Who Is Responsible for What in a Retirement Plan?
A 401(k) plan can have a plan sponsor, committee, financial advisor, recordkeeper, TPA, investment fiduciary, and other service providers. But, who is actually responsible for what? Here’s how to understand retirement plan service provider responsibilities and where plan sponsors can still be on the hook.
“Oh, I thought they were handling that.”
It’s one of the most common sentences you can hear in a retirement plan committee meeting. The plan sponsor thought the recordkeeper was handling it, but the recordkeeper thought the TPA was handling it.
Meanwhile, the TPA thought the plan sponsor was handling it, and the financial advisor assumed someone else was reviewing the fee disclosure.
Somewhere in the middle of all that, an important responsibility is sitting there completely unattended.
Nobody intended for that to happen, everyone thought someone else had it.
But, that’s the problem.
A 401(k) plan can have a lot of people working behind the scenes. So, understanding exactly who is responsible for what is one of the most important parts of effective plan governance.
And while hiring good service providers can make running a retirement plan much easier, it doesn’t automatically mean every fiduciary responsibility has been delegated away. In fact, plan sponsors and retirement committees are still liable for what happens in a plan.
Who Is Responsible for a 401(k) Plan?
At the highest level, the plan sponsor is generally the employer or organization that established the retirement plan.
The plan sponsor typically has fiduciary responsibilities associated with operating the plan unless those responsibilities have been properly delegated in writing.
However, the plan sponsor usually isn’t doing everything by themselves. They may hire a variety of service providers to perform specific functions.
Those providers can include:
- Retirement plan recordkeepers
- Third-party administrators (TPAs)
- Financial advisors
- Investment managers
- 3(21) investment fiduciaries
- 3(38) investment fiduciaries
- 3(16) fiduciaries
- ERISA attorneys
- Auditors
- Payroll providers
- Consultants
- Custodians
The important word here is specific.
A service provider can be responsible for one function without being responsible for everything related to the plan.
That’s why simply asking, “Who are our service providers?” isn’t enough.
You need to be asking, “What exactly has each service provider agreed to do—and who is responsible for overseeing that work?”
The Retirement Plan Responsibility Problem
Imagine a hypothetical 401(k) plan.
The plan has:
- A plan sponsor
- A retirement plan committee
- A financial advisor
- A recordkeeper
- A TPA
- A 3(38) investment fiduciary
Everyone is experienced and professional. But everyone is also very busy.
The plan sponsor might assume the TPA handles compliance. Well, the TPA handles testing—but not every aspect of plan compliance.
Additionally, a plan sponsor could assume the recordkeeper handles participant notices, and they usually do. But the plan’s specific requirements depend on the plan’s design.
The financial advisor monitors investments, but the plan has also hired a 3(38) investment fiduciary. Now who is actually responsible for investment decisions and who is responsible for making sure that the investment fiduciary is doing what it agreed to do?
Suddenly, “Who does what?” becomes a surprisingly complicated question.
That’s why responsibility mapping is so important.
401(k) Service Provider Responsibilities: Who Does What?
There isn’t one universal division of responsibilities that applies to every retirement plan.
Contracts, plan documents, delegation agreements, plan design, and the specific services being provided all affect the responsibilities.
But here’s a general framework to help plan sponsors understand the major players.
1. The Plan Sponsor
The plan sponsor is the organization that establishes and maintains the retirement plan.
Depending on the plan’s structure and delegation, the sponsor may be responsible for:
- Establishing the plan
- Selecting service providers
- Monitoring service providers
- Making fiduciary decisions
- Reviewing plan fees
- Ensuring the plan is operated according to its governing documents
- Selecting and monitoring investments, unless properly delegated
- Maintaining appropriate fiduciary processes
- Ensuring required plan responsibilities are assigned
- Reviewing required reports and disclosures
- Making required filings or ensuring they are completed
- Maintaining appropriate documentation
This is where one of the biggest misconceptions about retirement plans comes in:
Hiring a service provider does not automatically transfer every responsibility to that provider.
The scope of the delegation is key here, as is the plan sponsor’s ongoing oversight.
2. The Retirement Plan Committee
Some employers establish a retirement plan committee to oversee the plan’s fiduciary responsibilities.
A committee might be responsible for:
- Investment oversight
- Service-provider oversight
- Fee review
- Plan governance
- Fiduciary decision-making
- Reviewing reports
- Monitoring delegated fiduciaries
- Reviewing plan performance
- Documenting decisions
But a committee isn’t automatically a fiduciary simply because it exists.
Its fiduciary status depends on its authority and functions.
