As the employer sponsoring a 401(k) plan, you are legally responsible for ensuring the plan is operated in compliance with IRS and Department of Labor (DOL) regulations. Understanding the various roles and responsibilities of plan fiduciaries is essential to keeping your plan compliant and protecting both the business and its employees.

Even when tasks are delegated, the Plan Sponsor retains ultimate responsibility for ensuring all fiduciaries and service providers are performing their roles correctly and in the best interest of plan participants. This article outlines your responsibilities and explains the roles of optional and required plan partners.

Who This Applies To

This article is for employers, plan sponsors, and administrators responsible for managing a 401(k) plan.

Fiduciary Roles Explained

In small businesses, it’s common for the business owner to serve as the sole fiduciary, fulfilling the roles of Plan Sponsor, Administrator, and Trustee. However, the Plan Sponsor may appoint other individuals or service providers —to carry out specific duties. Here’s how they differ:

Plan Sponsor (Employer)

  • Owns the plan and is the primary fiduciary
  • Ensures the plan remains compliant and qualified under IRS rules
  • May designate others to carry out administrative duties

Plan Administrator (Appointed by Plan Sponsor)

  • Handles day-to-day plan compliance and administration
  • Submits accurate employee and payroll data
  • Authorizes distributions, rollovers, and other plan activity

Plan Trustee (Appointed by Plan Administrator or Plan Sponsor)

  • Oversees and protects plan assets
  • Acts in the best interest of plan participants
  • Ensures investments are prudent and records are accurate
  • Facilitates audits and works with service providers to meet fiduciary standards
  • There MUST be at least one U.S. person named as trustee of a 401(k) plan. Ubiquity allows 2 named trustees to be listed in our system.

All fiduciaries are expected to:

  • Sign forms and authorizations promptly
  • Understand their legal obligations under ERISA
  • Acknowledge that investment choices are client-directed (Ubiquity does not act as an investment manager or provide investment advice)

Responsibilities of the Plan Administrator

While tasks may be delegated, the Plan Administrator—and ultimately the Plan Sponsor—is still responsible for ensuring they are completed accurately and on time. For example, if the Head of HR (as Plan Administrator) assigns an HR clerk to submit deferrals, they are still liable if deposits are late. In an audit, penalties and interest may apply, regardless of who performed the task. Delegating duties does not remove fiduciary responsibility.

1. Maintain Accurate Employee Data

Accurate employee records are critical for eligibility tracking, contribution limits, and IRS reporting. You must:

  • Enter all active employees in the system before your first payroll is processed.
  • Add new hires before deductions begin.
  • Update terminated employees promptly:
    • Go to Employees 
    • Click the Employee Name 
    • In the Employment pop-up module click Mark them as terminated
    • Select the reason for termination in the drop down
    • Add the termination date
    • Click Terminate

2. Submit 401(k) Contributions Each Pay Period

Submit employee and employer contributions every payday—or as soon as administratively possible afterward. Each upload should include:

  • Compensation for all active employees
  • Actual hours worked (salaried employees should be reported as 40 hours/week)

If your payroll provider is integrated with Ubiquity, this process may be handled automatically.

3. Send Funds to the Custodian (if not using ACH)

If you’re not using ACH to transmit contributions:

  • You must manually send funds to your plan’s custodial account
  • Deposit instructions can be found under 401(k) Plan Settings > Documents & Forms

4. Assist with Rollovers, Loans, and Withdrawals

As the Plan Sponsor or Administrator, you may need to review and approve requests for:

  • Rollovers into the plan
  • Participant loans
  • In-service or post-termination withdrawals

5. Comply with IRS Requirements

To maintain your plan’s qualified status, you must support IRS-required reporting and testing.

At year-end, Ubiquity will ask you to confirm:

  • Employee demographic data (regardless of participation)
  • Compensation and hours worked
  • Contribution amounts

Accurate data throughout the year makes this process easier. You are also required to review and sign IRS filings, such as Form 5500.

6. Distribute Account Statements Quarterly

ERISA Section 105 requires that participants receive account statements at least once per quarter.

  • Ubiquity provides online, on-demand statements to meet this requirement.
  • If your employees do not have guaranteed internet access, you must provide paper statements.

Who Supports Your Plan

Ubiquity Retirement + Savings – Recordkeeper

Ubiquity serves as your plan’s recordkeeper. Our role includes:

  • Tracking contributions and balances for all participant accounts
  • Submitting trades to your plan’s custodian
  • Administering loan and distribution processing
  • Completing annual compliance testing and IRS reporting
  • Supporting fiduciaries and participants with plan-related questions

Plan Custodian

The custodian is responsible for safeguarding plan assets and executing financial transactions. Their role includes:

  • Executing trade instructions from Ubiquity
  • Processing distributions and issuing checks
  • Reporting distribution activity to the IRS

Third Party Administrator (TPA)

The TPA ensures your plan is administered in compliance with IRS and ERISA rules.

  • If you have a full-service plan with Ubiquity, we act as your plan’s TPA and will handle the following tasks:
    • Support plan design and document preparation, including amendments and restatements
    • Perform annual compliance testing
    • Prepare required IRS filings such as Form 5500
    • Oversee operational compliance
    • Generate required plan notices
  • If you’re using Ubiquity for recordkeeping services only, you are required to onboard a separate TPA who will perform these tasks.

Financial Advisor (Optional)

While not required, a plan trustee may choose to work with a financial advisor to provide fiduciary support or help select and monitor your plan’s investment lineup. Advisors typically operate in one of two fiduciary capacities under ERISA:

ERISA 3(21) Investment Advisor

  • Shares fiduciary responsibility with, and mitigates some of the liability for, the plan trustees
  • Provides expertise and guidance and helps ensure the plan offers prudent investment options but the trustee retains final decision-making authority
  • Assists in developing and maintaining your Investment Policy Statement (IPS)

ERISA 3(38) Investment Manager (Full Discretion)

  • Takes on full discretionary authority over the plan’s investments
  • Selects, monitors, and replaces funds without requiring trustee approval
  • Relieves you of fiduciary responsibility for day-to-day investment decisions

Tip: If you prefer hands-on involvement in investment decisions, a 3(21) advisor may be right for you. If you prefer to fully delegate investment decisions to a professional, consider a 3(38) fiduciary.

Need Help?

For more details, refer to the Plan Administrator Guide.

If you need assistance, please contact us.