There are many service providers on your 401(k) plan team. Here’s what their roles are and what to expect from each of them.
To keep your 401(k) plan sustainable, successful, and compliant with IRS and Department of Labor regulations, it’s important to know who’s who, who is responsible for what, and review their service agreements accordingly.
As your 401(k) auditor, Cassell Plan Audits is the puzzle piece that connects all the different service providers in your benefits plan team. (Hence, our logo.)
We liaise directly with your providers during your audit, so you don’t have to.
As a Plan Sponsor, you likely know who your main providers are, but their industry labels—and the distinctions between their roles and responsibilities—may be less familiar. Additionally, one provider may fulfill multiple roles.
A glossary of common 401(k) plan service providers
Every 401(k) plan requires these first four roles. Although the same entity may assume all four, it’s critical to understand their different responsibilities.
Named Fiduciary
In general, the named fiduciary steers plan administration or participates in selecting investment options. Whoever is named, fiduciary responsibility ultimately rests with the Plan Sponsor.
Plan Sponsor
The entity that establishes retirement plans for a company’s employees—often the employer or company.
Plan Administrator
Oversees the operations of the plan. If there is no specific administrator identified, the Plan Sponsor is the Administrator by default.
Trustee
Person or entity entrusted to manage and control the plan assets, making investment decisions on behalf of plan participants.
For a deeper discussion of each of these four roles, check out this article. Here are other service providers that may be on your 401(k) plan team:
Custodian
The financial institution or insurance company holding the plan assets, sometimes also the Trustee.
Record Keeper
Tracks and accounts for data within the Plan. Often, the same entity that maintains the website where employees can access and change their accounts.
Third-Party Administrator (TPA)
Performs some or all of the Plan Administrator role. Carefully scrutinize their service agreement, because not all TPAs perform the same services, and bundled solutions give them multiple roles. They can help monitor compliance, reconcile data, process transactions (distributions/loans), and design and analyze the Plan.
Investment Advisor / Broker
Assist with the selection of the Plan’s investment options. Regulated differently, advisors must act in the Plan’s best interest while brokers aren’t held to the same fiduciary standards.
Fiduciary Auditor
Reviews fiduciary responsibilities for compliance with the Employee Retirement Income Security Act of 1974 (“ERISA”), looking at expenses, performance, employee education, and policy.
ERISA Attorney
Specializes in employee benefits law and ERISA’s requirements. When plan design failures occur, costly corrective actions must be taken. An ERISA Attorney helps determine the best course of action and limit damages.
401(k) Plan Auditor
Every 401(k) plan is required to file an annual IRS tax return (Form 5500). Large plans, generally defined as having 100 participating employees with balances or more, are required to hire an independent firm to audit the plan’s financial statements. The audit report is then submitted with Form 5500.
As independent, third-party auditors, we cannot offer advice, but we can make this annual requirement as painless as possible with a dedicated, experienced team of friendly auditors who focus on 401(k) plan audits and nothing else.
Most accounting firms perform one to two benefits plan audits per year; we’ve completed hundreds. When you’re ready for your next audit, see what a difference experience can make. Contact Cassell Plan Audits today.
