Your recordkeeper may not be your fiduciary

Many business owners assume the recordkeeper is responsible if something goes wrong in the 401(k). In most plans the responsibility sits with the employer. Here is what that means and how to check.

The Department of Labor closed 878 civil investigations of benefit plans in fiscal year 2025. 63% ended with money restored or a required correction.* Those figures cover retirement and health plans of every size.

When I ask a business owner who is responsible if something goes wrong in their 401(k), the usual answer is the recordkeeper. In many plans, that is not the case.

What a recordkeeper does

The recordkeeper is the company whose name is on the website and the statements. It processes contributions, keeps each employee's account, handles loans and distributions, and produces reports.

That is administrative work, and it matters. But it generally does not include the duty to run the plan in the employees' interest. Most recordkeeping agreements say so directly.

What a fiduciary is

Under ERISA, a fiduciary is anyone with authority over how the plan is run or how its money is invested. A fiduciary has to act in the interest of the participants, with the care a knowledgeable person would use, and has to follow the plan document.

The company that sponsors the plan is typically the named fiduciary. In practice that means the owner, the officers, or a committee the company appoints.

What stays with the employer

The employer's fiduciary duties usually include:

• Choosing the plan's service providers and checking on them over time.
• Choosing and reviewing the investment menu.
• Knowing what the plan pays in fees and that the fees are reasonable.
• Getting employee contributions into the plan on time.
• Following the plan document, including who is eligible and when.

Most problems that turn up in a review are ordinary ones: contributions deposited late, an eligibility rule applied wrong, a fee nobody had looked at in years.

The risk can be shared

This does not mean the employer has to do everything alone. The right advisor and service providers can take on part of the responsibility and much of the work. A documented process, with regular reviews and written records of decisions, can help lower the odds that something slips.

What cannot be handed off is the duty to choose those partners carefully and keep an eye on them. Hiring help reduces the load. It does not remove the employer from the picture.

There is a tradeoff. Providers who accept fiduciary responsibility usually charge for it, and the employer still has to review their work. The value depends on the plan and on how much time the employer can give it.

How to check your own plan

1. Review your service agreements. Search each one for the word "fiduciary." Note who accepts that role in writing, and for which tasks.
2. List who decides what. Who picks the funds? Who approves fees? Who makes sure deposits are on time?
3. Look for a record. Is there a file showing when the investments and fees were last reviewed, and what was decided?

If the answer to any of these is "I assumed the recordkeeper did that," that is the place to start.

This is not a reason to panic. It is a reason to know what you own.

If you would like someone to read the agreement with you, request a plan review.

*Source: U.S. Department of Labor, Employee Benefits Security Administration, fact sheet for fiscal year 2025, released January 30, 2026.