That’s another reason documentation is so important!
A well-designed governance structure should make it incredibly clear who has the authority in the plan; who is making the decisions; who is doing the monitoring, and who reports to whom.
3. The Recordkeeper
The recordkeeper is often the service provider plan sponsors interact with most frequently.
Recordkeepers generally provide the infrastructure for administering participant accounts.
Depending on the arrangement, a recordkeeper may handle functions such as:
- Maintaining participant account records
- Processing contributions
- Processing distributions
- Processing loans
- Maintaining beneficiary information
- Providing participant websites
- Providing participant statements
- Supporting enrollment
- Providing certain participant communications
- Providing plan data and reports
But here’s an important distinction:
A recordkeeper’s role is not automatically a fiduciary role.
A recordkeeper can provide significant administrative services without being a fiduciary with respect to every function it performs.
The actual agreement is so important and you need to read your contract.
So if your committee says:
“The recordkeeper handles that.”
Your next question should be:
“What exactly does the recordkeeper’s contract say it handles?”
4. The Third-Party Administrator (TPA)
The TPA typically focuses on the plan’s administrative and compliance functions.
Depending on the arrangement, a TPA may handle:
- Nondiscrimination testing
- Compliance testing
- Contribution calculations
- Plan administration
- Distribution calculations
- Loan administration
- Required corrections
- Plan document services
- Form 5500 preparation
- Annual compliance work
- Required amendments
But again, the exact scope varies.
Some recordkeepers provide many of these services directly, while some TPAs provide a broader range of services.
Lastly, the bigger question needing to be asked here is
“Which responsibilities has our TPA agreed to perform?”
5. The Financial Advisor
A financial advisor’s role can vary dramatically from plan to plan.
A financial advisor might provide:
- Investment education
- Investment recommendations
- Participant education
- Investment monitoring
- Plan-level investment consulting
- Fiduciary services
- Retirement readiness support
- Plan design consulting
But not every financial advisor is a fiduciary and not every fiduciary advisor has the same scope of responsibility.
A plan sponsor needs understand whether the advisor is a fiduciary and what type of fiduciary they are (what capacity do they serve?). They also need to know what decisions advisors make in the plan and what recommendations can they provide.
Finally, as we’ve said, you need to understand the agreement and know what it says.
6. The 3(21) Investment Fiduciary
A 3(21) investment fiduciary generally provides fiduciary investment advice or recommendations to the plan.
Depending on the arrangement, the advisor may:
- Recommend investments
- Monitor investments
- Make investment recommendations
- Assist with an investment policy statement
- Provide investment analysis
- Help evaluate investment fees
- Provide fiduciary investment advice
The key distinction is that the plan sponsor or another fiduciary may still retain authority to make the final investment decision.
In other words:
A 3(21) may advise. The plan fiduciary may decide.
But the exact arrangement needs to be understood from the actual agreement.
7. The 3(38) Investment Fiduciary
A 3(38) investment manager has a different role.
Under ERISA §3(38), an investment manager is a fiduciary who has the authority and responsibility to manage some or all of the plan’s assets, subject to the requirements of the arrangement.
That can include:
- Selecting investments
- Monitoring investments
- Replacing investments
- Managing an investment lineup
- Making investment decisions within the delegated authority
This is a major distinction from a 3(21) advisory relationship.
A simplified way to think about it:
3(21)
“Here is what I recommend.”
3(38)
“I have the delegated authority to make the investment decision.”
But there’s another question:
Who monitors the 3(38)?
Delegating investment management doesn’t mean the plan sponsor should stop paying attention to the relationship.
The sponsor should understand the scope of the delegation and maintain an appropriate process for monitoring the investment manager.
8. The 3(16) Fiduciary
A 3(16) fiduciary can take on certain administrative and fiduciary responsibilities that might otherwise remain with the plan sponsor.
Depending on the agreement, a 3(16) fiduciary may take responsibility for functions such as:
- Plan administration
- Fiduciary administration
- Operational oversight
- Participant communications
- Compliance-related administration
- Distribution processes
- Required filings
- Coordinating service providers
- Other delegated responsibilities
But—and this is a big “but”—not every 3(16) arrangement is the same.
The scope of the fiduciary’s authority depends on the actual engagement.
Don’t assume:
“We hired a 3(16), so they are responsible for everything.”
Instead, ask:
“What responsibilities did we actually delegate?”
