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The Buck
Stops With The Plan Sponsor.
Why Plan Sponsors can't skirt away
from their fiduciary responsibility.
One of my pet peeves about society is that so many
people refuse to take personal responsibility for problems they may
have caused. It always appears to be someone else's fault. I once
worked at a place where my boss was very effective in holding
employees to accept responsibility, instead of pinning the blame on
someone else. Of course when my boss made mistakes, he always
blamed it on someone else.
 Plan sponsors and those that serve as individual
trustees of retirement plans don't have that luxury. Regardless of
the errors or omissions caused by their third party administrator
(TPA), financial advisor, or ERISA attorney, they ultimately bear
the responsibility and liability as plan sponsors. Even situation
where there was no malice, like offering retail mutual funds when
less expensive institutional shares are available have been held to
a breach of fiduciary responsibility.
Fiduciary responsibility can always be minimized;
it could never be fully eliminated. Plan sponsors need to surround
themselves with the TPA, independent financial advisor, and ERISA
attorney that can implement guidance and processes that will allow
the plan sponsor to track their duties and responsibilities as a a
plan sponsor.
An article that I recently wrote, concerning that
the buck stops with the retirement plan sponsor and ways to
minimize fiduciary liability can be found here.
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401(k)
Fee Simple Absolute.
What
will happen, what won't happen, and what may happen with plan fee
disclsoure in 2011.
With
fee disclosure regulations that will be effective in July 2011, all
plan sponsors will fina lly get a break down of fees being charged by
their plan providers. While some critics of fee disclosure think
the sky will fall down on the retirement plan business, some
supporters think that fee disclosure will solve all what troubles
the retirement savings of American workers. I hate to say it, but
these critics and supporters will be greatly
disappointed.
While
we won't know how regulations will change the 401(k) in�dustry
until they actually take effect, we can guess what will happen,
what won't happen, and what may happen after July 16, 2011. An
article describing my predictions on what may take place in the
401(k) and retirement plan industry after fee disclosure
regulations come into play can be found here.
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Licks for 2010 New Plans or Plan
Changes.
As plan sponsor, be mindful of
the December 31st deadline.
 New Years is just around the corner, so that means
it is boom time for ERISA attorneys, investment advisors, and third
party administration firms as plan sponsors rush to implement new
plans or make changes to current ones. The reason is because
December 31st is the deadline to sign plan documents and
amendments for calendar years plans. Sole proprietors can implement
a retirement plan that is effective January 1, 2010, even if it's
signed on December 31st. This flexibility
is a boon to sole proprietors or companies that come into extra
income and could use an ample deduction for retirement
savings.
For
current, calendar years plans, December 31st is the last
date to make changes that may take effect in the current Plan Year.
The changes that can be implemented may be to change
a contribution formula or a change to a vesting
schedule.
So
if you wish to implement a new plan or change a current one, be
mindful of the December 31st deadline.
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Introducing
TPA/Advisory Legal Solutions.
A low cost, legal service for third party
administration and asset advisory
firms.
Having
worked for the TPA (third party administration) world and the law
firm world , I have learned from their limitations in
handling clients. That is why, except for IRS and DOL
audits/investigations, all my work is billed on a flat fee. My fees
are as transparent as they can be; there are no additional costs
for copying, courier services, and research. Plan sponsors around
the country have been enjoying my services because they have an
attorney-client relationship at a price they can
understand.
I
have been known to work in a thorough, but quick method. When I
left my old TPA firm in 2007, I was replaced by two attorneys and a
paralegal. That may explain why my fees are 25-50% lower than my
old TPA, with the added benefit of an independent
attorney.
So
while I have been saving plan sponsors headaches and legal fees, I
am now concentrated on spreading that service to third party
administration firms and financial advisory firms. I am introducing
The Rosenbaum Law Firm P.C. TPA/Advisory Legal Solutions, an
in-house/law firm relationship where my firm would act as in-house
counsel where fees are only paid per project.
If
you are part of a TPA or investment advisory firm, you will not
have to pay a legal staff to sit around and twiddle their thumbs
while also providing them benefits. If you currently have an
in-house staff, my solution offers the opportunity for cost savings
because you will only pay for the legal services for your firm and
your client that you need, rather than paying an unnecessary
salary.
A
retainer only starts at $500 a month, which will act as a credit
for legal services that will be provided. This arrangement will
allow you to offer a legal service you never thought you could add
to your repertoire or afford, without having to bring them on board
with the hope there will be work for them.
Having
the background in the TPA world, my Firm also has the background to
improve your quality controls, which will also enhance your client
satisfaction and client retention. My firm has vast experience in
plan administration, compliance, and day to day operations. My
marketing materials have started to become the talk of the
industry, which you can co-brand at no additional cost.
For
further information, please contact me.
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Still
a Hit on JDSupra.
Articles
make #12 and #17 on most widely read articles on national law
content web site.
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Spreading
the gospel of fiduciary responsibility
online.
Continuing
legal education course presented by your truly, available online at
Lawline.com.
As
a certified provider of continuing professional education (CPE) for
accountants and continuing leg al education (CLE) for attorneys in New
York, I have been educating these professionals on the hidden
pitfalls that plan sponsors have in connection with the fiduciary
responsibility they have with the sponsorship of their retirement
plans.
An online version of this class, entitled
"How to Help Your Clients Avoid
the Pitfalls of 401(k) Plans" is available as an approved, one hour
CLE class for attorneys in Arizona, California,
Hawaii, Illinois, Missouri, North Dakota, and New York for
$40. The course
can be found here. A short snippet can also
be founded on YouTube here.
As
always, this class is available for attorneys and accountants in
New York for free. Please contact me if you are interested in
hosting a free CPE/CLE class.
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The Rosenbaum Law Firm Review, December 2010, Vol. 1, No.
8
The Rosenbaum Law Firm P.C.
734
Franklin Avenue, Suite 302
Garden City, New York
11530
516-594-1557
Attorney Advertising. Prior
results do not guarantee similar results. Copyright 2010, The
Rosenbaum Law Firm P.C. All rights reserved.
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