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What's My Role in Managing My Company's 401k Plan?

Intro

It's important to understand your role in the managing of your company's 401k plan.This video quickly outlines common 401k roles. CUI Wealth Management is dedicated to providing content to help Plan Sponsors and Plan Administrators. 

Understanding Your Fiduciary Role

Welcome back to Five Minute Fiduciary. With anything in life, it's hard to fulfill your role if you don't understand your role. And naturally, that also translates to fiduciary rules. So, before you figure out how to get to where you are going, you got to figure out where you're at.  

Let's take a minute and talk about two different types of fiduciaries. One is called a named fiduciary. The other is called an unnamed fiduciary. It's super easy to figure out who the named fiduciaries are in the plan because they're in the plan documents. The first named Fiduciary is the Plan Sponsor. The Plan Sponsor oversees all other fiduciaries of the company retirement plan. They're kind of like a CEO of the plan, so to speak.  Often, it's the employer that takes on this role.  

Another named Fiduciary is the Trustee. The Trustee takes care of anything that's related to plan assets. For example, if you have questions related to investment management, it may fall on the Trustee of the plan.  

Another named Fiduciary is a Plan Administrator. You can think of the plan administrator kind of like the Operations Management of the plan. They do a lot of the day today.  For example, filing the 5500 and providing fee disclosures to participants may very well fall on the Plan Administrator's responsibilities.  

For smaller retirement plans, it's not uncommon for the owner or for the employer to be over all three of these rules. One common pitfall that I see all the time is Plan Sponsor or Plan Administrator or Trustee not realizing their role in the plan. A lot of times, the misconception is, people think that the recordkeeper is the fiduciary on the plan. Often the recordkeeper is not a fiduciary on the plan. This is one of the reasons why it is so important for you to know your role and the roles of others involved in the plan; so you don't end up pointing fingers at someone else when in reality, it may be your responsibility to take care of a specific role in the plan.  

Let's take a minute and talk about unnamed fiduciaries. Unnamed fiduciaries are fiduciaries because of the role they play in a plan. For example, if someone is making decisions on behalf of the plan, they may be a fiduciary even if they are not named in the plan documents. That's it for today. But if you have questions or want a second opinion on your retirement plan, please reach out to us. We'll see you next week.

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