Business Owners & Plan Sponsors

What's actually at stake

Personal liability. ERISA fiduciary breach reaches the fiduciary individually, not just plan assets. The common exposure is not self-dealing — it is the absence of a documented, repeatable process for selecting and monitoring investments and service providers. The process is the defense, and it cannot be reconstructed later.

Late corrections cost more than early design. Failed testing, missed deferrals, late deposits, and eligibility errors are correctable, but cost and disclosure escalate the longer they run. A missed deferral found in three months and one found in three years are different bills.

Owner capacity that expires annually. If the design leaves the owner short — no safe harbor, an allocation formula that fights the census, no cash balance overlay where demographics support one — that capacity is gone. There is no catch-up for a year of plan design you did not have.

Fees compound, and the record shows it. Excessive-fee litigation has been the dominant ERISA theme for years. The question is rarely whether fees were high in the abstract — it is whether the fiduciary knew what was paid, to whom, and could show a comparison.

The exit. Owners planning a sale meet the plan late. Termination, merger, successor plan rules, vesting, and open corrections surface in diligence — and what surfaces there gets priced into the deal.

What we do for you

1. Plan design built backward from the owner's number. We start with what the owner needs out of the plan, then work back through the census. A safe harbor plan makes a required employer contribution — matching or nonelective — and in exchange is deemed to pass the ADP and ACP nondiscrimination tests, so highly compensated employees defer fully without refunds. A traditional plan skips that mandatory cost and lives with testing every year. The decision comes down to what the safe harbor contribution costs against the capacity it unlocks.

2. Cash balance overlays where the demographics support one. A cash balance plan is a defined-benefit plan that shows participants an account balance but is funded to an actuarial formula. Stacked on a 401(k) with profit sharing, it can move materially more into tax-deferred status for an older, higher-paid owner — and it creates a funding obligation that does not flex in a bad year. We model both, with the actuary rather than around them.

3. After-tax contributions and mega-backdoor Roth mechanics. The 415(c) annual additions limit — $72,000 for 2026 — caps deferrals, employer contributions, and after-tax contributions to one account. The elective deferral limit is $24,500. The space between can sometimes be filled with after-tax (non-Roth) contributions converted to Roth, by in-plan conversion or in-service distribution. Three things must be true: the document permits after-tax contributions, it permits conversion or withdrawal, and those amounts pass ACP testing — where owner-heavy plans fail. We confirm all three before calling it available.

4. Fiduciary role and process — 3(21) versus 3(38). A 3(21) investment adviser recommends; the sponsor keeps discretion and decides. A 3(38) investment manager takes discretion and the responsibility with it. Neither removes the sponsor's duty to select and monitor the fiduciary it hired. We help you decide which fits, then build what makes either defensible — an investment policy statement, a committee, scheduled meetings, minutes that exist before anyone asks.

5. Fee benchmarking and participant outcomes. We inventory what every party is paid — recordkeeping, administration, advisory, fund expense ratios, revenue sharing — and compare it to a peer set of similar size and headcount. The output is a written benchmarking file; whether fees change is a separate question from whether you can show you looked. On the participant side: automatic enrollment and escalation, default investment selection, scheduled education.

6. One plan for the owner, not two. The company plan is one line on the owner's balance sheet, next to the business, the real estate, and the taxable accounts. We coordinate them — including how a sale, a buyout, or a succession event moves the plan and the owner's tax picture in the same year.

How the relationship works

1. A conversation. Thirty minutes — the company, the headcount, the plan, what is bothering you about it.
2. Documents. Plan document and adoption agreement, three years of Form 5500, testing results, the 408(b)(2) fee disclosure, the census — read before we form a view.
3. Findings. What the plan does, what it costs, where the design leaves the owner short, where the fiduciary file has holes. Yours whether or not you engage us.
4. Implementation and review. The fiduciary role in writing, a meeting calendar, and both plans on one cycle. Custody sits at Schwab, Fidelity, or Raymond James.

Related guides

• Workplace Retirement & 401(k) Strategy — the full service description for sponsors.
• How much of my net worth should be in my employer's stock? — when the plan holds company stock, or the business is the concentration.
• Glossary — definitions for 3(21), 3(38), safe harbor, 415(c), and cash balance.

Talk to us

If you sponsor a plan and are not certain it does what you built it to do — for your employees or for you — book a 30-minute call. Bring the plan document and the last Form 5500 if handy, and we will tell you what we would look at first. It's a conversation, not a pitch.

Book a call →

Lake House Private Wealth Management — Yardley, PA. Independent fiduciary. A dba of MGO One Seven, LLC, an SEC-registered investment adviser. Recognized in USA TODAY Best Financial Advisory Firms 2026.