What is the difference between 3(38) and 3(21) fiduciary?

A 3(38) investment manager takes discretionary authority over the plan's investment lineup — selecting, monitoring, and replacing funds — and assumes legal responsibility for those decisions. A 3(21) co-fiduciary recommends but does not decide; the plan sponsor retains discretion. 3(38) reduces sponsor workload and shifts more investment liability to the advisor. 3(21) keeps decision authority with the sponsor.

401(k) Advisory for Overland Park Businesses | Blue Valley Wealth Management

For Overland Park business owners and 401(k) plan sponsors

401(k) Advisory for Overland Park Businesses

Q: What does ERISA Section 408(b)(2) require of plan sponsors?

ERISA 408(b)(2) requires plan service providers to disclose, in writing, the services they provide and the direct and indirect compensation they receive. Plan sponsors then have a fiduciary duty to determine whether the fees are reasonable for the services rendered. Reasonableness is documented through benchmarking — not assumed.

Q: Is a safe harbor 401(k) plan worth the employer contribution?

A safe harbor 401(k) under IRC 401(k)(12) or (13) bypasses ADP and ACP nondiscrimination tests in exchange for either a matching or non-elective employer contribution that vests immediately, with limited exceptions. Safe harbor often makes sense when owners or highly compensated employees want to defer the full IRC 402(g) limit and the plan would otherwise fail testing. The math depends on payroll structure.

Q: How much does 401(k) advisory cost?

Fees vary by plan size, scope of services, and fiduciary status (3(38) vs 3(21)). Common structures include a flat annual fee, a per-participant fee, or basis-point fees on plan assets. Engagement terms are documented in a written services agreement and disclosed under ERISA 408(b)(2).

Plan design, fiduciary structure, investment selection, fee benchmarking, and participant outcomes, coordinated under one engagement. Blue Valley Wealth Management serves closely held employers across the Kansas City metro.

Schedule a plan review

What 401(k) plan advisory covers

A 401(k) plan advisor helps a sponsor design and oversee a qualified retirement plan under ERISA: plan design, investment oversight under § 404(a), fiduciary support as a 3(21) investment co-fiduciary, fee benchmarking under § 408(b)(2), and Form 5500 coordination.

Four priorities for plan sponsors

Every 401(k) engagement comes back to these four. Each one is fiduciary exposure when it goes undocumented, and a defensible decision when it doesn't.

PRIORITY 01

Fiduciary structure

As a 3(21) investment co-fiduciary, we provide investment recommendations and a documented oversight process while the sponsor retains decision authority under shared fiduciary status. 3(16) covers plan administration, typically handled by the TPA. How responsibilities are divided depends on bandwidth, risk tolerance, and TPA scope.

PRIORITY 02

Plan design

Eligibility, vesting, match formulas, profit sharing, safe harbor, and auto-enrollment. Design drives participation, owner deferral capacity, and nondiscrimination test outcomes.

PRIORITY 03

Investments & fees

A defensible lineup, a Qualified Default Investment Alternative, and a written Investment Policy Statement. Recordkeeper, investment, and advisory fees are benchmarked separately and documented annually, never assumed reasonable.

PRIORITY 04

Compliance & outcomes

Form 5500 filing, the 100-participant-with-balances audit threshold under the rules effective for plan years beginning in 2023, nondiscrimination testing, and, under current law, SECURE 2.0 deadlines phasing in through 2027. Participation, deferral rates, and retirement-readiness metrics are reviewed annually.

How we approach plan engagements

Coordinated wealth planning for Kansas City business owners, ESOP participants, and families. The plan is one piece of an integrated picture, not a box to check.

What we focus on

A documented fiduciary process you can show in a DOL audit
Plan design tied to your business objectives, not a vendor template
Annual benchmarking across recordkeeper, investments, and advisory fees
Participant-level planning for owners and key employees
Coordination of the plan alongside compensation, equity, and personal planning

What we don't do

Sell plan documents without ongoing fiduciary oversight
Reshuffle the lineup chasing trailing performance
Treat the 401(k) as a stand-alone product placement
Accept compensation structures that conflict with the plan's interest

How an engagement works

Four phases. Each one produces written output the plan committee can review.

