by Eric Bruns, CFP®
When it comes to managing a 401(k) plan, there’s more to it than just picking a few funds and calling it a day. For many employers, the intricacies of managing these plans can be daunting, especially when faced with the legal and ethical responsibilities that come with them. That’s where a 3(38) Fiduciary can make all the difference.
What is a 3(38) Fiduciary?
First, let’s clarify what a 3(38) fiduciary is – under the Employee Retirement Income Security Act of 1974 (ERISA), a 3(38) Fiduciary is an investment manager who has full discretion to make decisions about a retirement plan’s investment options. They are responsible for selecting and monitoring the plan’s investment options as needed.
But here’s the kicker: they also take on legal responsibility for those decisions. So, if you’re an employer sponsoring a 401(k) plan, bringing on a 3(38) Fiduciary doesn’t just mean delegating the work – you’re also offloading the legal burden to someone with the expertise and authority to handle it.
Why is this important?
Imagine your 401(k) plan as a complex machine. As the owner (the employer), you want it to run smoothly, but it’s made of many intricate parts that need expert care. A 3(38) Fiduciary is like a master mechanic. They don’t just understand how each part works; they fine-tune the machine, ensuring everything operates seamlessly. Importantly, they take responsibility if anything goes wrong.
By hiring a 3(38) Fiduciary, you’re helping your 401(k) run at peak performance, allowing you to focus on your business while they handle the critical maintenance.
The legal and ethical safety net
One of the biggest benefits of having a 3(38) Fiduciary is the legal protection it offers. As an employer, you already have enough on your plate without worrying about potential lawsuits over the management of your retirement plan. A 3(38) Fiduciary assumes legal liability for investment decisions, reducing your risk of being held responsible for any missteps.
But it’s not just about legal protection—it’s about doing right by your employees. After all, they trust you to provide them with a solid retirement plan, and a 3(38) Fiduciary can help ensure that trust is well-placed. They’re bound by a strict code of ethics to act in the best interest of the plan participants, so your employees can feel confident that their financial future is in good hands.
Final thoughts
In the world of 401(k) management, there are plenty of decisions to be made. Opting for a 3(38) Fiduciary can be a smart move. It’s about more than just offloading responsibilities—it’s about ensuring that your retirement plan is managed with the highest level of care, expertise, and integrity.
So why settle for anything less? At Fortis Wealth Management, we’re here to help you make the best choices for your plan and your employees. Let’s work together to provide the protection and peace of mind that everyone deserves.