The Rosenbaum Law Firm P.C. Blog

I always say that picking a plan provider just on price is a bad idea and I will say that picking a provider just on your years of experience is another folly.

I have 25 years of experience and when I had a couple of years of experience, I noticed that there were some plan administrators and actuaries that had 20 plus experience, who had no idea what they were doing. Time doesn’t make someone any good, perhaps when they started, they didn’t get the proper training or they didn’t partake in any continuing education., Whatever it is, there are many people out there with lots of experience who don’t know what they do. Years of experience don’t matter, it’s the quality of the experience that does.

Years ago, I knew a young attorney who was a real estate and tax attorney. A potential client for a real estate sale didn’t hire him because she thought he was too young. She hired an older attorney, who then embezzled from the sale of her home.

There are so many criteria you should consider in hiring a plan provider and harping on one criterion is a mistake.

Third-Party Administrator (TPA) Definiti LLC announced a program for financial advisers who have 401(k) books of business, that will offer access to proprietary retirement plan resources, reports, and a dedicated account manager to help them manage plan sponsor clients.

The adviser will be assigned a strategic account manager, who will help them with book-of-business status reports, priority access to their ERISA attorney, referrals to “orphaned” retirement plans, and advance notice of product and service launches, events, or legislative and regulatory updates.

This sounds like a smart move to me. Working for TPAs in the past, the hope with working with an advisor is they would bring all their clients to us, but this is an actual program with bells and whistles.

About 25 years ago, there was a medical report that dental plaque could cause heart disease. The cynic in me tells me that this was some sort of dental conspiracy to increase revenue as fluoridated water and other dental hygiene have hurt the dentists’ bottom line. Regardless of my cynicism, good oral health is an important goal.

While some people only see a dentist when something in their mouth hurts them, many visit the dentist for annual or semi-annual checkups as preventative care, to avoid dental problems later. Brushing, flossing, and checkups help avoid the root canals, caps, and dentures.

As an ERISA attorney, sometimes I see myself as a retirement plan dentist. While some plan sponsors only seek counsel from an ERISA attorney when something goes wrong with their retirement plan, there are many plan sponsors these days who seek ERISA counsel as a form of preventative care for their retirement plans. Seeking counsel from an ERISA attorney can be like seeking a dentist to avoid greater harm. Part of the marketing of my practice has been to advise plan sponsors and their financial advisors that their retirement plan should be reviewed on an annual basis to determine whether it’s being properly administered and whether the expenses for the plan are reasonable. These are preventative steps to avoid potential liability as a plan fiduciary. My Retirement Plan Tune-Up (which you will be hearing more about shortly) is a legal review where I look at the plan terms, plan administration, and fiduciary to determine what works and what needs to be corrected.

Plan sponsors should review their plans to determine whether the plan still fits their needs and whether there are potential liability pitfalls in plan administration and the fiduciary process.

In my articles and blog posts, I highlight the potential liability pitfalls that a plan sponsor needs to avoid. Whether it’s the lack of an investment policy statement or high fees, these are pitfalls that plan sponsors can minimize through best practices.

Some critics of my writings (some of them are ERISA attorneys) claim that small to medium-sized employers rarely get sued for breaches of fiduciary duty, so I am in the market of selling useless legal services. I guess that is my version of the plaque-causing heart disease theory. While the chances of a small to medium-sized employer getting sued are slim, the threat is still there. The chance of getting hit by lightning is remote; we still minimize the risk of getting hit by avoiding standing near trees or staying outside. In addition, ERISA litigation progresses and when ERISA attorneys run out of suing the larger plans for fiduciary duty breaches, where will they turn next? Regardless of the small risk or not, plan sponsors should follow good practices because good practices tend to avoid bad results.

Like their teeth, plan sponsors should have their plans checked on an annual basis to avoid a retirement plan root canal later.

CNN.com had an article on the best 401(k) plan providers which I found on a Google search for 401(k) plans.

All I can say is this was a list developed by someone who never sponsored a 401(k) plan or worked on one. It was geared towards large providers, some good ones (Empower and Fidelity) and some bad ones (one of those payroll companies). If you’re a large plan, the list wasn’t bad. If you’re a small plan, many of these providers won’t give you the time of day.

When speaking about cars, I ask my mechanic, Ralph. If I had a 401(k) plan provider question, I’d ask an advisor or somebody else in the business.

Nearly two in three Americans say they worry more about running out of money than death an Allianz Life Insurance survey.

The worry of running out of money has increased in recent years. In 2024, 63% say they worry more about running out of money than death, up from 57% in 2022. I would assume inflation and global uncertainties with wars in Ukraine and Gaza, have contributed to this. Another fact is you can’t escape death.

Lincoln Financial Group is launching its FlexPEP(k) and FlexPEP(b), a pooled employer plan (PEP) solution for 401(k) and 403(b) plans.

Independent fiduciary services provider Smart Retirement Solutions, Inc. will serve as the pooled plan provider while Envestnet will work as the ERISA §3(38) fiduciary.

The FlexPEP(k) and FlexPEP(b) will include a full-service model, guaranteed income solutions, group plan discounts, and qualified default investment alternative (QDIA) options.

I have an old saying: “I needed you, you weren’t there, and I no longer need you.” When you have a plan sponsor and they need help, you need to be there. Otherwise, don‘t be surprised if you are gone as a plan provider.

Whether it’s a missing 5500 or some other big trouble issue, plan sponsors need to make sure they can depend on you, and if they can’t, they will find a way to replace you.

I have an old saying: “I needed you, you weren’t there, and I no longer need you.” When you have a plan sponsor and they need help, you need to be there. Otherwise, don‘t be surprised if you are gone as a plan provider.

Whether it’s a missing 5500 or some other big trouble issue, plan sponsors need to make sure they can depend on you, and if they can’t, they will find a way to replace you.

I hate to get political, but when people complain about something “woke,” they really should Google or use Wikipedia to find out what that means.

That being said, the push by the Department of Labor (DOL) for fiduciaries to be allowed to offer ESG funds on their plan’s lineup isn’t woke. I’m not in favor of ESG funds because I don’t think they offer the best return and no two fund companies have the same principles as what an ESG investment is. Rather than going political, I just wouldn’t offer it if I was that opposed to it. That’s it.

I have about a half dozen corporations where I need to file a corporate tax return by March 15. Every year, I panic and get the work done. I think one year, I was on an extension. So I don’t understand when I have clients with multiple years missing of a Form 5500 being filed.

The problem is there is no statute of limitations for failing to file a tax return, so missed returns from 6 or 7 years ago, are still outstanding. The current penalty from the Department of Labor for a late 5500 filing is $2,670 per day, with no limit. The Internal Revenue Service penalty for the same missing form 5500 is up to $250 a day, up to a maximum penalty of $150,000 per plan year.

So if you have missing returns, contact your third-party administrator and/or ERISA attorney and get those forms filed through the Delinquent Filer Voluntary Compliance Program, where the fees for forgiveness are way less than penalties that can be in 6 digits.