401(k) Fiduciary Handbook: Reducing Your Liability As a Plan Sponsor

September 27, 2016
2 min read
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We asked ourselves: “Why do organizations still struggle with understanding their 401(k) fiduciary responsibilities?” We saw that organizations’ efforts and spending on finding and hiring benefits brokers and compliance experts was increasing every year, but we also found that many companies were left unaware of how much fiduciary responsibility they were still holding onto with their 401(k) plan.

The upcoming Department of Labor fiduciary rule creates further complexities, and introduces an opportunity for plan sponsors to ask detailed questions of their 401(k) advisors and providers to understand the potential for biased or conflicted advice.

Boost your 401(k) fiduciary knowledge

To create more dialogue and awareness around the role of the 401(k) fiduciary and why it matters, we began creating content with an aim to strip away industry jargon and provide a clear picture of what work needs to be completed to offer a 401(k) plan, whether you need a 3(16) fiduciary or 3(38) fiduciary (or both!), and who the government holds responsible for this work to be done correctly and prudently.

If this is your first time directly administering a 401(k) plan at your work, you may want to start with this blog post detailing the different levels of 401(k) fiduciaries and what each of them does, to learn what’s left on your plate to take care of.

After that, dive deeper into each fiduciary level and use our new 401(k) Fiduciary Handbook to find out which fiduciary level is right for you. Along the way, you’ll gain new vocabulary and knowledge that will help you make a more informed, empowered decision as you work with your current 401(k) provider or find a new one that better suits your needs.

What does hiring a 401(k) 3(16) fiduciary or a 3(38) fiduciary mean for your organization?

By delegating your fiduciary responsibilities to a third party, your risk is limited to choosing and managing a competent third party. On one end, you can delegate and get help picking investments by hiring a 3(38) fiduciary. On the other, you can delegate almost all of the administrative work and responsibilities by hiring a 3(16) fiduciary. It’s up to you. The 401(k) fiduciary handbook will help you determine which responsibilities are delegated at each fiduciary level, which one is the right fit for your team, and which responsibilities you’ll continue to take on.

As a business owner, you need to understand which fiduciary roles your 401(k) vendors are taking on — and which ones are your responsibilities. At ForUsAll, we think that it should be delightful for a small or midsized business to offer a 401(k). Dealing with the administrative paperwork that comes with federally mandated liabilities is not delightful.

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

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David Ramirez - CEO at ForUsAll
Esther Kim

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

Happy employees with a 401(k) they deserve offering more choice more growth.
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This material has been prepared for informational and educational purposes only and should not be construed as a recommendation by ForUsAll, Inc., its affiliates or employees (collectively, “ForUsAll”)  to activate a cryptocurrency window or invest in crypto.  Investing in crypto can be risky and investors must be able to afford to lose their entire investment.  You should consult with your own advisers before activating a cryptocurrency window or investing in crypto.  ForUsAll does not provide legal, tax, or accounting advice. Please refer to your Plan's fee disclosure for more details.© 2023 ForUsAll, Inc. All rights reserved.
1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.