Ordinary Days Can Bring Real Scares

Jan 26, 2026

If you’re like most retirement plan sponsors, your intentions are truly the best: helping employees save for retirement, while you save up too. You probably know you are a fiduciary under the high standards of ERISA, and do your best to lean into what that means. Nonetheless, you’re busy running your business and living life, and it’s pretty likely that you’re neglecting some important obligations. Most retirement plan sponsors end up forgetting something–and the problem is, those oversights are very likely to catch up and result in big scares–the legal kind–someday. Read on for the list of things you may be neglecting and advice about tackling it.

What’s Sneaking Up on You?

At the National Association of Plan Advisors, ERISA gurus Nevin Adams and Fred Reish point out: “There are lots of things that require the careful attention, selection and monitoring of plan assets and services by plan fiduciaries, advisors and plan sponsors alike. But there are some things that may sneak up on even the most attentive fiduciary.” True—and one thing that plan sponsors can lose sight of, is that even when contracting plan services out to others, the sponsor inherently retains fiduciary responsibilities. Afterall, you decided on the third parties right? You monitor them, right? You agreed to the fees, and you know and accept all the fees that are being paid by the plan, right? That’s exactly how the high standards of ERISA law work. According to Nevin and Fred, in addition to fees, other aspects of plan sponsorship that you may be neglecting include:

Your target-date fund glidepath(s): Is it “to” retirement or “through” retirement, is it appropriate for your participant base, and do THEY know what it is (particularly at the projected date of retirement)?
The degree of personalization in a “managed” account: How personalized is it, what data elements are considered, is the cost (relative to a target-date fund alternative) reasonable for the value provided, and who pays it? Is it structured as a qualified default investment alternative (QDIA)?
Cybersecurity: What provision(s) have your providers made in securing participant data (particularly in view of the sample questions provided by the Labor Department), and are you prepared to deal with those questions in a DOL audit?
Participants that leave their accounts “behind”: What procedures do you have in place to communicate with, and in some cases track down for distributing benefits? Are you able to appropriately track and administer required minimum distributions (RMD)?

Oversights are particularly frightening for retirement plan sponsors, because, as ERISA fiduciaries, we are obligated to be even more careful with the funds entrusted to us by employees than we are with our own money. As Steve Sansone of Sage View Advisory points out, even well-intentioned plan sponsors “can make mistakes that may result in costly consequences, such as increased plan expenses or potential legal liabilities.” Indeed, consequences of fiduciary liabilities can result in being held personally liable, as Nevin and Fred further underscore: “Plan fiduciaries are personally liable for the actions they take (or don’t) with regard to plan administration. Traditional organizational insurance policies don’t cover that, nor does the fiduciary bond required — what provision(s) have you made to insure against that possibility?”

If you face claims that you have failed in your responsibilities as a retirement plan sponsor, the only type of protection that shields you personally is Fiduciary Liability Insurance—-with it, you’ll be armed with coverage for defense and penalties. Without Fiduciary Liability Insurance, your personal assets are exposed. Colonial Surety Company offers an efficient and affordable Fiduciary+Cyber Liability Insurance bundle specifically to protect retirement plan sponsors.For a few dollars a day, you’ll be armed with:

$1,000,000 for Defense and Penalties if you are faced with alleged or actual breaches of fiduciary duty.
Cybersecurity Coverage for the business and plan, which addresses Department of Labor recommendations, and includes expert response services to curtail damage after an incident.

To make protection even easier for plan sponsors, Colonial Surety Company helps you add the Fiduciary+Cyber Liability Insurance to your ERISA Bond.

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Good To Know: Study Up and Make Corrections

Visit the National Association of Plan Advisors for a list of resources that Nevin Adams and Fred Reish suggest studying up on to prevent oversights related to target date funds, cybersecurity, “leave behinds” and more. Additionally, make use of the Voluntary Fiduciary Correction Program at the Employee Benefits Security Administration (EBSA) to proactively address compliance issues before they become bigger problems:

The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that allows plan officials to identify and fully correct certain transactions such as prohibited purchases, sales, and exchanges; improper loans; delinquent participant contributions; and improper plan expenses. The program includes 19 specific transactions and their acceptable means of correction, eligibility requirements, and application procedures. If an eligible party documents the acceptable correction of a specified transaction, EBSA will issue a no-action letter.

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