Now Do You Care About Your 401(k) Plan? Well, You Should
When I was in law school, I was very jaded about things because I didn’t think the law school was very honest about some of the problems that I afflicted. So as the top editor of the law students’ magazine, I would mention problems affecting the school and offering concrete solutions for them. A lot of times, I would use the Robert DeNiro line from a very forgettable 1996 movie called The Fan, where he asks: “Now Do You care? Maybe just a little bit?” My comments and criticism didn’t go over well with many students and faculty members because of my role as the “turd in the punch bowl” by exposing problems that were an issue for people who only wanted to think nice and happy thoughts. I’m still the same way as an ERISA attorney, which gets some heat from plan providers who also only want to think nice and happy thoughts. As a 401(k) plan sponsor, you need to care and you need to care always.

To read the article, please click here.


Substitutions That 401(k) Plan Sponsors Can’t Afford To Make
I was a kid who grew up in the 1970s and 1980s where people started to become a little more health-conscious by offering substitutes for well-known foods. There was this whole push to replace butter with margarine and there was certainly a difference in taste and I don’t know anyone who eats margarine today (other than for baking). There was a push with diet soda that had saccharin and later, Nutrasweet, as a healthier alternative to sugar. People swore up and down that saccharin caused cancer in laboratory animals and that Nutrasweet caused brain tumors, both of which have not been substantiated. 401(k) plan sponsors think they can substitute a part of their job with something else and as plan fiduciaries, they do so at their financial peril. This article is all about substitutions that as plan sponsors, you can’t afford to make.

To read the article, please click here.
The Problems Of 401(k) Plan Provider Contracts.
One of the best things to happen to 401(k) plan sponsors was the implementation of fee disclosure rules by the Department of Labor in 2012. Plan sponsors had a fiduciary duty to pay only reasonable plan expenses for services provided and that was an impossibility when they had no idea what their third-party administrator (TPA), financial advisor, and any other plan provider was charging. While plan sponsors now know the price of plan administration, one problem remains and that’s because the Department of Labor (DOL) hasn’t figured this out to be a priority, but they will eventually. The problem is the plan provider contract and so many disputes surround the contract and without some guidance, 401(k) plan sponsors like you may be forced to turn over plan assets or money from your pocket needlessly to a soon to be former plan provider because you don’t have the knowledge to contest. The problem with paying plan assets needlessly to a former plan provider is that a breach of fiduciary duty of its own kind. This article is all about plan provider contracts and what you need to know to avoid a mess.

To read the article, click here.
Don’t Cheat Employees On Their Retirement Plans
As I’ve stated before, I wouldn’t hire employees because I was an employee once too. That pretty much means that I never met an employee who thought they were overpaid. For that matter, I never met an employer who thought that they pay their employees too little.

Despite what my former colleagues at union-side law firms think, employers typically don’t have a treasure chest of jewels they’re keeping away from their employees, it’s just the dynamic of a relationship where an employee wants to make as much as they can and an employer wants to pay as little as possible. It’s not evil, just human nature.

Those that never ran a business, don’t understand how costs of payroll and benefits must be tied to revenue because an employer’s pocketbook is not limitless.

Thanks to medical costs and taxes, it’s expensive to have employees. Employers are taking away benefits and not putting benefits out there that are enticing to current and prospective employees. As an employee, regardless of where I worked, the health plan got worse and worse because medical costs are spiraling out of control and the employer had to rein in costs.

While employers may feel free to cut back on the benefits they offer, the one benefit that they can’t afford to neglect is a retirement plan. An employer can certainly cut back on the contributions they make to their retirement plan(s), but they can’t just cut back on the services to their plan by sticking the plan with a cheap provider (if they are the ones paying for administration, rather than the plan) if it’s going to negatively affect the plan’s administration and compliance.

The reason is that employers as plan sponsors are plan fiduciaries too. So employers still may want to cut back on benefits, they need to make sure that they don’t do something that could negatively impact their role as plan fiduciaries.

Any change of plan provider or even a change in benefits should be done in consultation with your plan providers and/or ERISA attorney to make sure that any cutbacks in benefits you must make won’t increase your plan fiduciary liability exposure.
401(k) fees are still sliding
The beauty of fee disclosure regulations and technological breakthroughs is that 401(k) fees have been sliding. Even 9 years after the promulgations of the fee disclosure regulations, it’s still sliding.

The new release of the 401(k) Averages Book shows that the average total plan cost for a small retirement plan (100 participants/$5,000,000 assets) declined from 1.23% to 1.20% over the past year, while the average total plan cost for a large retirement plan (1,000 participants/$50,000,000 assets) declined from 0.91% to 0.90%.

1-3 basis points aren’t a big deal, but it’s indicative of a trend towards lower fees even with consolidation in the 401(k) business.
Come out and Network.
Networking event and Mets Game,
Wednesday July 28th
Come join us for a great night of networking and a Mets game too. While the networking event has 401(k) in it, it is open to professionals from all types of businesses.

The event is on. Wednesday, July 28th while the Mets take on the Atlanta Braves. Seats in the Honda Club behind the right field fence and foos too, for just $150.

For more information and to buy tickets by PayPal, please click here.