Risk Management
Your Fiduciary Duties as a Plan Sponsor — and How to Share Them
When a business sponsors a 401(k), the owner (or whoever makes plan decisions) becomes a fiduciary under ERISA — and fiduciaries can be personally liable for imprudent decisions. Most owners don't realize this until a problem appears.
What the law expects
- Act solely in the interest of participants and beneficiaries.
- Act prudently — with the care of someone familiar with such matters.
- Offer a diversified investment menu.
- Pay only reasonable plan expenses.
- Follow the plan document.
Where small plans get into trouble
- No written process for choosing or replacing investments.
- Never reviewing fees against the market (the 408(b)(2) fee disclosures you receive are the starting point).
- Late deposits of employee contributions.
- Nobody can say who is responsible for what.
How advisers can share the load
| Role | What it means for you |
|---|---|
| 3(21) investment adviser | Recommends the investment menu and monitors it. You make the final decisions and share fiduciary responsibility. |
| 3(38) investment manager | Has discretion to select, monitor and replace investments — and takes on that responsibility. Your duty becomes prudently selecting and monitoring the manager. |
| 3(16) administrator | Takes on specified administrative duties, such as notices and filings. |
No arrangement removes all of the owner's responsibility, but the right structure narrows it and documents a prudent process.
A simple checklist
- Get your adviser's fiduciary role in writing.
- Adopt a written investment policy statement.
- Review investments and fees at least annually, and keep notes.
- Confirm contributions are deposited promptly after each payroll.
Pleasanton Wealth will tell you in writing exactly which fiduciary role it accepts before you sign anything.
Want to see what this means for your business?
Tell us a little about your team and goals and Samah will reply within one business day.
Request a complimentary plan reviewGeneral educational information as of September 22, 2026; limits and rules change. Not individualized investment, tax or legal advice. Consult your tax adviser about your situation.