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Retirement Plan Sponsors: This is Your Wake Up Call.

Times have changed, now you have to be on your toes.

 

Anytime I travel, I ask for a wake up call even though my IPhone will blare "The Godfather Waltz" around the same time because you can never be too careful in getting up in the morning. When I travel around the country to speak, I want to make sure I don't sleep through my allotted time. When it comes to being a retirement plan sponsor, employers never had a wake up call about their fiduciary duty for years and now that there is one, many plan sponsors are still sleeping through it. So this article is about how the rules concerning retirement plans have changed and how plan sponsors need to wake up and take notice of these changes.

 

For the article, click here.

The Small Stuff That Retirement Plan Sponsors Can't Afford To Neglect.
It looks rather small, but the thing plan sponsors may forget can hurt them.

 

They often say that you shouldn't sweat the small stuff, but you should never ignore the small stuff because small things have a tendency to mushroom into larger things. How many times have we heard of plan crashes and other disasters than only happened because of the failure of a small bolt or tube? While retirement plans don't have the same disasters like a building collapse, but there is enough small stuff that can be neglected to the plan sponsor's and plan participant's peril. So this article is about the small stuff that plan sponsors should take care of before they become a larger problem.

 

To read the article, please click here.

Forgetting that plans are an employee benefit can make your plan a human resources disaster.
 
When it comes to recruiting and retaining employees, salary isn't enough. Employees also seek benefits, which can be treated as tax-free compensation such as employer-provided health insurance and tuition assistance. One important employee benefit that is often used as a recruiting and retaining tool is an employer-sponsored retirement plan. Too often plan sponsors forget that the purpose of setting up a retirement plan is to help an employee achieve tax-deferred savings for retirement. While a retirement plan is an important employee benefit, the flip side is that a poorly run retirement plan can expose the plan sponsor to liability and become a human resources disaster. So this article is about how plan sponsors can avoid having their retirement plans become human relations disasters.

To read the article, please click here.

Plan Sponsors need All Stars as their Plan Providers.
But not all All Stars are real All Stars. 

 

The Major League Baseball All Star Game was something I always looked forward, especially when my Mets were doing well in the mid-1980's.  Since 1933,it has been the Mid-Summer Classic. This year it's at my home ballpark Citi Field and the last time, it was in Flushing, it was across the way at the since demolished Shea Stadium in 1964 that the National League won on a Johnny Callison Homerun. Since it's been 49 years since the Mets hosted an All Star Game, I took it upon myself to buy tickets for this year's game in the possible likelihood that I may not be around the next time they host it.

 

The starters for the All Star Game (except for the pitcher) are selected by the fans through voting. Based on who is playing this year, I think fans picked it on merit. When I was a kid, there was a lot more popularity involved. My favorite player (until I met him) was Reggie Jackson and there were some years that Reggie's numbers didn't warrant a starting bid. In addition, the reserves are selected with a rule that each player must have been a representative. So I remember the years when John Stearns or Joel Youngblood were selected to the National League All Stars only because the Mets had to have one All Star.

 

When plan sponsors select plan providers, they need their own All Star team. Unlike the Major League All Stars, all selections must be based on merit. So picking up a provider just because they have so many plans (I'm looking at you payroll providers) isn't a wise idea and neither is picking up a financial advisor just because he or she has a $1 billion under management. Picking a plan provider because their affiliated bank gave the plan sponsor a credit line isn't a good idea either. Like a major league manager, plan sponsors need to evaluate all plan providers through a process to see who is the best fit for their plan. Just going with a big name isn't a process; it's a recipe for disaster if things don't go right.

Plans with required audits have some fee explaining to do
Auditors are asking some tough fee disclosure questions.

 

The purpose of an audit for a retirement plan that requires one (generally, those with 100 or more participants) is to ensure that the assets are where the plan sponsors and providers say there are, as well as to ensure that the assets will be there to pay off the participant's retirement benefits. So auditors are concerned about a plan sponsor's internal controls as well as any issues that threaten the tax qualification of the retirement plan.

 

Most auditors were never interested in plan expenses of the plans they reviewed because quite honestly, up until a few years ago, no one else did either.  It used to drive a lot of retirement plan professionals crazy that auditors didn't question plan fees (count me as one), but auditors contended that expenses were irrelevant to the purpose of their audit.

 

Well, things have changed and plan sponsors with audits have more work to do.

One of my RIA clients (cheap plug here) forwarded me a list of questions that one of their audit-required plan sponsor clients forwarded from their auditors. It was a litany of questions regarding 408(b)(2) fee disclosures; plan expenses, and whether the plan sponsor exercised their fiduciary duty in determining whether plan expenses are reasonable for the services provided.

 

So if a plan sponsor did nothing about plan expenses and truthfully told their auditor of their malfeasance of fiduciary duty, I am sure that those responses will end up somehow in the audit report, which of course is filed with a Form 5500 that is readily available to the government and to the public.

 

So plan sponsors with an audit have some work to do to show their auditors on whether they are exercising their fiduciary duty in only paying reasonable plan expenses.

Again, I didn't make the fiduciary threat up; it's already there.

I could use your support and vote.  
 

Ary While it's certainly made me some shekels and drachmas, I truly appreciate my readers. They put up with a lot of stories about Caddyshack, Crystal Pepsi, and my disdain for a managing attorney named Lois and her sidekick Fred.

 

I am overwhelmed that I have been nominated as one of the Top 100 Most Influential People In Defined Contribution on 401kwire.com. I am not big on beginning, but I would appreciate your support and vote.

 

You must register to vote and don't have to be a subscriber.

 

To register and vote, visit here. I am listed under thinkers.

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The Rosenbaum Law Firm Review, August 2013, Vol. 4, No. 8
The Rosenbaum Law Firm P.C.
ary@therosenbaumlawfirm.com
734 Franklin Avenue, Suite 302

Garden City, New York 11530

 

Phone 516-594-1557 

Fax 516-368-3780    

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