What does a complete 401(k) proposal include?
A complete proposal identifies who holds each fiduciary role, states clearly what is included versus charged separately, discloses all fees including participant transaction fees, addresses controlled group provisions for franchise operators, explains what happens during a provider transfer, and documents the governance and compliance process the plan sponsor can rely on.
What is a 3(38) investment fiduciary and why does it matter?
A 3(38) investment fiduciary has full discretionary authority to select, monitor, and replace plan investments. When a 3(38) is in place, the plan sponsor's investment selection liability shifts to the advisor. This does not eliminate the sponsor's fiduciary status — the sponsor retains the duty to prudently select and monitor the appointed fiduciary. This is one of the highest levels of investment protection available to a plan sponsor under ERISA.
What is a 3(16) plan administrator and what does it cover?
A 3(16) plan administrator takes on the day-to-day fiduciary responsibilities of plan administration — eligibility determinations, enrollment processing, required notices, compliance monitoring, and government filings. When a 3(16) is engaged, those operational duties and the associated liability shift to the 3(16). The sponsor is not relieved of fiduciary status and retains the duty to select and monitor the 3(16) prudently.
What does audit-ready governance mean for a plan sponsor?
Audit-ready governance means the plan has documented processes, signed agreements, and organized records that demonstrate a prudent fiduciary process was followed. In the event of a DOL audit or participant complaint, the plan sponsor can show that every decision was made with appropriate care, documented at the time, and followed the plan's written procedures.
What is an Investment Policy Statement?
An Investment Policy Statement (IPS) is a written document that defines the process for selecting, monitoring, and replacing plan investments. It is the foundation of a defensible investment governance structure. Without an IPS, a plan sponsor has no documented framework to show regulators or courts that investment decisions were made prudently.
How does a franchise 401(k) reduce fiduciary liability for the business owner?
By engaging a 3(38) investment fiduciary and a 3(16) plan administrator, the business owner delegates the two largest categories of fiduciary responsibility to qualified professionals. Combined with a written IPS, documented compliance process, and continuous monitoring, this gives the owner defensible, audit-ready protection.
What fiduciary responsibilities does a plan sponsor retain?
Even with a 3(38) and 3(16) in place, the plan sponsor retains the duty to prudently select and monitor those service providers, ensure fees remain reasonable, follow the plan document, and deposit contributions timely. We support that ongoing monitoring obligation with documentation, so the sponsor's remaining duties are also covered by a defensible process.
What is ERISA and why does it apply to franchise owners?
ERISA — the Employee Retirement Income Security Act — governs employer-sponsored retirement plans and establishes fiduciary standards for anyone who exercises authority over plan assets or administration. Franchise owners who sponsor a 401(k) plan are ERISA fiduciaries by function, regardless of title, and are personally liable for fiduciary breaches.
What is nondiscrimination testing and who handles it?
Nondiscrimination testing — including ADP, ACP, and top-heavy tests — ensures the plan does not disproportionately benefit highly compensated or key employees. With franchise401kplans.com, testing is automated and continuous, not billed annually by a separate TPA. Issues are caught and corrected early, before they become violations. See the
controlled groups page for how this applies across multiple franchise entities.
What should I bring to a plan review consultation?
Bring whatever you have — a current provider proposal, a renewal quote, your plan's 408(b)(2) fee disclosure, or just the name of your provider. We can work from any starting point. Many reviews take one 30-minute call and result in a clear picture of what your plan is and isn't providing.
Do you complete IRS Form 8881 for SECURE 2.0 tax credits?
Yes. When we set up your plan, our team completes IRS Form 8881 on your behalf to ensure the SECURE 2.0 startup costs, employer contributions, and auto-enrollment credits are actually claimed. Many businesses miss these credits simply because no one prepares the form. See the full breakdown on the
tax credits page.
Should a 401(k) proposal address profit sharing and cash balance modeling?
Yes. A complete proposal should say explicitly whether the advisor models a coordinated
Profit Sharing and Cash Balance stack for the owner and key employees, not just a basic 401(k). This is one of the clearest signals of whether a provider is offering a bundled product or genuine advisory planning — many bundled proposals never mention it at all.
