Many plan sponsors assume that because Empower runs the 401(k), Empower is also watching the fees and the fund lineup. That is not necessarily true. The fiduciary oversight remains with you, the employer, and ERISA can hold you personally liable.
What Empower Does and What the Plan Sponsor Must Do
Plan sponsors using Empower frequently misunderstand the division of labor. Empower is a recordkeeper. Recordkeepers handle administration, custody, statements, and participant services. They are not, typically, fiduciaries to the plan. The named plan fiduciary is the plan sponsor: the company, and by extension the officers and committee members who make plan decisions.
Under ERISA Section 404(a), plan fiduciaries owe duties of loyalty and prudence to participants. Loyalty means acting solely in the interest of participants and beneficiaries. Prudence means making decisions with the care, skill, and diligence that a knowledgeable person would use under the circumstances. Those duties apply to fee monitoring, investment menu selection, vendor oversight, and process documentation.
Empower will provide reports, fund lineups, and participant materials. Empower will not tell the plan sponsor whether the fees are reasonable, whether the investment menu is competitive, or whether the share classes available are the lowest-cost options for the plan’s size. Those judgments are the sponsor’s to make, and the sponsor is the one ERISA holds responsible if they are not made well.
The Four Fiduciary Duties That Apply to Every Empower Plan
Plan sponsors who run a fiduciary process in good faith focus on four duties. Each one is well-established in ERISA case law and Department of Labor guidance, and each one creates documented evidence that the sponsor takes its obligations seriously.
Duty 1: Monitor Plan Fees on a Regular Schedule
Plan fees include recordkeeping fees paid to Empower, advisory fees if any, and investment expense ratios charged inside the funds. The fiduciary question is not whether fees exist. They always do. The question is whether the total cost is reasonable for the size and complexity of the plan, and whether the plan is paying for services it actually receives.
A formal benchmarking process every two to three years, with documented results, has historically been the standard the Department of Labor has expected. Plans that cannot produce evidence of fee benchmarking when audited have faced significant fiduciary breach exposure.
Duty 2: Review the Investment Menu Using Prudent Criteria
The funds offered to participants must be selected and monitored against documented criteria: long-term performance versus benchmarks, expense ratios, manager tenure, fund size, and consistency of approach. Sponsors using Empower’s default lineup without independent review are accepting whatever menu Empower has assembled, which may or may not reflect the best interests of the plan’s participants.
An Investment Policy Statement documents the criteria the committee will use to evaluate funds, the benchmarks against which performance will be measured, and the process for replacing underperforming options. Plans without an IPS are operating without a written standard, which makes prudence harder to demonstrate if challenged.
Duty 3: Hold and Document Committee Meetings
The plan committee should meet on a regular schedule, typically quarterly or semiannually, with formal agendas and meeting minutes. The minutes should capture what was reviewed, what was decided, and the reasoning behind the decisions. Meeting minutes are the single most important fiduciary documentation a plan sponsor can produce, and they are routinely the first thing requested in a Department of Labor inquiry.
Duty 4: Avoid Prohibited Transactions and Conflicts of Interest
ERISA prohibits self-dealing and transactions between the plan and parties in interest. For Empower plans, this most often surfaces around revenue sharing arrangements, where some funds in the menu pay back a portion of their expense ratios to offset recordkeeping fees. Revenue sharing is not inherently prohibited, but it must be disclosed, evaluated, and documented as part of the total cost picture.
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What Does Fiduciary Liability Look Like for an Empower Plan Sponsor?
Fiduciary liability for an Empower plan sponsor means personal financial exposure when participants can show losses result from a breach of duty. Empower 401(k) plan sponsor liability runs to officers and committee members individually, and ERISA imposes joint and several liability across every fiduciary on the plan.
The most common claims involve fees that were not benchmarked and turned out to be excessive, fund lineups that included high-cost share classes when lower-cost versions were available, and lapses in process that left the plan unable to demonstrate it had ever evaluated its arrangements. Joint and several liability means each fiduciary can be held responsible for the full amount of the loss, regardless of how blame is allocated among them. Settlements in 401(k) fee litigation have ranged from low six figures to nine figures, with mid-size and large plans being the most frequent targets. Smaller plans are not immune. Department of Labor enforcement actions and Empower 401(k) ERISA compliance reviews reach plans of every size.
