And Why It Still Falls on You

There’s an old video floating around where a fund rep walks around a financial conference asking attendees, “What’s a fiduciary?” The answers range from awkward stammering to full-on guessing. These are industry people. And they still don’t know.

That’s the problem.

The word gets thrown around constantly. It’s on every advisor’s brochure, in every bundled provider’s sales deck—but almost nobody is willing to say what it actually means, who really holds it, and what happens when it gets ignored.

If you really want the IRS’s version, you can read it here—but don’t expect clarity or candor.

There are a few specific fiduciary roles in the 401(k) world—and a few ways to end up as one without even realizing it:

• 3(21) Investment Fiduciary — “Help me do it.” You give advice, but the client makes the final decision.
• 3(38) Investment Fiduciary — “Do it for me.” You make discretionary investment decisions on behalf of the plan.
• 3(16) Administrative Fiduciary — Responsible for day-to-day plan operations (like approving loans, signing 5500s, managing eligibility).
• Named or Functional Fiduciary — If you’re listed in the plan document or acting like a fiduciary (e.g., approving investments, controlling money movement), you’re treated like one. The DOL doesn’t care what your title says.

But at its core, being a fiduciary means this:

If you have the ability to make investment decisions, control plan assets, or impact how money moves into or out of the plan—you’re on the hook.

And yes, signing the 5500 puts a target on your back, even if you didn’t know what the form meant.

You Can Delegate—but Not Escape

You can delegate pieces of fiduciary responsibility to professionals—called prudent experts—but if you’re a business owner, trustee, or a named plan fiduciary, you can never fully offload it.

Someone always has to be watching the watchmen.

It’s not something to ignore. And it’s not something to “kick the can” on until next quarter. Because when there’s an issue, these things snowball fast.

Things I’ve Personally Seen Go Wrong:

• Eligibility Failures: Plan sponsor excludes eligible employees because “this was just for me and my spouse.” Totally illegal.
• Unsupervised Self-Direction: Sponsor hands a participant a brokerage account with no oversight—participant loses everything. They sued. And they won.
• No Investment Oversight: Like the Tibble vs. Edison case—plans left on autopilot with bloated fees and poor performance.
• Botched Match Contributions: Company gets sold and has to hold $100,000 in escrow because matching was mishandled. Fixing it cost $50,000.
• Family-Run Plan Gone Off the Rails: One plan had 3 participants (doctor, wife, sister), over $3M in assets, and zero compliance. Bought a house, a car, funded a kid’s film career, paid no withholding taxes. If the IRS ever audits it? Felonies.

None of this is theoretical. I’ve seen it up close.

Here’s the Fix: A Process

All of this—every horror story—was preventable. Not through a flashy new platform or another outsourced “solution,” but by having a real, documented process.

That means:

• Regular reviews of plan investments
• Monitoring eligibility, match, and deposit timing
• Clarity on who’s doing what—especially if you have a payroll provider, recordkeeper, TPA, and advisor all pointing fingers
• Actually reading your plan document (or working with someone who has)

The Reality:

If your plan gets sued over investments, I’m the one standing next to you in court. That’s not just a metaphor—fiduciaries can be held personally liable for plan failures. Fines, repayment, even removal. It’s serious. And yes, business owners and plan sponsors often bear the brunt if things go wrong. That’s what being a fiduciary means—not a logo, not a title, but actual responsibility.

I don’t run from that. I’m built for it.

If you’re unsure where your risk lives—or whether anyone’s actually watching the plan—let’s take a look.

📞 619-942-4510
📧 jason@missionretirementplans.com

Disclosures: I’m an independent advisor and fiduciary. I provide oversight, advice, and risk management for 401(k) plans—without bundled incentives or commission-based conflicts. This isn’t theory. It’s what I do.

We work with employers across California—including San Diego, Los Angeles, Orange County, Sacramento, and the Bay Area.