What is the role of the plan sponsor in a 401(k) plan?

The role of the plan sponsor in a 401(k) plan primarily involves managing the plan assets and ensuring compliance with applicable laws and regulations. This responsibility includes selecting and monitoring investment options, ensuring that the plan adheres to the Employee Retirement Income Security Act (ERISA) requirements, and fulfilling fiduciary duties to act in the best interest of the participants.

Plan sponsors, which are typically employers, must also ensure that the plan operates according to its terms and meets reporting and disclosure obligations. This entails coordinating with service providers, ensuring proper plan administration, and maintaining records that are required by law. The proper management and compliance oversight are crucial to protect the interests of participants and to avoid potential legal and financial liabilities.

The other options reflect responsibilities that do not align with the primary functions of a plan sponsor. Advising employees on personal finances is not a typical role of the sponsor, as it falls more within individual financial advising rather than the plan’s management. Marketing the plan to potential participants might be a consideration for recruitment, but it’s not the core function of the sponsor. Determining employee salaries is a separate function of human resources or management, not directly linked to the responsibilities of managing a 401(k) plan.