Is Your Third Party Administration for Your 401(k) Plan a Trustee or Custodian?– July 01, 2020 by Beth Reho

Is your third party administrator (TPA) for your 401(k) plan a trustee or custodian? Do you know the difference? Often these words are used interchangeably but they mean something very different, and you should know the difference to ensure they are being represented properly in your plan documents and financial statements.

What Is a 401(k) Trustee?

The trustee (or trustees) of a plan is the individual that has the primary fiduciary responsibility to ensure the plan assets are being managed in the best interest of the participants and in line with the plan document. The trustee can be held personally liable for the misuse of plan asset.

>> Read “4 Questions Employee Benefit Plan Fiduciaries Should Know the Answer To” for additional insight on fiduciary responsibilities.

What Is a 401(k) Custodian?

On the other hand, a custodian of a plan is often hired by the trustee, to hold the investment assets and handles all the buying and selling of the assets. In many cases the custodian, who often is also the TPA of the plan, will also provide recordkeeping services, including investment options, contributions, distributions amounts and other plan provisions, as defined. The services provided by the custodian are typically documented in a service agreement between the plan administrator and the custodian; however, the trustee generally has control over what the custodian does and is responsible for their actions.

It is important to know your responsibilities for your plan, how your plan is written and ultimately how it is being presented to third parties through items such as financial statements. Take the time to read your documents and ensure your plan is being properly represented.

Contact Beth Reho at or a member of your service team to discuss this topic further.

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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.