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Business owners must tackle many important decisions when establishing a 401(k) plan for their employees. Many of these choices are unfamiliar, and perhaps the most pivotal is also the least understood — whether to be the plan’s trustee themselves (self-trusteed) or designate a corporate trustee, which could be directed or discretionary.

Since 401(k) plans originated in the Internal Revenue Code (IRC) in 1978, the vast majority have been self-trusteed plans, in which the plan owner or an internal committee assumes the role. Business owners were often told that the self-trusteed model is cheaper, easier and entails little risk.

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