9. The ERISA Attorney
ERISA counsel can provide critical legal guidance, including:
- Interpreting ERISA requirements
- Reviewing plan documents
- Advising on compliance issues
- Reviewing fiduciary questions
- Assisting with plan corrections
- Advising on litigation or potential disputes
- Reviewing service-provider arrangements
- Advising on prohibited transactions
- Assisting with regulatory developments
But hiring an ERISA attorney doesn’t mean the attorney becomes the plan’s fiduciary.
Legal advice and fiduciary responsibility are different things.
Know the role, know the agreement, know the responsibility.
10. The Auditor
Large retirement plans may be required to obtain an annual independent qualified public accountant (IQPA) audit.
The auditor’s job is not to become the plan’s fiduciary.
The auditor provides an independent audit of the plan’s financial statements and related information as required by applicable rules.
This distinction is important because plan sponsors sometimes assume:
“The auditor would have caught that.”
Maybe.
Maybe not.
Regardless, an audit isn’t a substitute for fiduciary oversight.
The Big Question: Who Is Responsible for Monitoring the Service Providers?
This is where retirement plan governance gets particularly interesting.
Let’s say your plan hires:
- A recordkeeper
- A TPA
- A 3(38) investment fiduciary
- A financial advisor
Who makes sure they’re all doing what they said they would do?
The answer doesn’t automatically become “the plan sponsor hired them, so the sponsor has to do everything.”
But neither does the answer become:
“We hired them, so we’re done.”
The plan’s fiduciary structure needs to identify who has responsibility for monitoring each relationship.
That might be the plan sponsor.
Or it might be a retirement plan committee, a delegated fiduciary, or it could be shared depending on the function.
Most importantly, the responsibility must be clear and documented.
Why “Who Does What?” Is a Fiduciary Question
This isn’t merely an administrative exercise, it goes directly to fiduciary governance.
ERISA fiduciaries are expected to act prudently and in the interest of plan participants and beneficiaries and to adhere to the highest standards under ERISA.
However, that requires a reasonable process.
And a reasonable process is much harder to demonstrate if nobody can explain who was responsible for a particular decision.
Consider two plans.
Plan A
The committee says:
“We thought the recordkeeper handled that.”
No one can find the contract.
So, no one knows who was supposed to monitor the function.
Consequently, there are no meeting notes documenting the responsibility.
Plan B
The committee has a responsibility matrix that shows:
Function: Annual compliance testing
Responsible provider: TPA
Oversight: Plan fiduciary
Timing: Annual
Documentation: Testing report
Status: Complete
Which plan has a stronger governance process?
The answer is pretty obvious.
The Responsibility Matrix: One of the Most Useful Tools a Plan Can Have
A responsibility matrix is essentially a map of the retirement plan because it connects:
Responsibility → Service Provider → Fiduciary → Oversight → Timing → Documentation
For example:
| Plan Responsibility | Who Performs It? | Who Oversees It? | Documentation |
|---|---|---|---|
| Investment monitoring | 3(38) fiduciary | Plan fiduciary/committee | Investment report |
| Compliance testing | TPA | Plan fiduciary | Testing report |
| Participant accounts | Recordkeeper | Plan fiduciary | Recordkeeper reports |
| Fee review | Plan fiduciary/advisor | Plan fiduciary/committee | Benchmarking report |
| Form 5500 preparation | TPA/other provider | Plan fiduciary | Filed Form 5500 |
| Fiduciary governance | Named fiduciary/committee | Appropriate fiduciary oversight | Meeting minutes |
Important: This is a framework, not a universal assignment of responsibility. Actual responsibilities depend on the plan’s documents, contracts, delegation, and circumstances.
However, that’s exactly why a responsibility matrix should be customized rather than copied from another plan.
What Happens When Nobody Owns a Responsibility?
This is where the risk becomes real.
Imagine a plan has a responsibility that needs to happen annually. Everyone assumes someone else is handling it. Well, the year ends and nobody did it.
Now the plan isn’t simply dealing with an administrative mistake.
It may be dealing with a fiduciary issue, a compliance issue, a correction, or potentially participant impact.
And the worst part?
The problem may not be discovered until months—or even years—later.
A clear responsibility structure is designed to prevent that.
“But We Have a ‘Fiduciary.’ Isn’t That Their Job?”
This is another common misconception.
Hiring a fiduciary can absolutely provide significant value.
But “fiduciary” isn’t a job description by itself.
There are different fiduciary roles, different types of authority, and different scopes of delegated responsibility.
A plan sponsor needs to know:
- What fiduciary role was delegated?
- What authority was delegated?
- What wasn’t delegated?
- What does the fiduciary actually do?
- What does the fiduciary monitor?
- What remains the plan sponsor’s responsibility?
