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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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401(k) plan trustee change

originally posted: 10/9/2006  revised: 11/23/2010

Q: We used to have Paychex managing our 401(k) plan. Now Fidelity is taking over. In the new plan documents, we see Fidelity is the trustee. Is that O.K.?

A: This sounds normal; Fidelity is an excellent trustee. The important thing is just to make sure to add independent investment advice for plan participants from another source. This keeps the employer in compliance with 401(k) plan laws and prevent the employer from being responsible for any poor investment performance. Otherwise the employees have the right to hold the employer liable if Fidelity underperforms other investments.

Generally the rule is that the investment company (Fidelity) cannot provide independent advice regarding the merit of Fidelity products vs. other investment choices although the investment firms are lobbying hard to allow this integration of service. It is not in the best interest of the plan investors. If independent advice is missing, this should be added seperately.

Investment advice should be provided seperately from the other 401(k) plan services.

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