The recordkeeper is the retirement plan’s bookkeeper. It tracks who’s in the 401(k), what each person owns, what goes in each payroll, and what comes out in loans and distributions, and it runs the website employees log into.
The recordkeeper works from payroll data your company sends. It doesn’t decide who’s eligible, doesn’t set the retirement plan’s rules, and doesn’t carry your fiduciary duties.
The recordkeeper, the TPA, the custodian, and the trustee are four different jobs. One company can hold several of them, so ask which functions a provider has accepted in writing rather than going by its title
Standard recordkeeping isn’t a fiduciary role. The Department of Labor lists tasks like maintaining participant records, preparing benefit reports, and processing claims as ministerial. Hiring the recordkeeper and keeping an eye on it is a fiduciary act by your company.
Every 401(k) needs someone keeping the books. The recordkeeper has to know that an employee contributed $200 last Friday, that it bought a particular fund at a particular price, that she’s 60% vested in the company match, and that she took a $5,000 loan in March.
The recordkeeper is the provider your employees think of as “the 401(k) company,” because its name is on the account statements and on the site where employees check their balance and change what they’re contributing. What the recordkeeper handles and what it doesn’t is the first thing to get straight, because the gaps are where plan problems start.
The one-page card below shows where each job on a 401(k) usually sits, from posting contributions to filing the Form 5500.
Plan Sponsor Tool
Who Does What on Your 401(k)?
A one-page card showing where every job on a 401(k) usually sits, from posting contributions to filing the Form 5500, with a column for anything that works differently on your plan.
The recordkeeper maintains the retirement plan’s records at the employee level. Think of a ledger with a line for every employee in the 401(k): what they’ve put in, what the company has put in for them, what it’s invested in, what they own outright, and what has come out.
Nothing in ERISA defines the recordkeeper’s job. “Recordkeeper” is an industry title, not a legal one, which is part of why the role gets confused with the other providers on a retirement plan. What the law does define is who administers the plan, and that’s a separate question covered below.
What Does a 401(k) Recordkeeper Do?
The recordkeeper’s tasks fall into four groups.
Tracking money in. Each payroll, the recordkeeper takes the file your company sends and posts each person’s contributions to their account. It applies their investment elections and credits company contributions when those are funded.
Tracking money out. It processes distributions, rollovers, hardship withdrawals, and loans, including the repayment schedule that comes back through payroll.
Keeping employee records.
It maintains each person’s service and employment record and applies the eligibility and vesting rules in your plan document to the dates your company reports. It tells you who has become eligible and how much of the company’s money each person owns, working from the dates you send.
Statements, the website, and employee questions. It produces account statements, runs the enrollment site and the participant website, shows new hires how to enroll and pick a contribution rate and investments, and fields the calls. In a 401(k) where employees pick their own investments, each person also has to receive a quarterly statement showing the dollar amount of fees actually charged to their account. That obligation belongs to the plan administrator, and your service agreement says whether the recordkeeper prepares the statement.
What Does a Recordkeeper Not Do?
This is the part worth reading twice. Each of these sits with someone else.
Eligibility. Your plan document sets the rule. The recordkeeper applies it to the employment dates you send, so a wrong rehire date lets someone in too early or keeps them out when they should have been in.
Compensation. Your plan document says which pay counts toward contributions. If payroll calculates that pay differently, the contributions stay wrong until someone compares the payroll file to the plan document.
Plan design. The match formula, the vesting schedule, and the eligibility rules are the company’s decisions.
The investment menu. Choosing and monitoring the funds belongs to the company or to an investment fiduciary it hires. The recordkeeper makes the menu available on its platform and tracks what employees buy.
The money itself. The plan’s assets sit with a custodian and a trustee, covered in the next section.
Compliance. The yearly IRS tests, the Form 5500 filing, and any corrections belong to the plan administrator, or to a TPA the plan hires.
Depositing contributions. The company sends the money. The recordkeeper can only post what has arrived in the plan’s trust.
Recordkeeper vs. TPA: What’s the Difference?
Four jobs on a retirement plan get mixed up constantly, partly because one company can hold two or three of them.
Recordkeeper. Keeps the employee-level records described above. Call it when a balance looks wrong or an employee can’t get into the website.
Third-party administrator (TPA). Handles the technical compliance work: the yearly IRS tests, the Form 5500, and the plan document and its amendments. Call it when you’re changing the plan’s rules or a test came back failed.
Custodian. Holds the plan’s investments and settles the trades.
Trustee. Holds legal title to the plan’s assets. ERISA generally requires plan assets to be held in trust, with limited exceptions, so your plan has a trustee even when the name is buried in a service agreement.
In a bundled arrangement, one provider does the recordkeeping and the compliance work. In an unbundled arrangement, a recordkeeper and an independent TPA split it. Bundled means one phone number, one invoice, and fewer handoffs between companies when something needs fixing. Unbundled means you can replace one provider without moving the whole plan. Either way, the question is whether every job on the plan has someone’s name on it.
