Why an Employer Should Visit a Retirement Plan Dentist to avoid a Plan Root Canal.

You avoid the pain by taking preventative care.
 

More than a dozen years ago, there was a medical report that dental plaque could cause heart disease. I thought it was some sort of dental conspiracy to increase revenue as fluoridated water and other dental hygiene has had to have a negative effect on the dentists' bottom line. Regardless of my cynicism, good oral health is important. 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 terribly goes wrong with their retirement plan, there are many plan sponsors these days that 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 in avoiding greater harm. So this article is why retirement plan sponsors should see the help of a Retirement Plan Dentist before having a retirement plan root canal.

 

For the article, click here.

Plan Document Mistakes a Retirement Plan Sponsor Should Avoid.
Some things to look for.

 

One of the major things that plan sponsors forget about their retire- ment plans is the plan document. ERISA (the Employee Retirement Income Security Act of 1974 for those scoring at home) requires all retirement plans to have written plan documents. A written plan document is a legal document with legal ramifications in governing a legal entity known as a retirement plan. A retirement plan document can cause many issues for a retirement plan sponsor and since most plan sponsors are wary of ERISA attor- neys because of their billing practices (don't worry, I charge a flat fee) don't know. So this "free" article can help plan sponsors take count of the many problems their plan document can have on their retirement plan and what steps they should take to avoid these problems.  

 

To read the article, please click here.

No room for nepotism here.
 
They often say that it doesn't matter what you know, it's who you know. At one time or another, we have all derived a form of financial benefit because of someone we know. Maybe it's a job and maybe it's free Yankees tickets. It could be through someone we had previously worked with or through nepotism. Most of the time, "juicing people in" is harmless, but plan fiduciaries such as retirement plan sponsors could breach their fiduciary duty and/or commit a prohibited transaction by selecting plan providers just based on a previous relationship whether it's familial or centered on friendship. This article is about why it's wrong for plan sponsors to hire plan providers just based on the fact they know you, rather than what they know.
 

To read the article, please click here.

How an Employer can detect if their Retirement Plan Provider is Breaking Bad.
Clues to look for. 

 

I am the last to know anything, so I binge watched the television series Breaking Bad months after the series had concluded its run on the American Movie Classics cable channel. Needles to say, I was mesmerized on how a nice and dying chemistry teacher named Walter White became a heartless methamphetamine drug lord. The show haunted me like no other show did. It's the modern day version of Michael Corleone, someone who is so good that turns so bad. When it comes to retirement plan providers, it is my belief that the bad providers didn't start that way; they simply broke bad like Walter White. There are ways for plan sponsors to avoid having plan providers break bad when they are still clients of these providers, this article give you some insight. 

 

To read the article, please click here.

No Country for Lousy Retirement Plans.
There are no excuses.

 

In the movie, No Country for Old Men, the hit man Anton Chigurh (played by Javier Bardem) confronts Carson Wells  (who was also trying to recover the same money Chigurh was after) in his hotel room.

 

Before killing Welles, Chigurh asked him: "If the rule you followed brought you to this, of what use was the rule?"

 

In the New York Post recently, a New York City principal was reassigned after she was turned in by her former lover who happened to be the father of a child at the school. The principal is caught on tape describe some of her escapades on school time. While a friend of mine blamed the father for being so vindictive (the principal financially supported him and he was jealous she was cheating on him), it totally misses the point. Regardless of whether the father was a fiend, the principal put herself in a situation where that father could hurt her. The principal did something wrong and let the father know about it. She was the master of her own fate.

 

It's very hard for people to accept blame, it's always someone else's fault. I know from experience because in my lifetime, I uncovered two major scandals (one in law school and one in the 401(k) world). Rather than accept responsibility for their actions, they cast blame on me. For the law school situation, it was a law journal accused of cronyism by some staff members that was supposed to keep tab of the hours their staff worked in order to get academic credit. Well, they didn't keep very good records. No matter how much blame I got for exposing the scandal while the editor of the law magazine, it didn't change the fact they did something wrong. The same can be said about a certain third party administrator that had a relationship with an audit firm that questioned the independence of its plan audits. My name was mud for some time in the business, but my call to attention of this relationship didn't change the facts and didn't change anything when the Office of the Chief Accountant of the Department of Labor (DOL) put that accounting firm out of the plan auditing business.

 

For retirement plan sponsors who get into trouble with the DOL, many times it's because a former employee made a complaint. Rather than harping on the fact that someone made a complaint, a plan sponsor needs to fully accept their responsibility if something wrong did occur. A complaint by a former plan participant doesn't mean the plan sponsor did something wrong, but it does often end up uncovering a whole host of other problems. I've had situations where, the claims by the former participant were groundless but there were enough problems in the plan to keep the DOL agents busy.

 

Plan sponsors often find out that the rule of not being interested in their retirement plan led them to problems that made that rule a mistake. Plan sponsors need to be on their toes and never let their neglect lead them to problems where a plan participant (former or current) from dropping a dime with the DOL. Plan sponsors can blame the DOL complainer all they want, but it doesn't change anything if there are issues with their retirement plan.

 

Plan sponsors need to follow a rule that will lead them to less compliance and fiduciary liability exposure issues because there is no country for lousy retirement plans.

Make sure it's all there in the contract.  
 

People can promise you the moon, but they may deliver far less. That is why despite the promises made by your plan providers; you should always read their contract to determine whether they are actually delivering you what they promised.

 

A years back, an advisor looking at a prospective client showed me the agreement that the potential clients had with their current ERISA �3(38) fiduciary. The only problem is that there was nothing in the contract that suggested that the fiduciary was an ERISA �3(38) fiduciary or was exercising discretionary authority over the fiduciary process. So for all intensive purposes, the provider may be providing the service, but the contract says differently.  So imagine if the plan sponsor has to sue the fiduciary for a breach of fiduciary duty and realize that the contract doesn't protect them because the contract never claimed they were getting that 3(38) service.

So rather than taking the plan provider's word, I recommend all plan sponsors to read those contracts to make sure they got what they bargained for. Otherwise, it's another breach of fiduciary duty.

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The Rosenbaum Law Firm Review, June 2014, Vol. 5 No. 6
The Rosenbaum Law Firm P.C.
ary@therosenbaumlawfirm.com
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Garden City, New York 11530

 

Phone 516-594-1557 

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