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. Many 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 running a plan.
- 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; see how to switch 401(k) providers if a change is due).
- Late deposits of employee contributions.
- No ERISA fidelity bond (coverage is generally at least 10% of plan assets).
- Nobody can say who is responsible for what.
How advisers and administrators 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.
How we work: for 401(k) plans, Pleasanton Wealth serves as a 3(38) investment manager, taking responsibility for selecting, monitoring and replacing the plan’s investments.
A four-step fiduciary 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 employee contributions reach the plan promptly after each payroll (for plans with fewer than 100 participants, deposits within seven business days fall within a Department of Labor safe harbor).
Pleasanton Wealth confirms its 3(38) role for 401(k) plans, and exactly what it covers, in writing before you sign anything. For the full sequence of plan decisions, see the retirement plan playbook.
Want to see what this means for your business?
Tell us a little about your team and goals. The initial plan review is complimentary, and we aim to reply within one business day.
Request a plan review Review my existing planGeneral educational information as of September 24, 2026; limits and rules change. Not individualized investment, tax or legal advice. Consult your legal or tax adviser about your situation.