Discovery

Review of plan documents, the most recent Form 5500, vendor agreements, and the current investment lineup. We document where the plan stands today.

Diagnostic

Fee benchmark across recordkeeper, investments, and advisory. Fiduciary file review. Plan design and compliance gap analysis. Findings are written up.

Proposal

Specific recommendations on fiduciary structure, investment lineup, plan design changes, and engagement fees. The sponsor decides what to act on.

Ongoing oversight

Quarterly investment reviews, annual benchmarking, Form 5500 prep coordinated with the TPA, and a fiduciary file that travels with the plan.

Frequently asked questions

The questions plan sponsors ask most often, answered straight.

What does a 3(21) investment co-fiduciary do?

A 3(21) investment co-fiduciary provides investment advice and recommendations to the plan sponsor, helping select and monitor the investment lineup and maintaining a documented fiduciary process, while the sponsor retains discretion over final investment decisions. This shared fiduciary structure keeps decision authority with the sponsor, supported by professional guidance and documentation the plan committee can show in a DOL audit.

When does a 401(k) plan require an annual audit?

Plans with 100 or more participants with account balances at the start of the plan year are generally required to file Form 5500 with an audited financial statement. The participant-count rule changed for plan years beginning in 2023: only participants with balances count, which moved some plans out of audit status. The TPA confirms the count each year.

What does ERISA § 408(b)(2) require of plan sponsors?

ERISA § 408(b)(2) requires plan service providers to disclose, in writing, the services they provide and the direct and indirect compensation they receive. Plan sponsors then have a fiduciary duty to determine whether the fees are reasonable for the services rendered. Reasonableness is documented through benchmarking, not assumed.

What is a Qualified Default Investment Alternative (QDIA)?

A QDIA is the investment where participant contributions default if the participant has not made an election. Under DOL regulation 2550.404c-5, plan sponsors who select a QDIA meeting the regulation's requirements (typically a target-date fund, a balanced fund, or a managed account) gain fiduciary protection for those defaulted balances.

Is a safe harbor 401(k) plan worth the employer contribution?

A safe harbor 401(k) under IRC § 401(k)(12) or (13) bypasses ADP and ACP nondiscrimination tests in exchange for either a matching or non-elective employer contribution that vests immediately, with limited exceptions. Safe harbor often makes sense when owners or highly compensated employees want to defer the full IRC § 402(g) limit and the plan would otherwise fail testing. The math depends on payroll structure.

How much does 401(k) advisory cost?

Fees vary by plan size and scope of services. Common structures include a flat annual fee, a per-participant fee, or basis-point fees on plan assets. Engagement terms are documented in a written services agreement and disclosed under ERISA § 408(b)(2).

What is Form 5500 and when is it due?

Form 5500 is the annual return jointly required by the DOL, IRS, and PBGC for most ERISA-covered retirement plans. Under current law it is generally due seven months after the plan year ends (July 31 for calendar-year plans), with a two-and-a-half-month extension available via Form 5558. Small plans (under 100 participants with balances) may file the simplified Form 5500-SF.

How does SECURE 2.0 affect small business 401(k) plans?

SECURE 2.0, enacted December 2022, expanded retirement plan rules across multiple provisions phasing in through 2027. Items affecting small employers include automatic enrollment requirements for new plans (§ 101), expanded startup tax credits (§ 102), Roth catch-up treatment for high earners (§ 603), and the student loan match provision (§ 110). Under current law, applicability depends on plan adoption date and employer size.

Look under the hood of your plan.

A 30-minute conversation tells you whether your current advisor, recordkeeper, and lineup are still the right fit for the plan.

Schedule a 401(k) review