not illegal under ERISA. They never were. But ERISA requires a disciplined process: understanding fees, risks, liquidity, valuation methods, and how an investment fits the needs of the participant population. That burden doesn’t disappear because a fund has a famous name or because it’s wrapped inside a managed account.

For plan sponsors, this is where trouble can start. Alternatives often come with higher fees, limited liquidity, and opaque pricing. If participants can’t easily understand what they own, fiduciaries need to understand it even better. Documentation, committee minutes, and advisor analysis will matter more than ever.

This regulatory focus should also be a warning shot to advisors. Recommending alternatives isn’t about being cutting-edge or trendy. It’s about proving that the decision improves retirement outcomes and not just marketing brochures.

The takeaway is simple. The door to alternative investments may be opening wider, but the fiduciary standard isn’t loosening. If anything, it’s tightening. In the 401(k) world, complexity demands caution—and prudence is still the law of the land.

Some plan sponsors believe that holding committee meetings automatically makes them good fiduciaries. I’ve sat through enough meetings to know that’s not true. A calendar invite doesn’t fulfill fiduciary duties. What matters is what actually happens in the room—and what gets written down afterward.

Too many committees meet just to meet. They review reports nobody understands, listen politely to providers who never get challenged, and approve recommendations without asking hard questions. Then they congratulate themselves for checking the fiduciary box and move on until the next quarterly meeting. That’s not governance. That’s theater.

ERISA doesn’t require perfection, but it does require process. A good committee meeting involves engagement. Why are fees structured this way? Why is this fund still on the lineup? Why hasn’t participation improved? Why are forfeitures being used—or not used—in a particular manner? Silence is not prudence.

Documentation matters just as much as discussion. If it’s not in the minutes, it might as well not have happened. I’ve seen excellent fiduciary decisions undermined because no one bothered to memorialize the reasoning. Plaintiffs’ lawyers don’t attack intentions; they attack paper—or the lack of it.

Committee meetings should be purposeful, focused, and honest. Sometimes that means uncomfortable conversations. Sometimes it means telling a long-time provider that change is necessary. That’s not disloyalty; that’s fiduciary responsibility.

Good fiduciaries aren’t defined by how often they meet. They’re defined by the quality of the decisions they make when it counts.

There’s a growing belief in the retirement industry that technology equals quality. Sleek dashboards, mobile apps, and automation are valuable, but technology alone doesn’t make a great plan provider. If it did, fiduciary breaches would have disappeared years ago.

Technology processes data efficiently, but it doesn’t question it. A system will happily run nondiscrimination testing on flawed payroll data or produce reports that look compliant on the surface while masking deeper issues underneath. Human judgment is still required to recognize when something doesn’t make sense and to ask the uncomfortable follow-up questions.

Great providers use technology as a tool, not a substitute for expertise. They understand that automation works best when paired with experienced professionals who can interpret results, spot anomalies, and explain implications in plain English. Clients don’t just need reports; they need context.

Over-reliance on technology can also create complacency. When everything appears automated and seamless, plan sponsors may assume compliance is guaranteed. That false sense of security is dangerous. Providers play a critical role in reminding sponsors that fiduciary responsibility can’t be outsourced to a platform.

The most effective providers strike a balance. They invest in technology to improve efficiency and accuracy, while maintaining a culture that values experience, skepticism, and communication. The future of plan services isn’t man versus machine—it’s knowing when the machine needs a human to step in.

One of the hardest parts of being a plan provider isn’t the complexity of ERISA—it’s the incomplete information. Providers are often asked to solve problems without being given the full picture, and that’s a recipe for compliance failures that no service agreement disclaimer can truly fix.

Plan providers rely on plan sponsor data to perform testing, draft amendments, determine eligibility, and spot compliance risks. Controlled group ownership, affiliated service groups, other retirement plans, payroll practices, mergers, acquisitions—none of this is optional context. When sponsors leave out details, whether intentionally or accidentally, providers are forced to work with blind spots that can undermine even the best systems and expertise.

The frustrating reality is that when issues surface years later, providers are often pulled into the blame cycle despite never having the facts needed to prevent the problem. The IRS and DOL don’t audit based on what the provider was told; they audit based on what actually happened. That disconnect creates unnecessary exposure for everyone involved.

Providers need to be proactive in setting expectations. Data-collection processes should emphasize completeness, not convenience. Annual questionnaires shouldn’t feel like busywork; they should be framed as risk-management tools that protect the sponsor and the provider alike. Educating sponsors on why certain questions matter can reduce resistance and improve accuracy.

Plan providers aren’t miracle workers. They can’t fix problems they don’t know exist. The best provider-client relationships are built on transparency, not assumptions. When providers insist on better information up front, they’re not being difficult—they’re doing their job.

