Who Administers a 401(k)?

A 401(k) plan Administrator will usually be an officer of the Employer sponsoring the plan.

A 401(k) plan document will specify who is the Administrator of the plan, but it is generally an executive or officer of the company sponsoring the plan. 401(k)s can be sold in packages that are essentially the same from employer to employer.

When the design is well-established, and there are systems in place to enroll employees and maintain the plan, such as an employee website, a company’s CFO or human resources department chair may wear the Administrator hat. Some plans require a special administrator, and this may be a requirement of the broker-dealer acting as Custodian, especially if the plan has been designed from an open architecture, and there are many moving parts.

The calculation of contribution limits for highly compensated employees (HCEs), adherence to the rules and regulations, keeping up with the vested amounts and loans outstanding for each employee, all fall within the realm of Administrator responsibilities, and are usually very involved.

In addition, the IRS requires the employer to file many various reporting forms. The services of a third party administrator (TPA) may cost a few thousand dollars a year, so an employer must weight that cost against the benefits of customizing their 401(k).