The defense, when it works, is process. Sponsors who can produce minutes showing a committee that met, benchmarked fees, evaluated investment options against documented criteria, and made changes when the data warranted them generally fare better in litigation and audits than sponsors who relied on Empower’s defaults and assumed the recordkeeper had everything covered.
How Does an Independent Fiduciary Advisor Change the Picture?
An independent fiduciary advisor changes the picture by adding a co-fiduciary who is contractually obligated to act in the plan’s best interests, who has investment management credentials the typical HR director does not, and who runs the documented process the plan sponsor would otherwise have to build from scratch. The plan sponsor remains the named fiduciary. The advisor reduces the sponsor’s exposure by carrying explicit fiduciary status alongside the sponsor and bringing the expertise the prudent person standard expects.
An independent advisor serving as the plan’s investment fiduciary, often as a 3(21) or 3(38) fiduciary under ERISA, takes on documented responsibility for fund selection, monitoring, and replacement decisions. A 3(21) advisor co-fiduciaries with the sponsor: recommendations are made and the sponsor signs off. A 3(38) advisor takes discretion over investment decisions: the advisor decides and the sponsor delegates that authority away in writing.
For plans on the Empower platform, this is structurally compatible. Empower remains the recordkeeper. The independent advisor sits alongside Empower as the plan’s investment fiduciary, runs the benchmarking and review process, and shares fiduciary status with the sponsor. Working with a fiduciary committed to workplace retirement plan optimization means the prudent process is already built and being executed every quarter, not assembled from memory the first time the Department of Labor asks for it.
Empower 401(k) Fiduciary Oversight Checklist for Plan Sponsors
The following items represent the documented fiduciary process that has historically held up well under Department of Labor inquiries and participant litigation. None of them is exotic. Each one is the kind of routine governance that a knowledgeable fiduciary would recognize as the prudent person standard in practice.
- Written plan committee charter. Names the committee members, defines their authority, and establishes meeting frequency.
- Investment Policy Statement. Documents the criteria for selecting, monitoring, and replacing investments in the plan.
- Annual fee benchmarking. Compares Empower’s pricing and service to peer recordkeepers using independent data.
- Quarterly investment review. Evaluates each fund against its benchmark and the IPS criteria, with results captured in committee minutes.
- 408(b)(2) fee disclosure review. Confirms recordkeeper fees and revenue sharing match actual amounts paid through the plan.
- Participant fee disclosure verification. Confirms that 404(a)(5) participant disclosures are accurate and delivered on time.
- ERISA fidelity bond. Protects plan assets at the required level (10% of plan assets, with statutory minimum and maximum).
- Fiduciary liability insurance. Protects fiduciaries personally and is reviewed annually for coverage adequacy. Distinct from the fidelity bond, which protects the plan, not the fiduciaries.
- Documented committee meeting minutes. Capture decisions, the data reviewed, and the reasoning behind each decision.
- Independent advisor or fiduciary co-source. Provides the credentials and process discipline the prudent person standard expects.
Plans that maintain this checklist are not immune to challenge. They are, however, in a meaningfully stronger position when one arrives. The Preserve. Strengthen. Grow.™ philosophy applies as cleanly to fiduciary process as it does to portfolio construction: build the discipline before you need it, strengthen it through documented use, and let the protection compound over time.
Working the Empower Platform with a Fiduciary Partner
Plan sponsors who decide their fiduciary oversight needs upgrading have two practical paths. The first is to leave Empower and move to a different recordkeeper. This is sometimes the right answer, particularly when the fee structure is fundamentally uncompetitive or service quality has deteriorated. The second is to keep Empower as the recordkeeper and add an independent fiduciary advisor to handle the oversight functions Empower does not provide. For many plans where the recordkeeper service is adequate and the issue is the absence of an independent fiduciary running the process, the second path solves the problem more efficiently.
An independent advisor serving as broker of record on the plan can run the fee benchmarking, lead the investment review, prepare the committee meeting agendas, draft and update the Investment Policy Statement, and produce the documentation that demonstrates a prudent process. The Empower plan fiduciary advisor’s fee is paid from the plan or by the sponsor, and is itself subject to the same reasonableness analysis as any other plan expense. A fiduciary process that includes tax-efficient investment selection and disciplined portfolio construction at the fund-menu level translates directly into better participant outcomes, which is, ultimately, the entire point of the fiduciary duty.