I understand why some plan sponsors withhold information from their plan providers. Sometimes it’s embarrassment. Sometimes it’s fear of added cost. Sometimes it’s just not knowing what matters. Unfortunately, in the retirement plan world, hiding information never protects you—it only delays the damage.

Controlled group issues, affiliated service groups, other retirement plans, ownership changes, payroll quirks—these aren’t “nice to know” details. They are foundational facts that determine compliance. When a provider doesn’t have the full picture, they can’t give accurate advice, and the plan sponsor is still the one holding the fiduciary bag.

I’ve seen plan sponsors omit information unintentionally and end up with failed testing, missed coverage issues, or deduction problems that snowballed over multiple years. I’ve also seen sponsors intentionally stay quiet, hoping a problem wouldn’t surface. It always does—usually during an audit, a transaction, or litigation, when the stakes are highest.

ERISA is unforgiving about ignorance. You don’t get a pass because you didn’t mention something. Providers rely on what they’re told. If the information is incomplete, the advice will be too.

Transparency with your plan provider isn’t about trust—it’s about self-preservation. The more they know, the better they can protect you. The less they know, the more exposed you are.

If you want fewer surprises from the IRS, the DOL, or a plaintiffs’ lawyer, stop treating information like a liability. In the long run, secrecy costs far more than honesty ever will.

If you’ve been paying attention to retirement plan news lately, you know that alternative investments are no longer a fringe conversation. They’re front and center. The Department of Labor has now taken a significant step by sending a proposed rule on alternative investments to the White House for review. This isn’t casual guidance or a vague press statement. It’s a formal regulatory move that could shape how defined contribution plans look for years to come.

This proposal traces back to last year’s executive order directing the DOL, Treasury, and SEC to reexamine how ERISA fiduciaries handle private markets and other non-traditional investments. For decades, the retirement plan world has played it safe. Stocks, bonds, and cash ruled the day, largely because anything outside that box felt like an invitation to litigation. Illiquidity, valuation challenges, and participant understanding have always made alternatives a tough sell.

Now the government appears to be signaling that modernization is on the table. The proposed rule has been sent to the Office of Management and Budget, which means the formal review process has begun. The text isn’t public yet, but once it is, there will be a comment period where industry stakeholders can weigh in. That alone tells you this isn’t theoretical. This is moving.

The big question is what the final rule will actually say. Will it provide clearer standards for fiduciaries? Will it offer any comfort that private equity, real estate, infrastructure, or even digital assets can be used prudently in defined contribution plans? Or will it simply restate existing fiduciary principles with a new label slapped on the cover?

What’s clear is that the industry is changing whether regulators like it or not. Providers are pushing alternatives. Sponsors are curious. Participants are asking for diversification beyond the traditional menu. The DOL now has a chance to either bring clarity or add another layer of uncertainty.

Innovation is fine. But under ERISA, process still matters more than novelty. This proposal could be a turning point—or just another rule that looks important until the first lawsuit tests it. Either way, fiduciaries would be wise to pay attention.

If someone had told me 15 years ago that one of the world’s largest alternative asset managers would be partnering with a mainstream retirement plan provider to bring private market investments into 401(k) plans, I would have assumed they were confusing a pension plan with a hedge fund cocktail party. Yet here we are.

Empower has announced a new partnership with Blackstone, adding private equity, private credit, real estate, and infrastructure strategies to its defined contribution platform. This is not a fringe experiment. This is a serious push to make institutional-style investing available to everyday retirement savers, delivered through collective investment trusts and primarily accessed via managed accounts and advice-based models.

This move didn’t come out of nowhere. Over the past year, Empower has been building a private markets lineup with some of the biggest names in asset management. Blackstone’s entrance adds scale, brand recognition, and credibility to the effort. When a trillion-dollar asset manager steps into the 401(k) space, it’s no longer a theoretical conversation about “someday.” It’s a statement about where the industry thinks retirement investing is heading.

That said, this isn’t about replacing target-date funds or turning participants into day traders of illiquid assets. The pitch is diversification—giving long-term investors exposure beyond public stocks and bonds in a controlled, professionally managed way. Done correctly, that can make sense. Done poorly, it can become a fiduciary headache.

Plan sponsors and advisors should be asking hard questions. How do fees compare? How is liquidity managed? What happens in market stress? How is participant suitability determined? And perhaps most importantly, how do you document fiduciary prudence when offering strategies that most participants have never heard of and don’t fully understand?

Private markets in defined contribution plans are no longer a hypothetical future. They’re here. Whether this becomes a meaningful evolution in retirement investing or an option that only a small percentage of participants ever use will depend on execution, education, and fiduciary discipline.

This isn’t a joke. But it is a turning point worth paying attention to.