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401(k) Plans Are Just A Tool To Save, They're Not Evil.
They are more than just a scapegoat for this country's retirement crisis.
 Years ago B.K. (before kids), I took weekly golf lessons. While it never showed on the golf course, I was developing a nice game. I took lessons with a curmudgeon golf pro named Kenny and the lessons were at a golf store. While I was salivating at the prospect of buying my own Callaway clubs, Kenny was insistent that a golf club was just a tool and it was dependent on how you use it. A golf club never makes the swing, the golfer does. So the newest Callaway and Titleist will slice pretty much the same way as a 50-year-old set of clubs if the golfer slices. While many television programs bemoan the fact that 401(k) plans are awful, the fact is that a 401(k) plan is merely a tool; it is dependent on how the plan sponsors and providers use it. So this article is a defense of 401(k) plans and how its usefulness is dependent on plan sponsors and their plan providers.
For the article, click here.
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Why Retirement Plan Sponsors are Always on the Hook for Liability.
Plan sponsors can minimize, can never fully eliminate liability.
 Whoever said the road to hell is paved with good intentions might have been a retirement plan sponsor. While setting up a retirement plan is a good intention, a plan sponsor's lack of diligence in reviewing what is going on with the plan has the unfortunate consequence of possibly resulting in potential liability for a breach of fiduciary duty. This article is about why plan sponsors are always on the hook for liability and what they need to avoid that hook at all costs.
To read the article, please click here.
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There are things that a plan sponsor needs to retain.
 George Carlin said that all you need in life is a place for your stuff. Carlin said that all a house really is; is a place for your stuff. When it comes to being a retirement plan sponsor, retirement plan sponsors need a place for their stuff. More importantly, they have to know what stuff they really need to keep. Too often they throw out stuff that they thought was garbage and keep garbage they think is stuff. As plan fiduciaries, retirement plan sponsors need to keep their stuff in order to exercise their fiduciary duty diligently and to protect themselves from liability. So this article is about stuff, retirement plan sponsor stuff and what stuff a retirement plan sponsor needs to retain.
To read the article, please click here.
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What plan sponsors can do to answer the issues raised by the Frontline program.
 PBS' Frontline had a scathing report on 401(k) plans called "The Retirement Gamble". The Retirement Gamble had no roulette tables or free drinks; it was a rather sobering look at the troubles affecting 401(k) plan and employees who participate in them. Like most exposes, the Retirement Gamble had plenty of accusations and very little advice on how plan sponsors could improve their odds, which helps the retirement savings of their employees and limits their liability. So this article is how plan sponsors can improve their odds in the retirement gamble.
To read this article, please click here.
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Some idea that won't happen.
 When it comes to improving the 401(k) plan, you hear a laundry list of complaints as to why 401(k) plans suck. Yet the laundry lists never come up with any suggestions on how to improve them.
So I offer two suggestions on how to really improve 401(k) plans. They both will be extremely unpopular and folks in the industry will say how either of these proposals will be gloom and doom for 401(k) plans. I may not be necessarily 100% in support of one of these draconian options (actually only one is), but the fact is that a shock to the system will improve the system.
So my gloom and doom choices would be:
The Department of Labor would revise their financial advice regulations to make it more cost effective for plan providers to prove it and make sure all participant directed 401(k) plans are required to offer investment advice, or
Eliminate participant direction of 401(k) plans and for the system to go back to its roots of being balance forward, trustee directed retirement plans.
Both proposals have absolutely no shot of ever happening because the industry is inundated with providers who would lose out if one of these proposals came out (yes, the mutual fund companies).
While everyone is fee obsessed, the main trouble regarding 401(k) plans is that with the advent of daily valued, participant directed plans is that it required the person least sophisticated to make investment decisions (the plan participant). It also gave the plan sponsor some false security that as long as participant directed their investments, they had unlimited liability protection under ERISA Section 404(c).
While these proposals will never come into being, at least I have offered something to improve 401(k) plans. Either requiring affordable investment advice or getting plan participants out of the investment decision making process will help try to alleviate the biggest problem affecting retirement plans is that participants don't have the background to make investment decisions, which only exacerbates the problems affecting 401(k) plans.
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Rebekkah Carp, Stony Brook Class of 2016.
I am pleased and honored to announce that Rebekkah Karp, Stony Brook Class of 2016 is the winner of the inaugural Rozalia and Emil Berla Scholarship.
I started The Rozalia and Emil Berla Memorial Scholarship Fund at my alma mater, Stony Brook University. This scholarship is named for the two greatest people I ever knew, my maternal grandparents who both survived the Holocaust.
Many of you in the retirement plan industry have contributed already and you have my thanks. If you can spare just a couple of bucks towards this worthwhile scholarship, I would greatly appreciate it.
$1,000 isn't much, but for a student attending such a great school, it's a substantial step in paying tuition.
You can donate online through this link. All you need to do to make sure the scholarship gets the money is to type "Berla" in the fund designation.
You can mail any contributions to
Send to Jane McArthur c/o College of Arts & Sciences, E3320 Melville Library, Stony Brook, New York 11794-3391. The Berla Scholarship should be noted on the memo line of your donation.
All gifts will be noted with a tax receipt.
Again I appreciate any help in raising money for such a good cause.
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The Rosenbaum Law Firm Review, June 2013, Vol. 4, No. 6 734 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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