Empower supports self-directed brokerage account access through Schwab as a platform capability. Whether a specific plan offers SDBA to participants is a plan sponsor decision, governed by the plan document and the sponsor’s fiduciary review process. For plans that do offer it, qualifying high-balance participants can access individually managed accounts through Schwab without rolling assets out of the plan. This is a downstream benefit, not a primary reason to engage a fiduciary advisor. The fiduciary work stands on its own. Plan sponsors evaluating their oversight should also review their broader 401k and workplace plan strategy, including how decisions made today shape participant options at retirement and how the plan compares to alternatives covered in 401k rollover strategy when participants eventually leave the company.
Frequently Asked Questions About Empower 401(k) Fiduciary Oversight
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Is Empower a Fiduciary on My 401(k) Plan?
Typically, Empower acts as recordkeeper, not as plan fiduciary. Empower processes contributions, maintains records, and provides participant services. The fiduciary duty to monitor fees, evaluate investments, and act in participants’ best interests stays with the plan sponsor unless a separate fiduciary services agreement has been signed.
Who Is the Named Fiduciary on an Empower 401(k) Plan?
The named fiduciary is identified in the plan document and is typically the plan sponsor, meaning the company itself. Officers, directors, and committee members who exercise authority over plan decisions are also fiduciaries by function, even when not formally named, because ERISA defines fiduciary status by the activities a person performs rather than by title.
What Is the Difference Between a 3(21) and a 3(38) Fiduciary Advisor?
A 3(21) advisor co-fiduciaries with the plan sponsor: the advisor recommends investment decisions and the sponsor retains discretion to accept or reject them. A 3(38) advisor takes investment discretion under written delegation: the advisor decides which funds to add and remove, and the sponsor delegates that authority. A 3(38) arrangement transfers more fiduciary responsibility for investment decisions to the advisor.
How Often Should Plan Sponsors Benchmark Empower’s Fees?
The Department of Labor has historically expected formal benchmarking every two to three years, with documented results retained in committee files. Annual review of the 408(b)(2) fee disclosure is also expected, even in non-benchmarking years. Plans that cannot produce evidence of fee benchmarking when audited have faced fiduciary breach exposure.
Does an Investment Policy Statement Protect Plan Fiduciaries?
An Investment Policy Statement does not provide automatic legal protection, but it documents the standards the plan committee uses to make decisions and demonstrates a prudent process is in place. Courts and regulators tend to view plans with a written, current, and consistently followed IPS more favorably than plans operating without one. The protection comes from following the IPS, not just having one on file.
Can Plan Sponsors Be Personally Liable for Empower 401(k) Fiduciary Breaches?
ERISA imposes personal liability on plan fiduciaries, including officers, directors, and committee members who exercise authority over plan decisions. Liability runs to individuals, not just to the company, and ERISA’s joint and several liability rules can hold any one fiduciary responsible for the full amount of a loss. Fiduciary liability insurance is distinct from the ERISA fidelity bond and is worth reviewing annually.
What Documentation Should Plan Committees Keep?
The core documentation includes the plan document, plan committee charter, current Investment Policy Statement, meeting minutes for every committee meeting, fund performance reports reviewed in each meeting, fee benchmarking studies, the 408(b)(2) and 404(a)(5) fee disclosures, the ERISA fidelity bond, and any fiduciary services agreements with outside advisors. Meeting minutes are routinely the first item requested in a Department of Labor inquiry. Plan sponsors interested in deeper context can review our guide to workplace retirement plan optimization.
Does Adding a Fiduciary Advisor Mean Leaving Empower?
Adding a fiduciary advisor does not require leaving Empower. The advisor sits alongside Empower as the plan’s investment fiduciary while Empower continues as recordkeeper. This separation is the standard structure for many mid-size and large plans and is fully compatible with the Empower platform. The advisor handles the oversight functions Empower does not provide, and the recordkeeping continues without disruption. You can also read more in our 401(k) Fiduciary Oversight guide.