Law Firm Review - December 2013

by Ary Rosenbaum

Why a Plan Review Shouldn't Be Treated Like a Trip to the Dentist.

Why it should and needs to be less painful than a trip to the dentist.

When it comes to their health, people dread going to the dentist. I dread going to the dentist and I only have one cavity. What gets people afraid of the dentist is the fear of the unknown, that somehow they will discover the need for a bridge or a root canal that will cost thousands of dollars and more importantly, a lot of pain. Plan sponsors treats reviews of their plan like a trip to the dentist and it doesn't have to be that way. A plan review can help root out issues that could be problems later down the line. This article is about why retirement plan sponsors shouldn't treat their plan reviews like a trip to the dentist.


For the article, click here.

End of Year Tips For Retirement Plan Sponsors.
Some stuff to think about before December 31st.


With the Holiday season about to start, we know that the end of the year will soon follow. While plan participants maybe more concerned about holiday shopping or the firm's annual holiday party, it's a great and necessary opportunity for plan sponsors like yourself to take a look at your retirement plan before the new calendar plan year begins because there maybe some changes you may want to or need to make before the end of the current plan year. So this article is about end of year tips for retirement plan sponsors.


To read the article, please click here.

One of the greatest debates in the 401(k) industry.
In our lives, there are times when we have two important choices. It's Coke vs. Pepsi, Mac vs. PC, Xbox vs. PlayStation (sorry Nintendo), Star Wars vs. Star Trek, and Marvel vs. DC. In the 401(k) space, it's always bundled vs. unbundled for the employer to choose as a 401(k) plan provider. So this article will discuss the bundled vs. unbundled debate and what may be the better fit for a particular 401(k) plan.

To read the article, please click here.

A Plan Sponsor's Guide to 401(k) Revenue Sharing.
What plan sponsors need to know bout 401(k) Revenue Sharing. 

One of my favorite movies of all time is Casino, directed by Martin Scorcese. It doesn't get as much love because it is often compared to GoodFellas, which was another mob movie that was directed by Scorsese, and also starring Robert DeNiro and Joe Pesci. Despite the criticism, it's a heck of a movie. One of my favorite scenes is when the man who helped the mob bosses skim the money from the casino count room, John Nash, was talking about how casino employees skimmed money from the money they were skimming. The employees were robbing the folks who were robbing the casino in which Nash said was "leakage". Leakage was an acceptable part of the casino skimming business because no matter how well you treated the employees, the employees are still going to steal a little extra for themselves. While the administration of 401(k) plans and the selection of investments are certainly more legal than casino skimming, the use of revenue sharing is "401(k) leakage". The problem with revenue sharing is that many plan sponsors are unaware of the true cost of the "free money" that mutual fund companies pay third party administrators (TPAs) to offset plan expenses. This cost is about the true cost of all of that "free revenue sharing money" and why plan sponsors may consider avoiding all revenue sharing pay funds.


To read the article, please click here.

For the plan sponsor, communication is key.
Communication has a great way of nipping disputed in the bud.

International Paper is paying $30 million in a settlement for a class action lawsuit concerning their 401(k) plan for claims resulting on having their own stock in the plan, unreasonable hidden plan expenses, and fraudulently reported performance histories. Cigna paid $35 million in claims over their Plan.


Most plans aren't big enough to have a class action lawsuit against them, but they have other fears that plan sponsors aren't even aware of. While a $1 million plan isn't going to be sued by an ERISA attorney in a class action lawsuit unless they're starving, retirement plans can be targeted by an employee or two to get a quick, inexpensive settlement or the government can audit them.


In the old days, it was kind of a blue line that most plan participants never crossed and the courts didn't recognize a participant's right in making sure that plan expenses are reasonable.


It's been quite some time that unreasonable plan expenses have been an issue for plans and it went from plan sponsors winning on every turn into what looks like a Washington Generals type losing streak.


The days where plan sponsors can look the other way about their retirement plan is long over. They either need to shape up or get shipped out by participants and/or the Department of Labor.

The only time I actually solicit for a good cause.  
Yes, it's that time of the year again where December 31st is around the corner for tax-deductible contributions for 2013.


The two greatest people I ever knew were my maternal grandparents, Emil and Rozalia Berla. They both survived the Holocaust, both surviving their parents and siblings. My grandfather lost his first wife and young daughter; the Americans at Buchenwald liberated him.  My grandmother was liberated from the concentration camp by the Soviets and they left her to die because she suffered from typhoid. The Soviet soldiers were surprised to see her still alive three days later because my grandmother had a will to live like no one else.


They were truly an inspiration to me; they both survived one of the most horrific and barbaric events in human history to live fairly normal lives, full of love and selflessness. As a father, I try to pay that love and selflessness forward.


One of my favorite places on Earth is Stony Brook University or as I still call it, the State University of New York at Stony Brook where I proudly graduated in 1994. The place sort of reminds me of my grandparents in the sense that the place did a lot for me and taught me lessons that I carry to this day (meeting the right friends there helped as well) and never asked for anything it returned. Like my grandparents, Stony Brook never made itself out to be more than what it was, it allowed me the freedom to grow and let my voice to be heard.


So what better way than paying back the debt I owed to my grandparents and Stony Brook (which I never will fully repay) by combining the people I love with the place I love?


So I started The Rozalia and Emil Berla Memorial Scholarship Fund that will benefit a Stony Brook undergraduate who has shown excellence in history, primarily the history about the Holocaust.  The first year for the scholarship is fully funded, but I'd like to raise more money so that the fund can grow and continue into the future.


What's the point? I'm not the guy who is going to hit you up for golf outings, charity events, etc. This is the one cause I am going to solicit money for.


So if my articles helped you in anyway or got you a client or my free phone call of advice benefited you or if I made a connection that benefited you or made a speech at your event, I only ask that you consider giving something to this tax-deductible scholarship fund. Not asking for $1,000 or even a $100, a $5, $10, or $20 donation would suffice.


There is an online link to contribute  here via credit card


For mailing payments, make checks payable to Stony Brook Foundation.  The Berla Scholarship should be noted on the memo line.


Send to Jane McArthur c/o College of Arts & Sciences, E3320 Melville Library, Stony Brook, New York  11794-3391.  All gifts will be noted with a tax receipt.


If you make a donation, please let me know because the University won't let me know (their privacy guidelines). I truly appreciate the consideration.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

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Ary Rosenbaum

The Rosenbaum Law Firm P.C. on:

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