Creating and Maintaining a 401(k) Fiduciary File
401(k) Fiduciary Files
As a plan sponsor, you are responsible for ensuring that your 401(k) plan complies with all applicable laws and regulations, including those related to fiduciary responsibility. One important aspect of fulfilling your fiduciary duties is creating and maintaining a 401(k) fiduciary file. Building and maintaining a fiduciary file is not required, but it is best practice. Here are a few things to know about fiduciary files.
What is a 401(k) fiduciary file?
A 401(k) fiduciary file is a collection of documents that provides evidence of your compliance with your fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA). ERISA requires plan sponsors to act prudently, in the best interest of the plan participants, and to diversify plan investments. A fiduciary file helps demonstrate that you have fulfilled these obligations and provides a record of your decision-making processes.
Maintaining a fiduciary file is also helpful when plan fiduciaries leave a company or pass fiduciary responsibilities to others. By retaining a fiduciary file, new plan fiduciaries can review past decisions and understand processes.
Creating a 401(k) fiduciary file
To create a 401(k) fiduciary file, organize your plan documents, such as your basic plan document, adoption agreement, summary plan description, and any amendments or restatements. Next, include 401(k) plan administration documents, such as your plan's trust agreement, investment policy statement, meeting minutes, a copy of the fidelity bond, and service provider agreements.
You should also include documents related to your plan's investments, such as investment performance reports, prospectuses, and due diligence reports. Additionally, you should have any records of participant communication, such as enrollment materials, education materials, and plan notices.
Maintaining a 401(k) fiduciary file
Once you have created your 401(k) fiduciary file, you should establish a process for maintaining it. Maintaining a fiduciary file includes:
Ensuring all documents are up to date.
Adding new documents as necessary.
Removing outdated documents.
It's essential to regularly review and update your fiduciary file to ensure that it accurately reflects your plan's current status and compliance with ERISA. You should also ensure that the fiduciary file is accessible to those who need it.
401(k) Advisors Can Help Maintain Your Fiduciary File
401(k) advisors can be helpful when it comes to building and maintaining a fiduciary file. 401(k) advisors can provide resources to help organize your fiduciary file. Your 401(k) advisor may have access to most of the documents you would want to have in your fiduciary file. They may even help you organize the file as part of their service agreement. For example, at CUI Wealth Management, we help clients maintain a fiduciary file through a cloud-based sponsor portal.
Conclusion
Creating and maintaining a 401(k) fiduciary file is essential to fulfilling your fiduciary responsibilities as a plan sponsor. A well-organized fiduciary file can help you demonstrate compliance with ERISA and provide a record of your decision-making processes. In addition, by establishing a method for creating and maintaining your fiduciary file, you can ensure that your 401(k) plan complies with applicable laws and regulations.
Please set up a consultation if you need help reviewing your fiduciary file. Though CUI Wealth Management is located in Salt Lake City, Utah, we serve clients in many states. Please see the website footer for a complete list of states we serve.