How Well Do You Know Your 401k?

To start off I would like to state that all 401k’s are not created equal. At the time you set up your 401k, you probably saw it as a benefit to help retain the lifeblood of any business (your employees). You were probably advised that it can also be a tool from a tax planning standpoint for your business. These are valid reasons to start a 401k. What you probably were not made aware of is the ongoing work this would entail and potential consequences of not keeping up with the work.  

Usually, when the 401k is started, either the owner(s) or the company itself is named in the documents as the fiduciary over that plan. Now depending on who helped you set up the plan and continues to help service that plan, they may also be listed on the documents as a fiduciary. This is vital information to know since you now have liability in that plan. If the person you are working with is not taking responsibility with you, you have a problem. This in plain English means that the people helping you are not standing on the front line with you incase things go south. They are most likely reaping the benefits without the same level of risk.  

401(k) Fiduciary Risk Checkup

How exposed is your company’s 401(k) plan?

Answer these questions to see whether you may be acting as a plan fiduciary and whether your retirement plan review process is documented, repeatable, and defensible.

Fiduciary role Are you named in the documents or making plan decisions?

Governance process Are plan reviews, fees, investments, and providers documented?

Employee impact Are participants receiving education and support for better outcomes?

Part 1: Fiduciary role indicators

These questions help identify whether you may be involved in decisions that create fiduciary responsibility.

1. Are you, the business, or a company officer listed in the plan documents as plan sponsor, administrator, trustee, committee member, or named fiduciary?

Yes Not sure No

2. Do you approve, select, or monitor the investment options inside the plan?

Yes Not sure No

3. Do you choose, hire, review, or replace the advisor, recordkeeper, TPA, payroll provider, or other plan service providers?

Yes Not sure No

4. Do you make or approve decisions about plan fees, plan design, employer match, eligibility, or participant education?

Yes Not sure No

5. Do you sign or approve plan documents, amendments, Form 5500 items, participant loans, distributions, or plan corrections?

Yes Not sure No

Part 2: Governance readiness

These questions help reveal whether your fiduciary process is organized, documented, and ready to defend.

6. Does your plan have a formal committee with a written committee charter?

Yes Not sure No

7. Do you have written meeting minutes from recent plan review meetings?

Yes Some, but inconsistent No or not sure

8. Does the plan have an Investment Policy Statement and a documented process for reviewing the investment lineup?

Yes Not sure No

9. Have plan fees and providers been benchmarked or reviewed through an RFP process within the last 2 to 3 years?

Yes Not sure No

10. Has each provider confirmed in writing whether they are acting as a fiduciary, and what role they accept?

Yes Not sure No

11. Is participant education provided and documented throughout the year?

Yes Occasionally No or not sure

12. Have cybersecurity safeguards, plan data access, and fidelity bond coverage been reviewed recently?

Yes Not sure No

0 of 12 questions answered

Fiduciary role 0 Likelihood indicator

Readiness 100% Governance score

Start here

Answer the questions to see your result.

This tool helps business owners identify whether they may have 401(k) fiduciary responsibilities and whether the plan review process has meaningful gaps.

Start by pulling the plan document, adoption agreement, service agreements, and most recent plan review notes. Those documents usually reveal who is responsible for what.

Potential priority gaps

• Answer the questions to generate your suggested review priorities.

Schedule a 401(k) Review Reset

What to gather before a review

A strong fiduciary process is easier to evaluate when the core plan records are organized.

Plan document and adoption agreement

Investment Policy Statement

Committee charter and meeting minutes

Provider agreements and fiduciary acknowledgments

Fee benchmarking, RFPs, and cost reviews

Participant education records

Cybersecurity safeguards and fidelity bond coverage

This tool is for educational purposes only and does not determine legal fiduciary status or provide legal, tax, or compliance advice. Fiduciary responsibility depends on plan documents, actual authority, discretionary control, provider agreements, and applicable law. Employers should review their specific plan with qualified retirement plan, legal, tax, and compliance professionals.

How are decisions being made within the plan? 

Is it as simple as the lowest cost wins?  

The key to “winning” in my experience when it comes to a 401k, financial planning, or anything with a dollar sign is education.  

How is the person you’re working with continuing to grow their understanding of retirement plans or what your employees would get the most value from?  

How are they then translating that to you and your employees?  

Is it all done through conversations with you?  

When they meet with you, have they ever once brought up information they got through conversations with your employees? If they are not educating your employees, that responsibility is on you. Now, you can take on that role if you’d like, but I would ask what are you paying for then? 

This leads to my next question and is arguably the most important one. How are they interacting with your employees? In my experience, they tend to focus most of their energy on the person who is paying them. This is great for you. This also means that you are the only properly educated person on the plan the whole company is potentially putting their life savings into. Remember that your advisor works for you. You have an obligation to your employees when you sign those documents to have their back. This means setting expectations for whoever you are working with and putting yourself in your employees' shoes.  

I can already hear some people saying, “they won’t care” or “they don’t pay attention to that stuff” and to that I would say it doesn’t matter. Here is the reality; they only have to care once for you to have a problem. If you tell me, I just don’t have the time to devote myself to this, then I think you are ready to have another discussion with the advisor helping you with the plan.  

Here are some of the questions we ask any employer when discussing their 401k: 

• Does your plan include a formal plan committee? If so, does the committee have a charter? 

• What was the topic of your last fiduciary training meeting? 

• When was the last time the plan providers were benchmarked? What was the result of the RFPs? 

• If your plan was audited by the Internal Revenue Service or Department of Labor, would you be able to quickly produce plan documents? If so, when was the last time those documents were verified to be correct? 

• What is the process utilized by your plan to review investment line-ups? 

• Who are the fiduciaries of your plan? 

• Do the plan providers provide safeguards against cyber threats? 

• How do your current plan providers prevent conflicts of interest? 

• Do you have a sample of the meeting minutes from your last plan meeting? Last five? 

• How often is the plan being reviewed? 

• What are the costs associated with your plan, including providers and investment funds? 

• How are you informed of regulatory changes that may impact the management of your plan? 

• What amount of coverage is provided by your fidelity bond? 

• Do you have a sample of the plan investment policy statement (IPS)? 

• How is education provided to participants? 

• Do you have the letters or documentation where the plan has confirmed fiduciaries in writing? 

This is a good starting point. If I were to ask you right now, could you confidently answer these questions?