Bundled service

What’s included in bundled 401(k) services?

When setting up a retirement plan, plan sponsors can choose between bundled and unbundled providers. A bundled provider offers most services of a 401(k) plan in a single package. By choosing a bundled approach, you avoid the task of managing separate vendors for recordkeeping, third-party administration, investment management, and plan custodian duties.

What’s included in unbundled 401(k) services?

Unbundled providers allow you to piece together services from different providers. While this approach offers flexibility, managing multiple providers may require additional time and resources. In contrast, a typical bundled package can help handle time-consuming tasks like recordkeeping—tracking participant accounts and transactions—and annual compliance testing to ensure your plan does not unfairly benefit certain employees.

Fiduciary responsibilities of bundled vs unbundled 401(k)

Choosing between bundled and unbundled solutions may impact how much fiduciary risk and administrative burden remains with the employer versus being delegated to a third party.

• With an unbundled 401(k), you piece together and manage individual contracts for different services, such as recordkeeping, third-party administration, and plan custody. This may make managing individual services potentially more time-consuming, depending on the level of fiduciary responsibility you are willing to assume.
• Bundled 401(k) providers consolidate services into a single package and frequently allow employers to offload significant fiduciary duties. A comprehensive bundled provider can assume select 3(16) fiduciary responsibilities, meaning they take on day-to-day plan administration tasks and maintain compliance to help reduce your liability.

Bundled solutions may include the option to select 3(38) fiduciary investment services. Under this arrangement, the provider assumes the fiduciary responsibility for selecting, monitoring, and managing the plan's investment options, limiting a plan sponsor’s financial risk.

—

Human Interest Inc. is an affordable, full-service 401(k) and 403(b) provider that seeks to make it easy for small and medium-sized businesses to assist their employees with investing for retirement. For more information, please visit humaninterest.com.