Your Responsibilities as a Retirement Plan Sponsor - Conway Center for Family Business

Your Responsibilities as a Retirement Plan Sponsor

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A recent study revealed that more than six in 10 U.S. households reported that they had employer-sponsored retirement plans – that is, they had assets in Defined Contribution (DC) plan accounts, were receiving or expecting to receive benefits from Defined Benefit (DB) plans, or both.*It’s no wonder there are strict laws governing retirement savings plans. 1

The rules that govern retirement plans and their sponsors are in place to protect investors – in this case, your employees and their retirement benefits. At Morgan Stanley, we can help you make sense of the rules that govern retirement savings plans so you can fulfill your responsibilities as a retirement plan sponsor.

Retirement plan regulations come from two primary sources: the Employee Retirement Income Security Act of 1974 (more commonly known as ERISA) and the Internal Revenue Code. ERISA provides the detailed federal statutory framework for employee benefit plans. The Internal Revenue Code governs the taxation of retirement plans and accounts, including 403(b) plans, 457 plans and IRAs. There are also regulations, notices, announcements and rulings that periodically come from the Employee Benefit Services Administration of the US Department of Labor (with respect to ERISA) and the Internal Revenue Service (with respect to the Code).


  • Of all the regulations, ERISA is given predominant attention because it spells out what you, as a fiduciary of your company’s retirement plan, must do. ERISA holds you accountable for the initial selection of investment alternatives made available to plan participants and for monitoring the performance of those investments.Among other things, ERISA requires that you:
  • Act solely in the interests of plan participants and their beneficiaries.
  • Act with the same care, skill, prudence and diligence that a prudent person who is familiar with such matters would utilize in similar circumstances.
  • Diversify the plan’s assets in a way that minimizes the risk of large losses.
  • Follow the plan documents unless they conflict with ERISA.
  • Avoid prohibited transactions involving the plan or its assets, as defined under ERISA and the Internal Revenue Code.If you breach any of your responsibilities, you can be personally liable to the plan for any losses. You’ll also be required to restore to the plan any profits you have made through the use of any plan assets. Plus, you can be held accountable for the imprudent actions of others if you knew about them and permitted them to occur. Finally, ERISA prohibits a number of transactions in order to prevent conflicts of interest between fiduciaries and the plan.


ERISA places a lot of weight on plan sponsors, but it also includes a provision that can provide some relief. By complying with Section 404(c) of ERISA, you can transfer investment allocation responsibilities to plan participants to help satisfy your fiduciary responsibilities. Here’s a general description of what you must do:

  • Give employees a broad selection of investment choices, including a core of at least three different investment alternatives that have different risk and return characteristics.
  • Allow employees to transfer account balances between investment alternatives and / or change investment direction at least once per quarter.
  • Provide employees with information about investing in general and the plan’s investment choices in particular to help them make informed investment decisions.
  • Provide the appropriate 404(c) disclosures. The participant must be furnished with an explanation that the plan is intended to comply with Section 404(c) under ERISA and that the fiduciaries of the plan may be relieved of liabilities for any losses that are the direct result of the investment instructions given by the participants.
  • Be aware that complying with 404(c) does not relieve the obligation to prudently select and monitor the plan’s investment options. This still remains a crucial fiduciary responsibility under ERISA.


In general, most senior executives involved in choosing and structuring their company’s retirement plan investments are considered fiduciaries. Once you cross into that territory, you can expose yourself to fiduciary liability and co-fiduciary liability under ERISA. When it comes to meeting your fiduciary responsibilities as a retirement plan sponsor, there are many considerations. Our team can help you make sense of it all. Morgan Stanley offers a broad range of investment choices and detailed performance reporting, as well as employee education and communications. We provide premium, personalized service to you, the fiduciary and plan sponsor. The Fortis Group at Morgan Stanley also offers asset allocation and investment guidance to your company’s employees through our dedicated team of financial professionals.

1 2017 Investment Company Fact Book-Investment Company Institute 2017 p. 138

If you’d like to learn more, please contact:

Pictured from left: Brian Moore, Financial Advisor; Howard Burnett, Financial Advisor; Laura LaMarca, Senior Registered Associate; Patrick Huang, Consulting Group Analyst; Tony Penzone, Financial Advisor; Kristen Ullman, Wealth Management Associate; Peter Risch, Financial Advisor; Erin Hackett, Financial Advisor; Jon Cleary, Financial Advisor; Jonathan Young, Financial Advisor; Angela Markowicz, Client Service Associate; Samantha Kinstle, Financial Advisor; Len Hibbard, Financial Advisor; Michael Beers, Financial Advisor

The Fortis Group at Morgan Stanley

Michael L. Beers
Senior Vice President
Financial Advisor
Corporate Retirement Director
4449 Easton Way, Suite 300
Columbus, OH 43212
(P) 614.269.3401


Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at . Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

Article by Morgan Stanley and provided courtesy of Michael Beers, Morgan Stanley Financial Advisor.

By providing this third party publication, we are not implying an affiliation, sponsorship, endorsement, approval, investigation, verification or monitoring by Morgan Stanley of any information contained in the publication.

Michael Beers may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation, in states where [he/she] is registered or excluded or exempted from registration, [insert URL like to FA website or FINRA Broker Check].

This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Morgan Stanley offers a wide array of brokerage and advisory services to its clients, each of which may create a different type of relationship with different obligations to you. Please consult with your Financial Advisor to understand these differences.

Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters.

Morgan Stanley Smith Barney LLC. Member SIPC.

CRC 2065248 (4/2018)  CRC 2348280 (exp 12/17/19)

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