What Are The 401(k) Fiduciary Responsibilities?

It isn’t enough to provide employees with a 401(k) retirement plan. While it can help attract new talent and retention, you, as an employer, must also ensure that you meet your fiduciary responsibilities. This will help protect you and your company from potential liability.

What is a 401(k) fiduciary?

A fiduciary is a trusted party that acts in the best interest of plan participants and their beneficiaries.. If you’re planning to offer your employees a retirement plan, you, or someone at your organization, will become a fiduciary. Hiring a 401(k) service provider that offers fiduciary services can be a smart way to transfer some of the fiduciary responsibilities.

What are the 401(k) fiduciary responsibilities?

The fiduciary is dedicated to ensuring the financial well-being of plan participants and beneficiaries. Additional responsibilities include but are not limited to:

• Operating according to plan documents
• Paying plan expenses
• Diversifying plan investments

What are the different types of ERISA fiduciary roles?

ERISA (Employment Retirement Income Security Act) lists several fiduciary roles including:

• Named fiduciary: This individual acts as the point person for plan participants. They take on a leadership role and manage the other fiduciary officers. Typically, the person who fills this role is the employer or owner of the company who is providing the retirement plan to employees.
• 3(16) Plan administrator: The plan administrator oversees the execution of the plan, from filing the form 5500 to approving plan distribution and annual notices.
• Investment advisor 3(21) fiduciary: This fiduciary has the power to recommend plan investments, but they are not permitted to execute these investment selections. Additionally, investment advisors can recommend modifications of investments as needed.
• Investment manager 3(38) fiduciary: The individual in this role has complete authority to manage, choose, and remove investments from the plan
• Trustee: The trustee is responsible for managing/controlling the plan assets within a trust. According to ERISA section 403, retirement plan assets must be placed into a trust. The role of the trustee can be filled by the business owner themselves or another individual or entity.

What if you hire a 401(k) service provider?

Hiring a 401(k) service provider can help to ensure that your business’ plan requirements are met. They generally perform some fiduciary duties to benefit the employers and employees. However, as the business owner, you still have some fiduciary responsibility. It will be your decision whether or not to hire a service provider.

When hiring a provider, be sure to consider your needs as a business owner, and the needs of your employees. You will also want to consider the provider’s experience, fees, support and service.

We understand that managing a 401(k) retirement plan for your employees may seem daunting. That’s where we come in. If you’re interested in hiring ePlan Services as your 401(k) service provider, contact our sales team today, our knowledgeable professionals will be glad to assist you.

This content is for educational purposes only, is not intended to provide specific legal or financial advice, and should not be used as a substitute for the legal advice of a qualified attorney or financial professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.