The risk isn’t a provider doing its job badly. It’s a job nobody realized was theirs. So ask which functions a provider has accepted in writing, not what it calls itself.
Is a 401(k) Recordkeeper a Fiduciary?
Usually not for the recordkeeping itself. Under ERISA, fiduciary status comes from what a provider actually does: holding discretionary authority over the retirement plan’s management or administration, controlling plan assets, or giving investment advice for a fee.
Routine recordkeeping doesn’t meet that test. The Department of Labor’s guidance says a person performing purely ministerial functions inside a framework of rules set by others isn’t a fiduciary, and its list of those functions names maintaining participants’ service and employment records, preparing reports about participants’ benefits, processing claims, and orienting new participants. That’s the recordkeeper’s job description.
Two things follow from that:
Choosing the recordkeeper is your fiduciary act.
The DOL calls selecting competent service providers one of a sponsor’s most important responsibilities, and it expects you to keep reviewing a provider’s performance after you hire it.
A provider can take on more than recordkeeping.
Your plan document names the retirement plan’s administrator, and if it doesn’t name anyone, that’s your company. Some providers accept a 3(16) plan administrator role or an investment fiduciary role in writing. That’s a separate agreement, not something recordkeeping includes.
What Does Your Recordkeeper Need From You?
The recordkeeper’s records are only as good as what arrives from your side. Every pay period it needs:
A payroll file with each person’s eligible compensation, calculated the way your plan document defines it, what they deferred, any loan repayments withheld, and hours worked if your plan counts them.
The contributions themselves. The DOL’s rule is that employee contributions go into the retirement plan as soon as they can reasonably be separated from company money. The outer limit is the 15th business day of the following month, and the IRS says plainly that this limit isn’t a safe harbor. Plans with fewer than 100 participants have an actual safe harbor at seven business days.
Employment changes: hires, terminations, rehires, leaves of absence, and anyone crossing into eligibility.
Once a year it also needs the payroll and ownership data behind the yearly IRS tests and the Form 5500, whether that work sits with the recordkeeper, a TPA, or both.
When data arrives wrong or money arrives late, fixing it falls to the company. Payroll integration sends the file automatically instead of someone building and uploading it each pay period, and it’s worth asking what your provider supports.
Can You Switch 401(k) Recordkeepers?
Yes. A conversion moves employee records and plan assets to the new recordkeeper, and it usually includes a stretch where employees can’t trade, take a loan, or request a distribution while their balances are in transit.
Run that stretch past three business days and it’s a blackout period, which means employees need written notice 30 to 60 days ahead. That obligation sits with the plan administrator, not with either recordkeeper, so put it on your own timeline rather than assuming the new provider handles it.
Put these to any recordkeeper you’re considering, and to the one you have. On the fee question, it helps to know how often to benchmark 401(k) fees before you ask.
Which functions are you accepting in writing, and which stay with us?
Are you acting as a fiduciary for any part of this, and for which part?
Does the compliance work sit with you, with a separate TPA, or both?
What does the retirement plan pay you, including anything you receive from the investments?
What does payroll have to send you, in what format, and how soon after each pay date?
Who confirms eligibility, and what happens when an employment date we send you is wrong?
If we leave, what does the conversion look like and how long is the blackout?
Before Your Next Payroll Cycle
The recordkeeper keeps your retirement plan’s books, and it does that from the payroll data your company sends. It doesn’t make your plan compliant, and it doesn’t carry your duties as the company sponsoring the plan.
Two jobs sit with you either way: picking the recordkeeper and monitoring it, and getting clean payroll data over on time.
Download the card to keep the full split on one page, and mark anything that works differently on your plan. To go through it with First Hill Trust, schedule a brief review here.
Plan Sponsor Tool
Who Does What on Your 401(k)?
A one-page card showing where every job on a 401(k) usually sits, from posting contributions to filing the Form 5500, with a column for anything that works differently on your plan.
It's the name on your employees' account statements and on the website they log in to. Your retirement plan's service agreements name it. If your plan is large enough to file Schedule C with its Form 5500, generally 100 or more participants, that schedule lists the providers paid $5,000 or more.
It depends on the recordkeeper and the retirement plan. The company can pay, or the plan can pay out of plan assets, though the plan can only cover its own reasonable expenses. Providers expecting at least $1,000 have to disclose their compensation to you in writing reasonably in advance of signing, including what they expect for recordkeeping specifically. If a provider offers recordkeeping without charging for it directly, it has to give you an estimate of what those services cost, since the money is coming from somewhere.
Yes. A bundled arrangement puts both with one provider. An unbundled arrangement splits them between two. Either works, as long as you know which company is doing what.
Either the recordkeeper or the TPA can prepare it. The obligation to file belongs to the plan administrator, which is your company unless your plan document names someone else, and the plan administrator is who signs it.
