The Rosenbaum Law Firm P.C. Blog

For years, policymakers have promoted lifetime income options as the next evolution of defined contribution plans, the long-awaited bridge between the old pension world and the modern 401(k). On paper, it’s a simple pitch: convert savings into a stream of guaranteed income and provide participants with the peace of mind that they won’t outlive their money.

In practice, it’s far more complicated, and plan sponsors are the ones caught in the middle.

The first problem is fiduciary risk. Sponsors worry that selecting the wrong product — or the right product that later becomes the wrong product, could expose them to second-guessing or litigation. Lifetime income is not like a mutual fund lineup that can be swapped with minimal disruption. Once participants annuitize, there’s no “undo” button.

Second, participant comprehension is a real hurdle. Lifetime income products aren’t intuitive. “Guaranteed for life” feels reassuring, until participants realize that “guaranteed” means different things depending on the insurer, the terms, and the fine print. Sponsors become educators, translators, and sometimes the scapegoats when expectations and reality don’t align.

Third, portability remains a challenge. Even with recent regulatory improvements, participants still fear losing benefits if they change jobs or if the employer changes providers. In a workforce that now changes jobs with the frequency previous generations changed cars, permanence is a tough sell.

Finally, lifetime income arrives at a time when sponsors are already risk-averse due to litigation trends. Anything labeled “new,” “innovative,” or “guaranteed” may as well come with a neon sign flashing: “See you in court.”

Lifetime income is not inherently the problem. The idea is sound. Participants need tools to manage retirement drawdowns. But unless sponsors receive clearer protections, simpler products, stronger participant education, and sensible expectations on all sides, the promise of lifetime income may remain more policy talking point than practical solution.

Because for plan sponsors, offering lifetime income shouldn’t feel like making a lifetime commitment they didn’t sign up for.

Most plan providers are prepared for competition. They know how to differentiate fee schedules, demonstrate technology, and present fiduciary solutions. They refine their pitch decks and rehearse the perfect value statement. But the truth is, in this industry, your biggest competitor usually isn’t another provider — it’s indifference.

For many plan sponsors, the retirement plan is not their business, it’s a distraction from their business. They’re worried about sales, supply chains, payroll timing, healthcare premiums, hiring shortages, and the dozen other fires that start each morning before coffee. The 401(k) plan becomes the afterthought that lives somewhere on the agenda between “fix copier jam” and “renew pest control contract.”

Indifference isn’t laziness, it’s overload.

This means the opportunity for providers isn’t just to sell services; it’s to spark engagement. Sponsors move when they understand the cost of standing still. Inertia has a price: employees who don’t save, participants who complain, fees that go unreviewed, cybersecurity that sits untested, and plan designs that never evolve with workforce demographics.

The provider who wins isn’t just the one with the best system, it’s the one who can translate consequences into clarity and complexity into confidence. Education done right doesn’t sound like a lecture; it feels like relief. When sponsors say, “I didn’t know we could do that,” or “No one ever explained it that way,” you’ve already separated yourself without a single pricing grid.

The key is to stop aiming to impress and start aiming to inform.

If you can help a sponsor shift from “we’ll get to it someday” to “we can’t put this off any longer,” you didn’t just win a client, you changed their outlook. And in this business, that’s the kind of conversion that lasts longer than the latest feature update or fee reduction.

Because when indifference is your true competitor, insight is your most powerful sales strategy.

Recent reporting shows that roughly 42% of full-time U.S. workers — more than 40 million people, don’t have access to a retirement plan through their employer. That number should give everyone in the industry pause.

This isn’t simply a headline or a statistical footnote — it points to a structural flaw in how we approach retirement readiness in this country. For millions of Americans, employer-sponsored savings vehicles like 401(k)s are not an option. And when access is the barrier, we can’t chalk the problem up to personal choice or financial literacy alone.

Without access to workplace plans, lower- and middle-income workers are shut out of the benefits that make retirement saving achievable: automatic payroll deduction, employer matching contributions, fiduciary oversight, and the power of long-term compounding. They’re left to navigate the complicated world of IRAs on their own — often without guidance, consistency, or confidence.

I’m wary of how these statistics get used, sometimes as talking points, sometimes to justify rushed policy — but the underlying issue can’t be ignored. A retirement system built around employer plans is only as strong as the number of workers who can actually participate.

If retirement security is a national priority, then access has to be part of the equation. Until it is, the gap isn’t just financial, it’s systemic.

I sat in the doctor’s office recently because my daughter needed a physical exam for college — one of those “where did the time go?” moments that reminds you life keeps moving whether you’re ready or not. As I looked around the waiting room, I saw a face that was oddly familiar. He was staring at me the same way. Then the nurse called his first name, and it clicked: a partner from that fakakta law firm from nearly two decades ago.

Seventeen years ago, that meant something to me. Back then, I was hustling for business, believing cross-selling my ERISA work to their clients was the golden ticket. I even had a buddy, a salesman with a local TPA, take us out to lunch at the old Legal Seafood back when they were still a Long Island staple. I thought I was networking with power players. I thought if I impressed the right partner, doors would open.

