Most employers establish retirement plans with the best of intentions. Organizations seek to assist employees in saving for their future, attract top talent, and provide competitive benefits packages. However, once that 401(k) or 403(b) plan becomes operational, the regulatory reality becomes apparent.
As a plan sponsor, you assume fiduciary responsibility. Under the Employee Retirement Income Security Act (ERISA), this represents one of the highest standards of care recognized in law. It states that you must act solely in the best interest of plan participants. It also establishes specific obligations that, when neglected, result in substantial consequences, including personal liability.
As we navigate the business landscape of 2026, regulatory scrutiny remains elevated, and the complexity of plan management continues to evolve. Fiduciaries cannot afford passive management approaches.
The following analysis presents three common fiduciary mistakes observed among organizations, the underlying causes, and specific remediation strategies.
The most pervasive issue in plan management involves operational inertia. Many organizations establish a 401(k), select a provider, determine a fund lineup, and subsequently provide minimal ongoing attention. Years pass. The business expands, workforce demographics shift, and the economic environment evolves. Yet, the retirement plan remains static.
This passive management approach creates subtle yet compounding risks.
Fee inflation: Investment expense ratios and recordkeeping fees undergo changes. Without benchmarking fees within three years, organizations may be paying outdated rates in a current market environment, potentially diminishing participant savings.
Performance deterioration: A fund that demonstrated superior performance five years ago may currently underperform relative to peers or its benchmark. Without systematic review, you are defaulting employees into underperforming assets.
Plan misalignment: Your current workforce demographics may differ significantly from when the plan was established. If your plan design (matching contributions, vesting schedules, auto-enrollment features) has not evolved, you may be allocating resources toward benefits that do not effectively motivate current employees.
You must manage your retirement plan as a dynamic business component, not a static benefit offering.
Quarterly investment reviews: Conduct meetings with your investment advisor to evaluate the fund lineup. Monitor funds that demonstrate underperformance and replace those failing to meet criteria established in your Investment Policy Statement (IPS).
Annual fee benchmarking: Annually request comprehensive breakdowns of all plan costs. Compare these against industry averages for plans of comparable size. If your assets have grown, you may possess leverage to negotiate reduced fees.
Plan design assessment: Evaluate whether this plan structure remains appropriate for your organization. Are participation rates optimal? If not, consider implementing auto-features or alternative matching formulas.
In the assessment framework of the Department of Labor (DOL) and the IRS, process takes precedence over outcome. You can implement an investment decision that results in losses while maintaining protection, provided you can demonstrate adherence to a prudent process in reaching that decision. Conversely, you may achieve favorable results through a decision, but without documentation of your methodology, you remain vulnerable to challenge.
The mistake many committees make involves conducting thorough discussions while maintaining inadequate records.
Absence of meeting minutes means no historical rationale exists for fund replacement decisions
No monitoring policy suggests inadequate plan oversight
Consider documentation as your primary insurance policy. If an auditor reviews your operations, your files should comprehensively document your plan's management history without requiring verbal explanation.
Formalize meeting documentation: Designate a secretary for your retirement plan committee. Every meeting must generate minutes recording attendees, data reviewed, decisions made, and the rationale for those decisions.
Preserve reports: Beyond reviewing investment monitoring reports provided by your advisor, maintain digital and physical copies in a centralized compliance repository
Document education: When committee members attend fiduciary training or receive regulatory updates (such as SECURE 2.0 provisions), document that training. This demonstrates your commitment to maintaining requisite compliance.
Centralize documentation: Maintain permanent files for executed plan documents, amendments, board resolutions, and the Investment Policy Statement (IPS)
Engaging qualified advisors, recordkeepers, and third-party administrators (TPAs) represents prudent business practice. It is appropriate to delegate areas where you lack specialized insight. However, a dangerous misconception assumes that retaining professionals eliminates your responsibility.
You can delegate authority, but you cannot delegate ultimate responsibility. Under ERISA, you maintain a duty to monitor your service providers. If your advisor fails to perform adequately and you fail to identify this deficiency, you bear equivalent liability.
You require a systematic approach to evaluate professionals managing your plan.
Annual service provider review: Establish formal review processes for all vendors. Are they fulfilling obligations outlined in their service agreements?
Assess responsiveness and initiative: Does your advisor present new strategies? Do they respond promptly to inquiries? Or do you only receive communication during contract renewal periods?
Verify professional specialization: Does your advisor possess specific experience and team resources required for your plan size? As plans expand, they often exceed the capabilities of generalist advisors lacking specialized retirement plan focus.
Evaluate fee structure: Are advisor fees competitive for the service level provided? Fee compression is occurring across the industry; ensure you are not overpaying for outdated service models.
Why does this matter significantly in 2026?
The implications are twofold. First, there exists risk to the organization and its officers. Fiduciaries who fail to adhere to proper standards expose the company to audit risks, penalties, and potential class-action litigation regarding excessive fees or imprudent investments.
Second, and perhaps more significantly, there is the human impact. Your employees depend on this plan. For many, it represents their primary vehicle for retirement savings. If the plan is burdened by excessive fees or poor investments due to negligence, this directly reduces the compound interest working in their favor. Your organization depends on your effective management of this responsibility to ensure your workforce can eventually retire with financial security.
As we progress through 2026, evaluate your fiduciary responsibility management. Are you committing any of these mistakes?
Is your plan operating without active oversight?
Is your documentation inconsistent or non-existent?
Are you assuming vendor performance without verification?
If you answered affirmatively to any of these questions, you are not alone. These represent common challenges, but they are entirely addressable.
We have provided consultation on retirement plans for organizations for many years. We have extensive knowledge with effective and ineffective strategies. Your retirement plan can function as a strategic asset that helps attract talent and support your team—not a liability creating concern. Success begins with taking your fiduciary role seriously.
If you require assistance ensuring your plan is properly structured and your fiduciary obligations are fulfilled, we are available to provide guidance and support.
Peter Devlin is Vice President of Retirement Plan Services at Brown & Brown, where he advises corporate customers on retirement plan design, fiduciary governance, compliance, and participant education. He helps employers improve retirement outcomes, reduce costs, and attract and retain talent through thoughtful retirement plan advisory services combined with an integrated total employee benefits solution.
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