Sources
ERISA Sections 3(16)(A), 3(21)(A), and 403(a), 29 U.S.C. Sections 1002(16)(A), 1002(21)(A), and 1103(a)
Code of Federal Regulations, 29 CFR 2509.75-8, Questions and Answers Relating to Fiduciary Responsibility
Code of Federal Regulations, 29 CFR 2550.408b-2 and 2550.404a-5, Service Provider and Participant Disclosure
Code of Federal Regulations, 29 CFR 2520.101-3, Notice of Blackout Periods
Department of Labor, Tips for Selecting and Monitoring Service Providers for Your Employee Benefit Plan
Internal Revenue Service, 401(k) Plan Fix-It Guide: You Haven’t Timely Deposited Employee Elective Deferrals
Important Disclosures
First Hill Trust Company is a Washington State-chartered trust company. Investment advisory services are provided by BAC Capital Advisors, an SEC-registered investment adviser and a wholly owned subsidiary of First Hill Trust Company. Registration does not imply a certain level of skill or training. This article is educational. Neither First Hill Trust Company nor BAC Capital Advisors is acting as ERISA counsel or tax counsel to any plan or plan sponsor, and nothing here replaces advice from qualified counsel about your own plan.
Accuracy and currency. Statutory provisions and regulatory descriptions in this article were checked against the cited primary sources as of the date of publication, but First Hill Trust Company and BAC Capital Advisors make no representation or warranty as to the accuracy, completeness, or timeliness of the information, and accept no liability for actions taken in reliance on it. Regulations and guidance change. Confirm current requirements with qualified counsel.
Educational purpose only. Provided by First Hill Trust Company for general informational and educational purposes only. It is not legal, tax, accounting, investment, or fiduciary advice, does not constitute a recommendation regarding any plan, investment, strategy, or course of action, and does not consider any recipient’s specific circumstances. Consult your own qualified advisors before acting.
No offer, agreement, or commitment. Nothing in this material constitutes an offer, solicitation, agreement, or commitment to provide any particular service or to assume any particular responsibility. Descriptions of what a trustee, administrator, adviser, committee, employer, or other party “may” or “can” do are illustrative of how such arrangements commonly work and do not describe the terms of any specific engagement. The actual services provided, the allocation of responsibilities, the scope of any delegation, and the duties of any party are governed solely by the applicable plan documents, trust agreement, advisory agreement, and written service agreements. In the event of any inconsistency, those documents control.
Services and regulatory status. First Hill Trust Company and its affiliates offer retirement plan services, recordkeeping and administrative services, trust and fiduciary services, investment advisory services, and group benefits services, in each case subject to applicable regulatory requirements and the terms of the relevant agreements. Not all services are offered to all clients, in all states, or in all circumstances. Investment advisory services are offered through an affiliated investment adviser; a copy of its Form ADV Part 2A is available upon request. Insurance and group benefits products are offered through appropriately licensed entities. The availability and scope of any service depend on eligibility and the applicable agreements.
Fiduciary status under ERISA. Fiduciary status under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is determined based on the functions performed and the authority exercised, not on titles or labels. Whether any particular party is acting as a fiduciary, and the scope of any related duties or potential liability, depends on the facts and circumstances specific to the plan and the relationship. Engaging a trustee, adviser, or other service provider does not eliminate a plan sponsor’s or committee’s own fiduciary responsibilities, including the duties to prudently select and monitor any party to whom responsibilities are delegated.
Affiliated entities and conflicts of interest. First Hill Trust Company is affiliated with other entities, including an affiliated investment adviser and entities providing administrative, trust, or other services. These relationships may create conflicts of interest, including where an affiliate is engaged or compensated in connection with a plan. Such conflicts and compensation are described in the applicable service agreements and the affiliated adviser’s Form ADV Part 2A; fiduciaries should consider them when evaluating any engagement.
Statutory and regulatory references. References to ERISA, the Internal Revenue Code, and related statutory or regulatory provisions are general summaries only. They are not a substitute for review of the actual statutory text, regulations, or guidance from the Department of Labor, Internal Revenue Service, or other relevant authorities, and they do not address how those provisions may apply to any particular plan, sponsor, fiduciary, or individual. Laws, regulations, and guidance are subject to change and to interpretation by the relevant agencies and courts. Examples, categories, and situations described are simplified for illustration and may not reflect the requirements or circumstances of any particular plan or person.
No guarantee of results; investment risk. References to governance, fiduciary practices, risk reduction, or outcomes describe common industry approaches and potential benefits, not promises or guarantees of any result, of compliance, or of protection from liability, loss, or claims. All investing involves risk, including possible loss of principal; diversification does not ensure a profit or protect against loss. Past performance does not guarantee future results. For more information, contact First Hill Trust Company at (206) 625-1800.
A safe harbor 401(k) requires the company to contribute and skips the yearly ADP test. A traditional 401(k) leaves contributions optional and has to pass it. Here’s what each one requires.
Every retirement plan has a plan administrator. If your plan document does not name one, the job falls to you. Here is what the role covers and what a 3(16) provider can actually take off your hands.
Understand what forfeitures are, the three things your plan can do with them, when they have to be used, and who at your organization has to make that decision.
What the law actually asks of your committee on fee benchmarking, where the three-to-five-year figure everyone repeats came from, and how to set a cadence you can defend.