But that firm was built by merging in solo practitioners who guarded their clients like the secret formula for Coca-Cola. Nobody shared. Nobody collaborated. As a former partner once told me, it was a glorified real estate tax grievance firm wrapped in the illusion of a full-service practice.

So there we were, two people in a generic waiting room, not peers, not rivals, just parents getting paperwork done. And I realized how much perspective time gives you. The people you once viewed as gatekeepers to your future may not have been guarding much at all.

When I wrote Full Circle, this is exactly the kind of moment I meant , when life loops around and hands you a clearer picture than the one you had when you were younger, hungrier, and running harder. The only difference is now, I don’t look at those encounters with bitterness. I look at them with clarity.

Because sometimes, the only thing that changed between then and now is how much you’ve grown — and how much smaller those giants look when you finally stop looking up.

In the retirement industry, one of the most persistent, and convenient, myths is the idea that there exists a single fiduciary solution that solves every problem for every plan. A package, a platform, a program that checks every box, eliminates every worry, and wraps the entire fiduciary burden in a tidy bow.

It’s a great marketing concept. It’s just not reality.

Fiduciary duty, by definition, involves prudence, process, and ongoing oversight. Those three words cannot be automated, outsourced, or replaced by dashboards alone. Technology is transformative, yes. Tools are indispensable. Templates, policy statements, and playbooks are valuable, but they are not a substitute for judgment. A committee can’t point to software screenshots and call it governance.

The truth is that every plan is its own ecosystem. A professional services firm with high earners, a manufacturing company with hourly turnover, and a nonprofit with grant-based funding all operate under different pressures, payroll patterns, and participant needs. The right investment menu, the correct auto-enrollment level, or the timing of employer contributions may differ dramatically, even if the plan size doesn’t.

Providers who promise certainty are selling comfort, not compliance.

The most effective providers don’t guarantee perfection, they guide decision-making. They remind sponsors that fiduciary protection comes from process: reviewing fees, documenting rationale, benchmarking regularly, monitoring vendors, and revisiting decisions as conditions evolve. A provider’s true value is not in eliminating risk, but in helping sponsors understand, evaluate, and manage it.

The retirement industry doesn’t need one-size-fits-all solutions, it needs right-size solutions. And right-size requires conversation, education, and collaboration. It’s more work than selling an all-in-one package, but it delivers something better: clarity for the sponsor, protection for the plan, and ultimately, better outcomes for the participants who depend on it.

That’s not a slogan, that’s fiduciary reality.

Every plan sponsor knows the feeling, employees come and go, but their 401(k) balances often stay behind like unpacked boxes from a move three years ago. It seems harmless, even administrative convenience at first. Then reality hits: more accounts, more notices, more fees, more fiduciary responsibility, and more opportunity for something to go wrong.

The problem isn’t personal. it’s structural. Former employees still count when calculating audit thresholds, per-participant fees, disclosures, and cybersecurity exposure. They remain beneficiaries of plan decisions long after they’ve stopped badge-swiping into the building. And if there’s uncashed checks or missing participants? That’s your problem too.

Encouraging former employees to roll over or cash out (within the rules, without advice, and without coercion) isn’t about pushing people out, it’s about plan health. A streamlined participant base means:

· Lower administrative burden

· Reduced audit costs

· Fewer abandoned accounts and lost participants

· Less fiduciary risk on stale records

A 401(k) plan is not a storage facility. When former employees leave their accounts indefinitely, sponsors shoulder ongoing responsibility without the ongoing relationship.

Helping people transition their savings cleanly and efficiently isn’t just housekeeping — it’s good governance. And sometimes, the best way to take care of a retirement plan is to help those who’ve already walked out the door keep walking, right into their next account.

Just when the 401(k) frontier seemed to be getting a new sheriff , tougher advice standards, greater accountability, the DOL has quietly dropped its appeal defending the 2024 fiduciary rule. That regulation would have expanded fiduciary duty to rollover guidance and plan-menu advice, but with the DOL withdrawing its defense in the Fifth Circuit, the rule is effectively dead… at least for now.

For sponsors, that news could feel like a gunshot echoing through an empty town. Some may see relief, fewer regulatory constraints, more flexibility, less fear of litigation triggered by “one-time advice.” Others may sense danger: this isn’t clarity, it’s uncertainty. The frontier just shifted again.

What should plan sponsors do as the dust settles? Lean on solid fundamentals. Governance, documentation, independent plan oversight, these aren’t optional just because the rule died. Fiduciary duty under Employee Retirement Income Security Act (ERISA) still applies. A sound plan doesn’t depend on regulatory headlines, it depends on consistent discipline, documented process, and unwavering commitment to participants’ best interest.

So treat this moment not as a freedom from responsibility, but as a reminder why the true “action plan” must always come from you, not Washington. Because when regulators ride off (or change their minds), the town doesn’t fix itself. The 401(k) world keeps spinning. And a good fiduciary doesn’t wait for rules. He builds the rules himself , with governance, integrity and prudence.

