Hidden Dangers Of A Retirement Plan That A Plan Sponsor Needs To Prevent

Ary Rosenbaum - The Rosenbaum Law Firm P.C.

One of the major cornerstones of the American dream is the purchase of a home. Owning a home can be tax advantageous as our government has encouraged home ownership through mortgage and real estate tax deductions. While owning a home has its financial advantages, it does meet those advantages with huge costs. Homes need to be constantly maintained and upgraded over time. A bathroom or kitchen from 40 years ago needs to be updated, as would a boiler with 10 years on its clock. In addition, a home can be damaged through a natural disaster such as an earthquake, a flood, or a hurricane. While most of the pitfalls of home ownership are easily apparent, there are some hidden dangers within the home that can actually make its occupants get ill without any warning or clue. It may be radon in the basement, toxic mold under the carpet, or dangerous gasses emanating from poorly manufactured drywall.

Retirement plans are similar to homes. They also are a cornerstone of the American dream. Retirements plans are generally implemented to save money for employees for their retirement. Like homes, our government encourages retirement savings by offering tax deductions to employers that sponsor and contribute to them while also offering tax deferrals on a participant’s retirement savings until distribution at retirement. The tax benefit comes at a huge cost because the retirement plan must go through important compliance testing so that the plan doesn’t discriminate in favor of highly compensated employees. The problem with retirement plans is that most of the dangers to the plan sponsor as a plan fiduciary are hidden and if the plan sponsor doesn’t surround themselves with the right retirement plan providers, they run the risk of breaching their fiduciary duty. Unfortunately for plan sponsors, they don’t often realize their duties as a plan fiduciary until after they breached them, So this article will try to illustrate the hidden dangers of retirement plan sponsorship and how they can be prevented.

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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.

Ary Rosenbaum - The Rosenbaum Law Firm P.C. on:

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