Who is a fiduciary under ERISA?

Anyone with discretionary authority over plan assets, administration, or investment decisions — including owners, officers, and HR leaders named in the plan document — is an ERISA fiduciary, regardless of title.

Can I be held personally liable for 401(k) plan losses?

Yes. ERISA §409(a) makes a breaching fiduciary personally liable to make good any losses to the plan. That liability is personal, not corporate, and personal assets can be reached.

Does hiring a 3(21) Adviser remove my liability?

No. A 3(21) Adviser recommends investments while the plan sponsor approves them and retains investment fiduciary liability. Only a 3(38) Investment Manager with discretion accepts that liability in writing.

What liability do I keep after appointing a 3(38) Investment Manager?

You retain the duty to prudently select and monitor the 3(38) Investment Manager, plus your remaining administrative fiduciary duties. Liability for individual investment selections shifts to the manager.

Does fiduciary liability insurance cover this exposure?

An ERISA fidelity bond covers theft, and fiduciary liability insurance can cover defense costs, but neither eliminates your fiduciary duty. Delegating investment discretion to a 3(38) manager reduces the underlying exposure.

Plan Sponsor Education

The fiduciary liability sitting on the owner's desk.

If your name is on the plan document as trustee or "named fiduciary," ERISA holds you personally responsible for prudent investment decisions. Personal assets — home, savings, business equity — can be reached to make participants whole.

ERISA §409

Personal liability for plan losses

ERISA §409(a) states that any fiduciary who breaches their duties "shall be personally liable to make good to such plan any losses to the plan resulting from each such breach." That's not corporate liability. It's personal.

The four fiduciary duties

What ERISA actually requires

Duty of Loyalty

Act solely in the interest of participants — not the company, not the recordkeeper.

Duty of Prudence

The 'prudent expert' standard: act with the care of someone familiar with such matters.

Duty to Diversify

Minimize the risk of large losses through appropriate diversification.

Duty to Follow the Plan

Follow the plan document — and monitor whether it still fits the workforce.

3(21) vs 3(38)

Advice vs. discretion

	3(21) Adviser	3(38) Investment Manager (third party)
Investment decisions	Recommends — you approve	Decides on your behalf
Fiduciary liability	Shared — you retain most	Transferred in writing
Ongoing monitoring	Advises; you must act	Manager acts prudently
What you retain	All investment liability	Duty to prudently hire & monitor the 3(38)

Learn more about 3(38) Investment Manager services
Compare 3(16) vs 3(21) vs 3(38) fiduciary roles

Our commitment

We arrange for an independent third-party 3(38) Investment Manager — through the RFM 401(k) Maneuver PEP — to accept discretionary fiduciary status in writing for every plan we advise.

We serve as your 3(21) Adviser. As a fee-only Registered Investment Advisor, we take no commissions and are legally obligated to act in your participants' best interest.

Talk to a fiduciary advisor

Educational content — not legal, tax, or investment advice. Consult your ERISA counsel for guidance on your specific plan.

Liability FAQ

Common questions about ERISA fiduciary liability

Who is a fiduciary under ERISA?: Anyone with discretionary authority over plan assets, administration, or investment decisions — including owners, officers, and HR leaders named in the plan document — is an ERISA fiduciary, regardless of title.
Can I be held personally liable for 401(k) plan losses?: Yes. ERISA §409(a) makes a breaching fiduciary personally liable to make good any losses to the plan. That liability is personal, not corporate, and personal assets can be reached.
Does hiring a 3(21) Adviser remove my liability?: No. A 3(21) Adviser recommends investments while the plan sponsor approves them and retains investment fiduciary liability. Only a 3(38) Investment Manager with discretion accepts that liability in writing.
What liability do I keep after appointing a 3(38) Investment Manager?: You retain the duty to prudently select and monitor the 3(38) Investment Manager, plus your remaining administrative fiduciary duties. Liability for individual investment selections shifts to the manager.
Does fiduciary liability insurance cover this exposure?: An ERISA fidelity bond covers theft, and fiduciary liability insurance can cover defense costs, but neither eliminates your fiduciary duty. Delegating investment discretion to a 3(38) manager reduces the underlying exposure.