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How an Employer Can Improve Their 401(k) Plan At Little Or No Cost.
It doesn't cost much to improve a 401(k) plan.
 Sometimes you can just rejuvenate something without have to replace it. A nice new tie can breathe life into an older suit. Instead of new kitchen cabinets, resurfacing is an option. Sanding and staining can add luster to a dull hardwood floor. So instead of needlessly spending money, you can rehabilitate what you already have. This article is how plan sponsors can improve their 401(k) plan without spending a lot of money.
For the article, click here.
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Why Retirement Plan Sponsors Need To Care About Plan Design.
Plan design is something plan sponsors shouldn't neglect.
 Would you leave money on the table for the government to take instead? Would you not maximize your retirement savings because your accountant or third party administrator (TPA) told you that you had to give the same amounts to your other plan participants? Are your highly compensated employees restricted from maximizing their 401(k) salary deferrals and your TPA offered you no solutions? Well as a plan sponsor if you answered yes to any of these questions, you need to learn a valuable lesson regarding plan design. This article is about retirement plan design and why finding the right TPA who can offer plan design services can maximize the savings that all of your employees and saving on taxes. plans and the retirement plan business.
To read the article, please click here.
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There are liability pitfalls for being a plan sponsor.
 When it comes to selling products and services, marketing is everything. Marketing can help push a product or service into popularity, regardless of whether it's good or not. Spuds MacKenzie was such great marketing; it made people forget how lousy Bud Light really was. Savvy marketing can make something so utterly worthless into something that people want, even if they don't know if they really need it. The marketing by 401(k) plan providers of something called a Fiduciary Warranty is all marketing, it's something more than nothing, but not much more Believe me, Wendy's old pitch woman Clara Peller would have asked these purveyors of 401(k) Fiduciary Warranties "where's the beef?", but these warranties are more like baloney. This article is about the worthlessness of 401(k) Fiduciary Warranties and how plan sponsors should avoid relying them as a form of liability protection.
To read the article, please click here.
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Some more thoughts on this widely read article.
 Of all the articles I have written, the recent one about The Worthlessness of 401(k) Fiduciary Warranties has gotten the greatest response. I thank all my readers who have had a hand in building my national ERISA/ retirement plan practice.
Two things that people have mentioned about the article:
1. Several people including a former ERISA litigator said that a plan sponsor will never be sued for failing to make a broad range selection of investments under ERISA 404(c). While I respect their opinions, I never like speaking in absolutes. As Obi Wan Kenobi said in Revenge of the Sith, only the Sith speak in absolutes.
2. A good friend of mine point out that the biggest purveyors of these warranties are insurance companies. The business of insurance companies is to insure risk. So he reasoned that what does it say about the risk when they give these warranties for free? Couldn't have said it better myself.
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Any change was going to take time.
 When Eliot Spitzer was campaigning for the Governor of New York, he was well known in his role as a tough as nails Attorney General. In his campaign ads for Governor, Spitzer claimed that on "Day 1, everything changes".
Having been a follower of New York state politics, I knew that Spitzer was going to a flop because he was too arrogant. Anything who knows anything about what goes on in Albany knows that very little changes, especially in one day as Spitzer promised. Change takes time; it takes tweaking; it takes trial and error. Of course, Spitzer lasted about 14 months as Governor because of his penchant for his prostitutes.
I'm sure than when fee disclosure regulations for retirement plans were finally implemented last July, many people thought that also on Day 1, everything was going to change. Fee disclosure is a game changer for the retirement plan industry, but it's a change that will take time.
There needs to be tweaking as the Department of Labor (DOL) is noticing that most plan sponsors don't understand the jargon of the disclosures. The DOL is considering adding a guide requirement so that plan providers can explain the fees in the fee disclosures that were supposed to explain the fees. The plan providers who used to hide the expenses they were receiving are still getting away with it, by just disclosing their inflated fees.
Most of all, plan sponsors need to be trained over time to expect these fee disclosures and the need for them to benchmark their fees. Like the usage rate of seat belts in New York, it took over 20 years for 90% New York drivers to use seatbelts even thought it's the law (rate of usage right before the law was 16%). It will take quite a but of time for plan sponsors to understand disclosures and what to do with them.
Fee disclosures will have a profound effect on the retirement plan industry; it will just take more than a Day to change everything.
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Plan sponsor should scan all their plan files into pdf.
 Being a plan sponsor is a tough job and the amount of paperwork that goes with it can be overwhelming. The paperwork includes plan documents, summary plan descriptions, amendment, valuations, trusts statements, and payroll.
The fact is that as a plan fiduciary, plan sponsors need to keep good records. It's important to have correct records when you need to pay former plan participants out, but they need to protect themselves. I have seen too many plan sponsors get into trouble with plan compliance or audits by the Internal Revenue Service or Labor Department because they no longer have copies of the documents they once had.
While spaces for document file cabinets are usually at a minimum, there is a friend out there than can help you avoid losing necessary plan documents and that's a scanner.
Saving all the necessary plan documents and valuation reports through scanning them as a pdf can help plan sponsors avoid losing documents and save on the need for space of filing cabinets. While plan sponsors should maintain original copies of all plan documents, they can scan the rest. A good scanner won't set you back and plan sponsors probably have that option with their copier.
Plan sponsors should scan all their plan files as they come in and label them in any easy to understood manner. Creating specific directories on the network for specific plan years is also a great way to keep these things organized.
Something as simple as a scanner can help a plan sponsor exercise their duty as plan fiduciaries.
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The Rosenbaum Law Firm Review, May 2013, Vol. 4, No. 5 734 Franklin Avenue, Suite 302 Garden City, New York 11530 Phone 516-594-1557 Fax 516-368-3780
Attorney Advertising. Prior results do not guarantee similar results.
Copyright 2012, The Rosenbaum Law Firm P.C. All rights reserved.
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