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Administration June 1, 2026
Communication Liability Falls to the Plan Sponsor
Experts caution that while a vendor can prepare and distribute plan communications, the sponsor retains the fiduciary responsibility to ensure the accuracy of what is sent.
Reported by
Emily Boyle
Art by Mar Hernandez
Plan sponsors, be advised: Retaining a vendor to draft and disseminate plan communications is not a way to pass off fiduciary liability.
Whether a recordkeeper or a third-party administrator prepares disclosures for transmission to participants, experts say the plan sponsor’s final sign-off carries the most weight.
“On a certain level, it’s on the vendor to produce and disseminate [plan] communications,” says Michael Gorman, a partner in Morgan, Lewis & Bockius LLP. “But case law has taught there is an obligation for plan fiduciaries to ensure that their communications include all material information relevant to the plan and are not materially misleading.”
Common Arrangements
In the single-employer context, a recordkeeper or TPA is often hired to prepare and disseminate certain communications, Gorman explains. The employer then reviews the final communications to ensure they are accurate and contain the relevant material terms.
“Recordkeepers are not typically plan fiduciaries and will work hard in their contracts and service agreements to explicitly say they are not,” says Michael Francis, president of investment adviser firm Francis LLC.
Morgan Lewis’ Gorman says a vendor may explicitly take on fiduciary responsibility in a limited capacity, such as by serving as a 3(16) administrator, but doing so is rare.
In turn, Francis emphasizes that plan sponsors should understand that they, ultimately, have the responsibility to ensure participant communications are both accurate and complete. He says anyone who has control or authority over a plan or its administration is a fiduciary.
Inaccurate or incomplete communication can harm employees, Francis warns. If an employee is, in fact, harmed, they have an Employee Retirement Income Security Act-based right to claim damages from the fiduciary.
A plan sponsor’s “first line of defense” against liability for false or misleading communications can be that a communication is ministerial in nature, not fiduciary, Gorman explains, defining ministerial communications as those prepared by a party that has no discretion over a plan or its administration.
But the line between ministerial and fiduciary communications can blur due to the plan sponsor’s duty to ensure communications are accurate, Gorman says. Courts have not uniformly accepted the ministerial defense when communications have been misleading or failed to include material information for participants.
“Most problems occur where a nonfiduciary is communicating with participants in a manner that could be confusing at best, deceiving at worst,” Francis says.
A Unique Setup
Darbi Buchanan, director of 401(k) services at WorkSmart Systems Inc., explains that her company serves as both a professional employer organization and the sponsor of a multiple employer plan. WorkSmart administers a 401(k) MEP for about 10,000 employees spread across 290 employers. The firm does this in addition to providing other human resources, payroll and benefits-related services.
WorkSmart is responsible for preparing and distributing all participant notices and communications, Buchanan explains. The firm does not outsource any communication responsibilities to recordkeepers or TPAs.
“When a client chooses to join, their employees essentially look like ours,” Buchanan explains. She says choosing to take part in the retirement plan that WorkSmart offers is the only kind of fiduciary responsibility an individual employer maintains once the company joins the MEP.
Claire Rowland, a partner in Morgan Lewis, says that when an employer participates in a plan that is sponsored by a PEO, the employer has limited fiduciary responsibility.
But it’s important to understand that [liability is] not zero, Rowland says.”
Gorman explains that the participating employer would retain the duty to monitor its vendor selection—in this case, its selection of WorkSmart. The Department of Labor has maintained that no employer can completely outsource the duty to monitor.
A plan sponsor’s fiduciary framework is “not in a vacuum,” Rowland says. “The framework is a thoughtful and comprehensive approach to how the various disclosure requirements and other communications [can be] handled on a daily basis.”
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