Are You a 401(k) Fiduciary? Answer These Four Questions

Written by Smart Investor | 12 April 2010

You may be a fiduciary and not even know it. Retirement plan fiduciaries assume serious responsibilities, as I discussed in "Top Three Reasons Why You Should Care About Your Fiduciary Duty." But you're not always explicitly informed when you're in fiduciary roles.

You're a fiduciary if you answer "yes" to any of the four questions listed below.

Question 1: Are you named in plan documents as a fiduciary?

This one is a no-brainer. If you're named in your 401(k) plan documents as a fiduciary, then you fall into the category known as "named fiduciaries."

What's tricky is that you need not be named as a fiduciary to be considered a fiduciary. Don't assume you're safe if you answer "no" to Question 1.

Question 2: Do you exercise control over the management or administration of the plan or its assets?

This is the question that brings many corporate employees into the realm of fiduciaries. Fiduciaries typically include "the trustee, investment advisers, and all individuals exercising discretion in the administration of the plan, all members of a plan’s administrative committee (if it has such a committee), and those who select committee officials," according to "Meeting Your Fiduciary Responsibility" on the Department of Labor (DOL) website.

It's important to look at the functions you perform for your company plan to see if they can be considered control over the plan's management or administration. For example, a human resources professional learned that he was considered a fiduciary simply because he handled questions about a participant’s benefit claim, according to a case cited by the law firm of Winston & Strawn.

Question 3: Do you provide ongoing investment management or advice to the plan or to plan participants?

This question isn't likely to snare many corporate employees. But it's a good reason to be careful before offering any informal investment advice to your colleagues or employees.

Question 4: Do you select or supervise other plan fiduciaries?

This question gives managers a good reason to examine the meaning of "fiduciary" even if they lack direct influence over their company's retirement plan.

Feeling confused? I can help you understand this topic's complexities. Call me at 916-435-2100 or email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Investment advice offered through Smart Investor, a Registered Investment Adviser.