Does your Company sponsor a 401K plan? If the answer is yes, then you may not be aware of all the responsibilities that ERISA requires from plan fiduciaries. ERISA defines a fiduciary as a person who has discretionary authority or responsibility in plan administration.

For example, did you know that the most basic fiduciary responsibility is notifying personnel in the payroll and human resource departments that they are plan fiduciaries? Or that fiduciaries must establish a formal mechanism for selecting and reviewing the investment options under the plan, which includes monitoring fees charged by mutual fund companies?

I bet you didn’t know that ERISA requires that plan fiduciaries must document their selection process when selecting service providers for the plan. Service providers include investment consultants, plan actuaries, and others who assist in plan administration.

These are just a few of the responsibilities that plan fiduciaries face every day when administering 401(k) plans.

What can you do to make sure you’re covered?

Well, for starters, reviewing the overall governance of your retirement plan to determine exactly who has fiduciary responsibility will help with reducing the risks of sponsoring and operating a retirement plan.

Also, it is important to keep these other factors in mind:

  • If your company has a board of directors, steps should be taken to limit the board members’ personal liability.
  • Purchasing fiduciary insurance to protect those exercising discretion on behalf of the plan.
  • Establishing charters that clearly delineate the responsibilities of plan fiduciaries, and
  • Conducting annual training with fiduciaries and non-fiduciaries that assist with plan operations.

A prudent and efficient governance structure is a key to the successful operation of a retirement plan and the company that sponsors the retirement plan. Plan Sponsors, fiduciaries and non-fiduciaries may obtain assistance with their governance structure from other persons such as attorneys, consultants, financial professionals, accountants, and record keepers.

For more information call LSL CPAs and Business Advisors at 714.569.1000

Click here for more details about our ERISA Plan Audit services.

By Mike Rossi, CPA


Maria Arriola

For over 30 years, Maria has served clients in a variety of areas including financial statement audits, reviews and compilations as well as business and individual taxation.   Maria excels working with clients in the real estate, and healthcare industries, along with employee benefit plans. You can reach Maria at 714-569-1000 Read Maria's complete bio