7 thoughts on “A Tale of Two Cities…er, Retirement Plans”

  1. Scott, great article! Thanks for pointing out the lack of oversight and how this translates into less money at retirement for public sector workers, especially in the K-12 marketplace. What I really apprecaite is you provide a solution to address the problem, not just talk about the problem itself. Thanks for shining a light on the high fees public sector employees are paying and for finally saying single vendor is the right way to go.

    1. I agree with Debby, great article and very timely for what is happening across the country with these plans. It is mind boggling that everything in your article is not obvious to governmental k-12 plan sponsors.

  2. Scott, prohibited transaction rules found in IRC section 503(b) apply to governmental 401(a) plans pursuant to IRC section 503(a)(1)(b). While not as robust as the prohibited transaction rules in IRC section 4975, they are there. Most states have anti-kickback rules applicable to their (and their political subdivision’s) retirement plans. Most states have open meeting laws that require more transactional and decision making transparency than is required under ERISA. Participant fiduciary breach of duty claims are easier to maintain under state laws (permitting monetary damages) than they are under ERISA which limits most claims to claims for benefits or equitable relief. After the US Supreme Court’s decision in Wal-Mart, class action claims may be easier to maintain in state courts than in federal courts. I’m not saying that there are not abuses in public sector plans; I’m saying that mechanisms already exist to address them. Dan Wintz, Attorney, Fraser Stryker, PC LLO

    1. Dan,

      Great information and thank you for your comments. While these mechanisms exist, there is no enforcement and it still fails to address the major differences in disclosure and transparency between the two plan types. Thanks again for the comments, great info.


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