401k Generation Inc

Three acronyms every plan sponsor should know.

All three come from ERISA. Each describes a different fiduciary role. The difference is where the liability sits.
→ 3(16) Plan Administrator: day-to-day plan operations, Form 5500, distributions, compliance testing. If no one is named, the plan sponsor is responsible by default.
→ 3(38) Investment Manager: full discretionary authority to select, monitor, and replace investments. Signs on as fiduciary in writing. Without one, the sponsor carries the investment liability.
→ 3(21) Investment Advisor: non-discretionary; offers advice but doesn't act unilaterally. The plan sponsor retains decision authority and liability.

Most "401(k) advisors" are 3(21)s. That's not bad, it just means the liability isn't actually transferred. If your plan documents don't name a 3(16) AND a 3(38), the structural protection isn't there regardless of how much you trust your advisor.

If you're a business owner, HR director, or CFO who sponsors a plan, save this, and share it with your benefits team.

For broader financial planning questions regarding estate, trust, personal wealth — that's what our wealth management team focuses on. Contact us any time.

Most business owners we work with set up an excellent 401(k) for their team, and then underplan their own retirement.

It makes sense. The business IS the retirement plan. The exit IS the strategy. You'll worry about it when you sell.

Here's the math that surprises people: the median business owner sells for less than they expect, in a longer timeline than they planned, and with more tax exposure than they modeled. Counting on the business sale to fund retirement, without a parallel personal wealth plan, is one of the most common *and most expensive* assumptions we see.

What we help business owners do, separate from their 401(k):

→ Build a personal investment portfolio that doesn't depend on the business
→ Model retirement income from multiple sources (not just the eventual sale)
→ Tax-strategize the eventual transition (the difference between strategies can be six figures)
→ Plan for the "what if I want out earlier than I thought" scenario

If you sponsor a 401(k) for your team but haven't sat down for your own wealth review in 2+ years, that's the most common gap we see in business owner financial planning.

Contact us today to start a conversation.

Mid-year is the most underused window for 401(k) plan sponsors.

Q1, you're closing prior-year compliance testing. Q3 is open enrollment prep. Q4 is renewal season. June is the one quarter when most plans drift on autopilot, and the best window to catch issues before they become Form 5500 disclosures.

Five questions every plan sponsor should be able to answer right now:
1. When was your investment menu last formally reviewed by your 3(38)?
2. Are your fund expense ratios competitive vs. comparable plans?
3. Has your participation rate dipped — and if so, why?
4. Are you on schedule for Form 5500 filing (due July 31 for calendar-year plans)?
5. Have you documented every fiduciary decision your committee made in the last 12 months?

If you can't confidently answer 2 or more, connect with us today.
https://www.401kgeneration.com/contact