402(a) vs. 3(16): Understanding the Real Difference in Retirement Plan Fiduciary Responsibility
One of the most common questions we receive is simple:
“How is a 402(a) different from a 3(16)?”
Many plan sponsors have heard of a 3(38) investment fiduciary. Some are familiar with 3(16) administrative fiduciary services. But far fewer understand the role of the 402(a) Named Fiduciary — even though every single 401(k) plan has one.
If you sponsor a retirement plan, this distinction matters more than you may realize.
Watch the Full Podcast Episode
Season 3, Episode 1 of The Wise Fiduciary Podcast
Start with the Structure: ERISA’s Three Fiduciary Buckets
Under ERISA, fiduciary responsibility inside a 401(k) plan generally falls into three primary categories:
- Legal Oversight
- Investment Oversight
- Administrative Oversight
Most industry conversations focus heavily on the investment bucket. That’s where 3(21) and 3(38) fiduciaries operate.
The administrative bucket is where 3(16) fiduciary services typically apply, but the role that oversees all three buckets is the 402(a) Named Fiduciary.
What Is a 3(16) Fiduciary?
A 3(16) fiduciary is responsible for specific administrative functions of a retirement plan. These duties may include:
- Reviewing and signing Form 5500
- Approving loans and distributions
- Distributing required notices
- Overseeing certain operational compliance tasks
Not all 3(16) services are the same.
Some providers offer limited-scope 3(16) services. Others may perform tasks but not accept fiduciary liability for them. Still others may shift responsibility back to the plan sponsor through certifications or review requirements.
It is critical to ask:
- Which duties are being performed?
- Is fiduciary liability formally assumed?
- Where does responsibility ultimately remain?
What Is a 402(a) Named Fiduciary?
The 402(a) Named Fiduciary is the party with ultimate responsibility for the plan.
By default, this is typically the plan sponsor.
Under ERISA, the 402(a) fiduciary is responsible for:
- Oversight of investment fiduciaries
- Oversight of administrative fiduciaries
- Ensuring the plan operates in accordance with governing documents
- Monitoring service providers
- Ensuring fiduciary processes are prudent and documented
The 402(a) does not execute every operational task, but the 402(a) is responsible for ensuring those tasks are properly executed.
This is a significantly broader responsibility than a limited-scope 3(16) role.
The Key Distinction: Execution vs. Oversight
3(16) fiduciaries execute administrative duties.
402(a) fiduciaries oversee the entire fiduciary structure.
There is no such thing as a “limited” 402(a).
The 402(a) role encompasses responsibility across legal, investment, and administrative functions. When properly delegated to an independent professional fiduciary, both operational tasks and fiduciary liability shift away from the plan sponsor.
Why This Matters for Plan Sponsors & Employers
ERISA does not expect business owners, CEOs, or HR leaders to be retirement plan experts.
ERISA anticipates that fiduciaries will hire experts when they lack specialized knowledge.
Yet many plan sponsors unknowingly retain full 402(a) responsibility while only partially delegating 3(16) or 3(38) functions.
This can create gaps in oversight, documentation, and risk management.
- Clarify accountability
- Reduce unintended liability exposure
- Strengthen plan governance
- Operate in alignment with ERISA expectations
The Bigger Picture: Governance, Not Just Tasks
Administrative services are important and investment oversight is critical. But, retirement plans are governed structures under federal law.
When fiduciary roles are clearly defined, delegated properly, and monitored independently, retirement plans operate more efficiently and defensibly.
That is the distinction between checking a box and building a governance framework.
Final Thoughts
If you sponsor a 401(k) plan, you are already a fiduciary.
The question is not whether fiduciary responsibility exists.
The question is whether it is structured intentionally.
If you would like to explore how independent 402(a) fiduciary services fit within your plan structure, schedule a conversation with our team.
This article is based on Season 3, Episode 1 of The Wise Fiduciary Podcast, featuring Marta Hurst, Kate McBride, and Isaac Wood.
