By Mark Olsen, Managing Director at PlanPILOT
Fulfilling fiduciary duties is the cornerstone of responsible retirement plan sponsorship. Under the Employee Retirement Income Security Act (ERISA), plan sponsors are legally obligated to act in the best interests of participants and their beneficiaries.
Failure to meet these obligations can lead to personal and plan sponsor liability, significant penalties, and costly litigation. With regulatory focus increasing, particularly concerning fee transparency and investment performance, a proactive, documented approach is essential.
At PlanPILOT, we understand the depth of the responsibilities plan sponsors face as well as the complications that can arise due to changing regulations and legislation governing retirement plans. In our view, regular review and upgrades go a long way in maintaining a sound and successful retirement plan.
Here is a practical guide for plan sponsors on raising their standard for fulfilling fiduciary duties in 2026.
Fiduciary Duties Checklist
Plan sponsors must adhere to five core fiduciary principles. These are the core of every quality design of policies and procedures
- Act solely in the interest of participants: The primary purpose must be providing benefits and paying reasonable expenses.
- Prudent person standard: Act with the care, skill, prudence, and diligence of a “prudent expert.”
- Follow plan documents: Operate the plan according to its legal documents, unless they conflict with ERISA.
- Diversify investments: Minimize the risk of large losses.
- Pay reasonable expenses: Confirm fees paid for services are necessary and reasonable.
Establishing and Running a Fiduciary Committee
Creating a formal committee is a best practice for managing fiduciary responsibility, allowing for collective decision-making and proficiency.
- Composition: Committees should typically have three to seven members, including representatives from finance, human resources, or leadership.
- Charter: Adopt a formal committee charter defining its purpose, authority, and responsibilities.
- Regular meetings: Meet quarterly, or at least semi-annually, to review investment performance, fees, and administrative tasks.
- Training: Conduct regular training for committee members to understand their duties and stay updated on regulatory changes, such as SECURE 2.0.
Documentation Best Practices
Because prudence is evaluated by the process rather than just the outcome, documentation is your best defense in an audit.
- Meeting minutes: Maintain detailed minutes for every meeting. Document what was discussed, data reviewed, decisions made, and the rationale behind them.
- Investment policy statement (IPS): Establish an IPS that outlines investment strategy, objectives, and benchmarks for monitoring performance.
- Service provider selection: Document the process for hiring, evaluating, and monitoring service providers, including RFP processes and fee benchmarking.
- Secure record retention: Keep records of all committee meetings, participant communications, and fee disclosures for at least six years.
Avoiding Common Fiduciary Pitfalls
Even well-meaning sponsors can fall into traps. Be aware of these common mistakes we often see in retirement plans:
- “Set it and forget it” investments: Failing to review the investment menu regularly, allowing underperforming or high-cost funds to remain
- Failing to benchmark fees: Not comparing plan fees (both direct and indirect/revenue sharing) to industry standards, resulting in overpayment
- Delayed contribution deposits: Failing to deposit employee deferrals on the earliest date they can reasonably be segregated from general assets; this is a high-risk area.
- Inadequate monitoring: Assuming that hiring a third-party administrator (TPA) or advisor removes all responsibility; sponsors must monitor the monitors.
- Ignoring operational defects: Failing to correct errors, such as missing a deadline for non-discrimination testing or ignoring participant complaints
Key 2026 Considerations
Taking steps now to review your plan can go a long way in heading off potential issues later in the year.
- SECURE 2.0 implementation: Verify your plan is updated to comply with SECURE 2.0 provisions, which have introduced new administrative, eligibility, and reporting requirements. Take note of changes from the One Big Beautiful Bill Act (OBBBA) legislation last year, one of which was the tax treatment of catch-up contributions.
- Data security: With the rise of cyber threats, fiduciaries are increasingly responsible for ensuring service providers have robust cybersecurity measures in place to protect participant data.
- Proactive oversight: As the regulatory environment becomes more complex, consider engaging an independent fiduciary professional to help with benchmarking and compliance reviews.
Summary
Fiduciary duty is a continuous process, not a one-time event. By establishing a dedicated committee, thoroughly documenting decisions, and proactively monitoring fees and performance, plan sponsors can minimize risk and provide a high-quality retirement benefit to their employees. Seeking guidance from an experienced plan consultant can help plan sponsors navigate changes to regulations and requirements and streamline their oversight responsibilities.
How Robust Is Your Plan Oversight?
At PlanPILOT, we’re creating the standard for client experience. Independent and impartial by design, we apply our skill to each facet of plan development, governance, and implementation to help you enjoy meaningful results. Our client partnerships are built on trust, communication, and responsibility—cornerstones of a healthy, prosperous relationship. We’re committed to providing objective guidance, informed innovation, and an integrated approach tailored to your unique objectives.
Our team of seasoned professionals upholds the highest professional standards, so every strategy we recommend aims to support both your organization and the participants who depend on it.
Reach out to us at (312) 973-4913 or send an email to mark.olsen@PlanPILOT.com to learn more about how we can customize our services and your plan to fit your unique needs.
About Mark
Mark Olsen is the managing director at PlanPILOT, an independent retirement plan consulting firm headquartered in Chicago. PlanPILOT delivers comprehensive retirement plan advisory services to 401(k), 403(b), and 457 plan sponsors. His specialties include plan governance, investment searches, investment monitoring, and plan oversight. Mark is recognized as a leader in the industry and speaks at national conferences, including those organized by Pensions & Investments, and CUPA-HR.