Retirement Plan Recordkeeping / Fiduciary Responsibilities

Recordkeeping is the backbone of employee retirement plans. It ensures that contributions are tracked accurately, investments are properly managed, and employees can confidently monitor their progress toward retirement. But these days, industry consolidation is reshaping who performs this critical function. Providers are increasingly exiting this line of work and transferring recordkeeping to others.

If your business sponsors a 401(k) or other retirement plan, your provider’s decision to sunset its recordkeeping platform is more than a back-office change. It can have wide-ranging impacts on you and your team — from changing costs and services to participant engagement.

Most importantly, this change can trigger fiduciary responsibilities: You’ll need to reassess your company retirement plan.

What Recordkeeper Changes Can Mean for Employers
When a recordkeeper exits the business, plan sponsors are often presented with a default transition to another provider. While this may appear to be the simplest path forward, there are risks in assuming the “automatic” choice is the right one.

• Potential disruption: Data migration, system conversions, and participant communications all carry potential pitfalls. If not carefully managed, your employees may experience delays or confusion.
• Costs and fees: A new provider may come with a different pricing model, affecting the economics of your plan.
• Services and features: Not all service providers are created equal. Some offer cutting-edge technology, robust participant tools, and responsive service – others may not.

Bottom line: A provider change is an important time to ask, Is this new arrangement in the best interest of our plan and participants?

Understanding Your Fiduciary Responsibilities
The Employee Retirement Income Security Act (ERISA) sets a high bar for businesses overseeing retirement plans. When a service provider such as your recordkeeper is changing, you have a few essential responsibilities:

1. Prudence: Sponsors must carefully evaluate partners to ensure fees are reasonable and services meet the plan’s needs.
2. Loyalty: Every decision must prioritize the interests of plan participants and beneficiaries over any other consideration.
3. Documentation: If a dispute arises in the future, a well-documented evaluation of your plan’s recordkeeper can demonstrate to authorities that you selected this service provider with care.

In short, allowing a plan to transition without due diligence could expose plan sponsors to fiduciary risk.

Reassessing Your Plan  
When your retirement plan encounters a major change such as a transition to a new recordkeeper, it’s wise to follow a structured checklist to evaluate both your provider and your plan as a whole. Consider key items such as:

• Fees and pricing: Compare direct and indirect costs, and benchmark against industry peers.
• Provider capabilities: Assess accuracy, reporting, technology platforms, and customer service.
• Investment menu: Confirm that investment choices remain diversified, appropriate, and cost-effective.
• Plan design and features: Consider whether auto-enrollment, auto-escalation, or matching structures are aligned with participant needs.
• Participant communications: Ensure employees will receive clear, accessible updates and education during the transition.
• Compliance and documents: Align plan documents with any regulatory or provider changes.
• Governance: Ensure the plan committee or fiduciary body has documented oversight and a clear decision trail.

By working through this checklist, sponsors can turn an unplanned transition into a disciplined review of their plan’s overall health.

Risks of Inaction
Failing to review a recordkeeper transition can carry consequences. Overlooked costs and weak service can quietly erode retirement outcomes, create negative experiences for participants, and reduce engagement over time.

From a legal perspective, plan sponsors who accept a hand-off without proper review could be exposed to fiduciary challenges if fees are unreasonable or services inadequate.

For businesses, passively accepting the “default” option is not the safe bet — it can expose sponsors to greater risk than proactively evaluating alternatives.

From Disruption to Opportunity
A recordkeeper transition is a chance to enhance your business’s retirement plan and strengthen your fiduciary posture. For example, now could be the right time to:

• Upgrade features and services: A new provider may offer better technology, improved communications tools, or enhanced services.
• Benchmark for competitiveness: Comparing fees and services against industry standards helps you ensure your plan is cost-effective and attractive to potential employees.
• Boost participant outcomes: By evaluating default investments, plan design, and education strategies, you can improve engagement and help employees achieve better retirement readiness.

Supporting your employees’ financial well-being means staying on top of your retirement plan responsibilities. But many businesses unintentionally miss key fiduciary duties.

Let’s Strengthen Your Retirement Plan

At ENB Wealth Solutions, our expert advisors are here to help you stay compliant, improve oversight, and deliver real value to your team. For example, we can help you benchmark fees and investments with unbiased tools, and provide dedicated support no matter who your recordkeeper is.

Explore ENB’s Retirement Plan Services and reach out to discuss your needs.

Investments are not FDIC insured, are not deposits or other obligations of the bank or guaranteed by the bank, involve risks, including possible loss of principal amount invested. Fees for ENB Wealth Solutions services are based on the degree of responsibility assumed by the department, the market value of the assets assigned to the account and the amount of income earned. In most cases, fees may be deductible for income or estate tax purposes. Speak with our wealth preservation experts for details.