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

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.