Your duties as a plan sponsor
The core fiduciary duties, and where plans commonly slip.
What ERISA asks of plan fiduciaries, and six areas where plans commonly need correction.
Core fiduciary duties for plan sponsors
The Department of Labor’s Meeting Your Fiduciary Responsibilities lists the basics. Plan fiduciaries must:
- Act solely in the interest of participants and beneficiaries, for the exclusive purpose of providing benefits
- Carry out their duties prudently
- Follow the plan documents, unless they conflict with ERISA
- Diversify plan investments
- Pay only reasonable plan expenses
Prudence is judged mainly by process, which is why the DOL encourages documenting decisions and the reasons for them. Deciding to start, amend or end a plan and choosing its benefits are business decisions; carrying them out is fiduciary work.
Mistakes can often be fixed. The DOL’s Voluntary Fiduciary Correction Program covers late deposits and other errors, and the IRS has its own correction programs. Work with your TPA or ERISA counsel.
Six common pitfalls
- Late payroll deposits. Employee deferrals must reach the plan as soon as they can reasonably be separated from company assets, and no later than the 15th business day of the following month. Plans with fewer than 100 participants have a 7-business-day safe harbor.
- Fee disclosures filed, not read. Under ERISA section 408(b)(2), covered service providers must disclose their services and compensation in writing. The responsible fiduciary uses them to judge whether fees are reasonable.
- Missing participant disclosures. In participant-directed plans, plan and investment fee information must go to participants before they first invest and annually after that, with fees actually charged shown at least quarterly (DOL rule 404a-5).
- Form 5500 deadlines. The annual return is generally due by the last day of the 7th month after the plan year ends, which is July 31 for calendar-year plans. Extensions are available.
- ERISA fidelity bond. People who handle plan funds generally must be bonded for at least 10% of the funds handled, with a $1,000 minimum and generally a $500,000 maximum per plan ($1,000,000 if the plan holds employer stock).
- Plan document out of step with practice. Using a different definition of pay, eligibility date or match formula than the document says. The DOL recommends reviewing the document periodically.
Sources: DOL: Meeting Your Fiduciary Responsibilities · DOL 408(b)(2) fact sheet · DOL participant fee disclosure fact sheet · DOL ERISA fidelity bond guide · Form 5500 instructions.
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Sources
- U.S. Department of Labor, EBSA: Meeting Your Fiduciary Responsibilities
- DOL fact sheet: Service provider disclosures under ERISA section 408(b)(2)
- DOL fact sheet: Fee and expense disclosures to participants (404a-5)
- DOL: Protect Your Employee Benefit Plan With an ERISA Fidelity Bond
- DOL: 2025 Instructions for Form 5500
Important disclosures
This page is general education about employer-sponsored retirement plans. It is not legal, tax or ERISA compliance advice and does not recommend any plan type, investment or provider for a particular employer. Plan rules, contribution limits and tax credits change, and eligibility depends on your facts; consult your ERISA counsel, third-party administrator and tax adviser.
Investing involves risk, including possible loss of principal. A retirement plan advisor or investment manager cannot eliminate investment risk or a plan sponsor’s fiduciary responsibilities. Strong Tower Advisors is not affiliated with or endorsed by the U.S. Department of Labor or the IRS.
Employer-plan services disclosure. Investment advisory and fiduciary plan-advisor services are provided through TLG Advisors, Inc. (a Simplicity company), an SEC-registered investment adviser. Strong Tower Advisors and TLG Advisors are separate and unrelated companies. 3(38) investment management and 3(16) plan administration are typically provided by contracted plan providers, money managers and TPAs; specific roles are established through written agreements. Compensation, costs, who pays and conflicts of interest are disclosed in the applicable plan service-provider disclosures and engagement agreements; not all services are free.
Prepared by Strong Tower Advisors for general education about employer retirement plans. Rule-based content is linked to primary public sources (IRS, U.S. Department of Labor and Federal Register) and is reviewed periodically because plan limits and regulations change.
About Strong Tower Advisors · Editorial and sourcing standards · Last reviewed October 2026