The Human Interest Team
We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.
Trustees are required
All 401(k) plans are required to have a plan trustee. The Trustee may be a professional trust company or bank, or one or more individuals appointed by the plan sponsor and who agree to assume the Trustee role. Company employees must serve as Trustees without compensation. Professional Trustees will charge a fee for their services.
How is a Trustee different from an Investment Fiduciary?
The federal law that governs 401(k) and other pension plans, called ERISA, sets out the duties of the plan fiduciaries, including those of the Trustee and Investment Fiduciary. The Trustee is generally responsible for managing and accounting for a plan’s assets. The Investment Fiduciary is responsible for selecting investments or appointing a professional investment manager, such as Human Interest Advisors, to select the menu of available investments. These two roles of Trustee and Investment Fiduciary may, but are not required to be, filled by the same person.
What are the Trustee’s duties?
The Trustee is generally responsible for managing and accounting for a plan’s assets but it may delegate some of these responsibilities to service providers, as long as it monitors the service provider to ensure it is performing the required services appropriately. ERISA permits the Trustee to be indemnified by the plan sponsor if the Trustee makes honest mistakes fulfilling its responsibilities.
Here is an overview of the duties a Trustee is responsible for:
It is important to understand the difference between being responsible for and performing the above tasks/duties. Although the custodian, Matrix Trust Company, and Human Interest perform these activities, the Trustee could still have liability to the extent the duties above are not fulfilled properly.
What are the Investment Fiduciary’s duties?
The Basic Plan Document requires the plan to name an Investment Fiduciary. If an Investment Fiduciary is not named, the Plan Sponsor is the Investment Fiduciary.
The Investment Fiduciary may appoint a “3(38) Investment Manager” as defined in ERISA to assume responsibility for selecting the plan’s fund line-up. If Human Interest is hired as a 3(38) Investment Manager, the fiduciary responsibility for investments is delegated to Human Interest.
As an alternative, the Investment Fiduciary may appoint a “3(21) Investment Advisor” as defined in ERISA to share the fiduciary responsibility for selecting the plan’s fund lineup. Both the 3(21) Investment Advisor and the Investment Fiduciary share the fiduciary responsibility in this case.
This overview is meant to be a user-friendly summary of very complicated legal rules. It is provided as a guide for plan sponsors and trustees. It is not intended to be, nor is it a substitute for legal advice from an attorney.
* Applies to all transaction types. For non-rollover distributions, shipping and handling fees may apply to requests for check issuance and delivery.
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The Human Interest TeamWe believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.
