Ary Rosenbaum
June 2010
“Who
am I and what am I doing here?” While these were the words of the late Admiral
James Stockdale at the 1992 Vice Presidential Debate, I also find this is a
question that I have to answer when I attend my frequent networking meetings.
I
am an ERISA attorney. What is ERISA? The Employee Retirement Income
Security Act of 1974,
which along with the Internal Revenue Code governs retirement plans. So in
English, I work on retirement plans. I do not handle plan investments nor do I
record keep plans, my interest lies in protecting the tax qualification of the
Plan, as well as limiting the liability of the Company sponsoring the Plan and
the personal liability of those who are serving as the trustees of the Plan
(often the owners of that Company).
I
draft plan documents, amendments, mergers, and terminations at a flat fee. I
handle DOL and IRS audits when a Company has been randomly targeted for a
retirement plan review by the government. I also make sure that the employer
knows the true cost of Plan administration and that they have an investment
professional to review their investments and educate their employees.
A few weeks
back, I was at a networking event and a business owner assured that he didn’t
need my services because he was with a broker from a very well known brokerage
firm. While I’m sure this broker was doing a fine job of picking
investments and reviewing those investments and the Plan’s investment policy
statement with this business owner, was the broker well versed in the
complexities of retirement plan law as well as the hidden dangers these
Companies have in sponsoring Plans like plan cost and employee education?
Probably not.
I will use one
example to prove the point home of why an ERISA attorney is needed for all
retirement plans. I represent a New York law firm. Through my review,
I determined that the third party administrator (Plan record keeper) was over
charging the client by $3,000 because they were taking revenue sharing payments
from mutual fund companies that were earmarked to offsetting administration
fees and putting the money in their pockets instead.
After firing this administrator, the new
administrator determined that the Plan's testing was negligently done by the
prior administrator requiring our client to make a $27,000 corrective
contribution to the employees. Through my work, our client received a $7,500
settlement from the prior administrator for their negligent work.
Did you know that even if you offer a 401(k)
plan and allow your employees to choose their own investments, you can be sued
if you didn’t educate them on the investments offered in the Plan? Did you know
you could also get sued for not knowing the full cost of your Plan’s
administration? So many companies swear they are paying nothing for
administration, sadly not knowing that the Plan’s investments have wrap fees
that are embedded fees to pay for administration that there are not aware
of.
While many Plan sponsors use their
administrator's legal department for plan document, there is no attorney-client
relationship since only a law firm could offer that. In most cases, my fees are
as much, if not lower than some of these administrator's legal
departments, with the added benefit that I represent you in trying to minimize
the cost of plan administration and your potential liability. As your
ERISA counsel, I am legally responsible to look after your interest, the legal
department of your administration firm is not. So who is on your
side?
If you sponsor a retirement plan, you should
annually review your plan structure, cost, and investments to minimize
liability. In order to alleviate this requirement, I am now offering a
Retirement Plan Tune-Up which is a legal review of a Plan’s documents, cost,
administration, and investments. All for a flat fee of $750.
So the next time you see me, you will know who
I am and what I do.
Ary
Rosenbaum
The
Rosenbaum Law Firm P.C.
516-594-1557
Attorney
Advertising. Prior results do not guarantee a similar outcome.