- How is the fiduciary itself monitored?
This is particularly important when comparing fiduciary service providers.
Ask:
“What fiduciary responsibilities will you actually take on?”
The Plan Sponsor’s Responsibility Doesn’t End When the Contract Is Signed
This is one of the most important concepts for plan sponsors to understand.
A service-provider contract is not the end of fiduciary oversight.
It’s the beginning of a relationship that needs to be managed.
The plan sponsor should have a process for:
- Selecting service providers
- Understanding their roles
- Documenting delegated responsibilities
- Monitoring their performance
- Reviewing compensation
- Reviewing services
- Addressing deficiencies
- Documenting the review
This is especially important for fiduciary providers.
If a plan is paying an additional fee for fiduciary services, the plan should be able to demonstrate what value and services it is receiving for that fee.
That becomes particularly relevant in today’s litigation environment.
Why This Matters Even More After Cunningham v. Cornell University
The Supreme Court’s 2025 decision in Cunningham v. Cornell University brought renewed attention to ERISA prohibited-transaction claims involving service-provider compensation.
The case involved allegations concerning payments to service providers and the application of ERISA’s prohibited-transaction provisions and statutory exemptions.
The Supreme Court held that a plaintiff bringing a prohibited-transaction claim under ERISA §406(a)(1)(C) does not have to plead around the statutory exemption in §408(b)(2) at the initial pleading stage. The fiduciary relying on the exemption bears the burden of establishing that the exemption applies. (supremecourt.gov)
Why does that matter for service-provider oversight?
Because plan sponsors should be able to answer basic questions about the relationships their plans have entered into. Questions like:
What services are being provided?
Who is providing them?
What are they being paid?
Is the compensation reasonable in relation to the services?
Who evaluated the arrangement?
Where is that evaluation documented?
**Hint: those aren’t questions to save for when there’s a lawsuit. Oops.
The Annual Fiduciary Checklist Can Tie It All Together
This is where an annual fiduciary checklist becomes especially useful.
It doesn’t just tell you what needs to happen.
It can show:
Who does it.
Who oversees it.
When it happens.
Whether it happened.
And where the evidence lives.
Consequently, this makes the checklist a responsibility map for the entire plan.
And if something changes—a new recordkeeper, a new investment fiduciary, a new TPA, a new plan design, a new delegation—the map can change with it.
That’s much better than discovering three years later that the person everyone thought was responsible never actually had that responsibility.
A Simple 401(k) Service Provider Responsibility Checklist
If you’re reviewing your plan’s current structure, start with these questions.
For every service provider, ask:
- What services does this provider perform?
- Is the provider a fiduciary?
- If so, what type of fiduciary role does it have?
- What authority has been delegated?
- What responsibilities remain with the plan sponsor?
- What does the provider charge?
- What documentation describes its services and compensation?
- Who monitors the provider?
- How often is the provider reviewed?
- Where is the review documented?
- What happens if the provider doesn’t perform as expected?
Then, ask the bigger question:
Are there any responsibilities that nobody clearly owns?
Until then, you may miss some of the largest oversight gaps.
Your Retirement Plan Shouldn’t Have a “Whoops, I Thought They Did That” Department
Retirement plans are complicated.
However, there are regulations, deadlines, investments, service providers, fiduciaries, participants, disclosures, filings, contracts, and an impressive number of acronyms.
It’s completely understandable that responsibility can get blurry.
However, blurry responsibility is exactly what a good governance process is designed to eliminate.
The goal isn’t for the plan sponsor to personally perform every task.
Everyone should know what they’re responsible for.
Everyone should know who is responsible for overseeing it.
And the plan should have documentation showing that the work actually happened.
Because when everyone knows who owns the responsibility, everyone can do their job better.
And when something inevitably changes—and it will—you know exactly where to start.
Want to Know Who Is Responsible for What on Your Plan?
Fiduciary Wise helps plan sponsors bring structure to the many fiduciary and administrative responsibilities involved in operating an ERISA retirement plan.
Our approach is designed to help clarify responsibilities across the plan’s fiduciaries and service providers, document oversight, and identify gaps before they become bigger problems.
Talk with Fiduciary Wise about your plan’s fiduciary responsibilities
Listen to the Wise Fiduciary Podcast
This article accompanies Season 3, Episode 10 of the Wise Fiduciary Podcast: “Annual Checklist.”
In the episode, the Fiduciary Wise team takes a closer look at the annual fiduciary checklist and explains why clearly identifying responsibility can help plan sponsors, fiduciaries, and service providers do their jobs better.