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New Year, New Opportunity to Review Your Fiduciary Duties

An employer sponsored retirement plan, like a 401(k) or 403(b) plan, has become an essential component of the employee benefit package. And oftentimes, fostering a workforce that is retirement ready means employers should establish their own unique retirement plan; one that is aligned with their company culture and needs.  

But while there are many features of a 401(k) plan that can differ from company-to-company, like plan design, investment menu, or recordkeepers and advisor partners, the constant variables between all plans are the fiduciary responsibility and liability incurred by the plan sponsor.  

When considering fiduciary rules, which are outlined in the Employee Retirement Income Security Act (ERISA) and are enforced by the Department of Labor (DOL), we commonly highlight two key principles: 

1. Act as prudent experts. Follow a set process for monitoring and managing the plan(s), and document actions 

2. Act solely in the best interest of participants first, and always 

As is the case with many things in life – easier said than done.

Wherever you are in your company’s journey, e.g., you’re a new start-up company with a brand-new retirement plan or an established company with a 30-year-old plan, there’s always an opportunity to evaluate how well your company is managing its fiduciary responsibilities. 

Wondering where to start? 

Here are three common fiduciary items and procedures you’ll want to ensure your company has in place: 

1. Proper Insurance Coverages

  • Fidelity (ERISA) Bond – Plan Sponsors are required to have Fidelity Bonds in place to protect the retirement plan(s) from theft and embezzlement.  
  • Fiduciary Liability Insurance – Fiduciary Liability Insurance protects individual fiduciaries in the event of suit brought forth against the Plan Sponsor, as the liability is personal.  

2. Investment Policy Statement (IPS)

  • The IPS establishes the prudent process set forth by the Plan Sponsor.  
  • Fundamentally the IPS is a tool to help reduce fiduciary liability exposure. 
  • For example, the IPS should clearly outline the responsibility and duties of both the Retirement Plan Committee (“Committee”) and the Consultant, the investment objectives, the fund selection criteria, and the monitoring process among other components.  
  • The IPS should be reviewed every three years or as there is Committee membership changes. 

3. Retirement Plan Committee (“Committee”):  

  • The Plan Sponsor typically delegates authority of managing the company’s fiduciary responsibility and liability (with respect to the plan(s)) to an internal group of employees (~3-7 members), which forms the Retirement Plan Committee. 
  • Committee responsibilities include but are not limited to, establishing & reviewing the IPS, selecting & monitoring individual investment options, evaluating the performance of those options against the stated IPS criteria, selecting & monitoring a third-party investment consultant, and evaluating investment and overall plan fees. 
  • Committees are required to meet at least annually but typically (or may) increase their meeting frequency depending on the size and/or complexity of the plan management.  
  • Minutes should be captured for each Committee meeting.  

While we’ve provided three common fiduciary items and procedures, there are many more beyond these three. Working with a retirement plan consultant can help you manage your fiduciary risk and responsibilities.  

At Newfront, we pride ourselves on taking a custom, unique, and consultative approach with our clients on all things plan related – from managing your fiduciary responsibility, to designing the ideal investment line-up, plan design, and employee education strategy. Our Retirement Services team is ready to learn about your retirement plan needs more broadly and collaborate on a strategy for managing your fiduciary responsibilities.  

Reach out to us to learn more about what makes your approach unique.  

Newfront Retirement Services, Inc. is a SEC registered investment advisor. Newfront Retirement Services, Inc. does not provide legal, accounting or tax advice. For additional disclosures, please visit https://abd-401k.com/disclosure/


Sarah Schwartz

About the author

Sarah Schwartz

Retirement Plan Advisor

Sarah is a retirement plan advisor who helps employers build, maintain, and defend best-in-class plans for their employees. She is dedicated to providing relevant data and insights that enable employers to make informed decisions that align with business and culture. Key areas supported include monitoring and review of investments, plan design benchmarking, fiduciary support, ERISA guidance on compliance issues, plan transitions, M&A, and employee education. Sarah is the Co-Founder of Newfront’s NewHer ERG and committed to building an inclusive workplace. You can connect with Sarah on LinkedIn here.


The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.

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