When plan sponsors offer a 401(k) plan for their employees, they take on a fiduciary responsibility for the performance and welfare of the plan. They must act solely on behalf of plan participants and their beneficiaries, focusing only on providing the best possible benefits. This includes making sure that all fees associated with the plan are reasonable and transparent, so participants can see exactly how much they're paying and the services they're paying for.

They also must make sure that the investments in the 401(k) plan's portfolio are not only sound but diversified across asset classes and level of investment risk, and they must understand and follow the procedures laid out in the plan document. They may be held liable if they don't follow established procedures and principles, and they may be required to restore funds that are lost through their negligent or improper actions.

Hiring an investment advisor has been standard practice for defined benefit plans. Professionals manage a pool of assets with one goal in mind, and participants aren't really involved in the management. But under ERISA, being a plan fiduciary isn't just about the investments. It's about the plan document, compliance, diversification, and improving participation and employee balances.

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