Just when the 401(k) frontier seemed to be getting a new sheriff , tougher advice standards, greater accountability, the DOL has quietly dropped its appeal defending the 2024 fiduciary rule. That regulation would have expanded fiduciary duty to rollover guidance and plan-menu advice, but with the DOL withdrawing its defense in the Fifth Circuit, the rule is effectively dead… at least for now.

For sponsors, that news could feel like a gunshot echoing through an empty town. Some may see relief, fewer regulatory constraints, more flexibility, less fear of litigation triggered by “one-time advice.” Others may sense danger: this isn’t clarity, it’s uncertainty. The frontier just shifted again.

What should plan sponsors do as the dust settles? Lean on solid fundamentals. Governance, documentation, independent plan oversight, these aren’t optional just because the rule died. Fiduciary duty under Employee Retirement Income Security Act (ERISA) still applies. A sound plan doesn’t depend on regulatory headlines, it depends on consistent discipline, documented process, and unwavering commitment to participants’ best interest.

So treat this moment not as a freedom from responsibility, but as a reminder why the true “action plan” must always come from you, not Washington. Because when regulators ride off (or change their minds), the town doesn’t fix itself. The 401(k) world keeps spinning. And a good fiduciary doesn’t wait for rules. He builds the rules himself , with governance, integrity and prudence.

A new study examining how retirees manage annuity payouts from defined-contribution plans should make every 401(k) plan sponsor sit up and pay attention. We spend so much time focused on accumulation, deferral rates, employer contributions, fund lineups, that we sometimes forget the entire point of the plan: income in retirement. And income isn’t just about having assets. It’s about making them last.

The research highlights a simple but often overlooked truth: many retirees, particularly women and those with longer life expectancies, may benefit from converting a portion of their savings into guaranteed lifetime income. Others, especially men or participants with shorter life spans, are more hesitant, and for good reason. Traditional annuity pricing doesn’t reflect individual differences in longevity, leaving some participants feeling like they are subsidizing everyone else.

For plan sponsors, the lesson is clear: accumulation-only thinking is outdated. Retirement doesn’t end at the final paycheck, it begins there. And as longevity increases, so does the risk that a retiree outlives their savings. Market volatility, health-care expenses, long-term care needs, all of these pressures turn a lump sum into an unpredictable journey.

This is the moment for sponsors to reevaluate whether their plan design supports retirement income. That doesn’t mean every plan needs an in-plan annuity tomorrow. But it does mean assessing whether participants have access to tools, education, income projections, stable withdrawal options, or yes, optional lifetime-income products, that help them turn savings into security.

Sponsors also need to communicate clearly. Participants often misunderstand how annuities work, what longevity risk means, or how steady income can complement Social Security. A plan that prepares participants for retirement must also prepare them for what comes after.

Because a 401(k) plan isn’t just a place to save money. It’s a bridge to independence. And a responsible fiduciary makes sure that bridge doesn’t collapse halfway across.

The recent complaint against One Brooklyn Health System Inc. hits like a cold gust in a dusty frontier town, sudden, sharp, and full of consequences. The plan is accused of mismanaging its 403(b) by offering expensive “retail” share classes of mutual funds when cheaper, institutional classes were freely available.

From 2014 onward, participants were placed into a target-date fund whose expense ratio ranged between 0.86 % and 1.03 %. Meanwhile, a nearly identical institutional version was out there with fees as low as 0.05 %–0.67 %. Over the years, that discrepancy alone, especially in a plan that covers thousands of participants, allegedly cost retirees millions.

What’s jaw-dropping isn’t just the mistake. It’s the fact that the cheaper option was obvious. The institutional funds were disclosed, clearly available — but ignored. That’s not oversight. That’s negligence.

Sponsors, take note. This isn’t academic theory. It’s a warning shot. If you run a 401(k), 403(b) or similar plan and you don’t routinely — and ruthlessly — evaluate share-class costs, fund-lineup fees, and provider revenue-sharing agreements, you’re sitting on a landmine waiting to blow.

Prudence isn’t optional. Under Employee Retirement Income Security Act (ERISA), fiduciaries are legally required to act in participants’ best interests — which means choosing the lowest-cost equivalent when available, documenting the decision-making process, and reviewing that decision regularly.

Let the One Brooklyn case be the kind of lesson no plan sponsor wants to learn the hard way.

· Review every fund and every share class on your menu.

· Compare institutional vs retail share classes — don’t assume your recordkeeper automatically picked the cheapest.

· Document the rationale for any costlier investment or vendor, and be ready to justify it if challenged.

· Monitor revenue-sharing and conflicts of interest — because those are the hidden bullets in any 403(b) or 401(k) negotiation.

If you treat your plan like a sloppy afterthought, participants will pay — often with their retirement income. If you treat it like what it truly is — a promise of security and dignity — you act with discipline, transparency, and respect.

That’s what being a fiduciary really means.