Sure, plan sponsors can find information from the Department of Labor, and they can certainly buy books on the subject (including one I wrote), the depressing truth is that these instructions only apply to the narrow actions of the plan sponsor.Unfortunately, the 401(k) plan sponsor is held liable for the actions of every vendor, and – here’s the really difficult part – it’s hard to know what fiduciary rules (if any) apply to which service providers. That’s because at least three different fiduciary standards exist: the tradition trust law variety; the ever-evolving SEC form; and, the much-maligned ERISA version.
The fact services providers can offer one, two or even all three forms of fiduciary standard (as well as a fourth non-fiduciary standard) can only increase the personal risk of every 401(k) plan sponsor, who generally spend their waking hours trying to produce more widgets, not staying up-to-date on the latest in the fiduciary industry.
Many plan sponsors do not understand the fiduciary responsibilities and risks they carry when sponsoring a qualified retirement plan for their employees. Many believe their service providers have taken care of everything. This is far from the truth and the federal government continues to make it worse.
Please comment or call to discuss how this affects you and your company.