The trustee of a plan is a very important role, both at Guideline and under the law. At Guideline there are several collaborator roles to help with plan administration within your company, but the trustee role holds the highest level of access. This individual is, ultimately, responsible for the plan at the company and serves as the main plan fiduciary.
Under the law, the plan trustee has personal liability for all aspects of plan operation. While the trustee can delegate away some responsibilities, appointing Guideline as the investment fiduciary for example, they always maintain the duty to monitor those they have appointed.
Due to the responsibilities of the plan trustee, there are certain requirements and recommendations for the individual who will hold this role.
Eligibility for a plan trustee
Must be an individual
Because of the personal liability under the law and access role at Guideline, the trustee must be an individual. You cannot name a role or job title (e.g., CEO, president, director of HR) as the trustee.
Guideline does not allow for directed or corporate trustees.
Role within the company
Typically, the trustee is going to be an employee of your company although they do not have to be a participant in the plan. Because they have full discretionary control over the plan, the trustee is generally someone with a significant role at the company, such as the owner, CEO, or other equivalent. Anyone who is appointed trustee should be made well aware of the responsibilities.
Foreign (non-US based) trustees are not allowed for 401(k) plans. If a plan appoints a trustee based outside of the US, the plan would become disqualified. Therefore, it is recommended that foreign companies with US offices interested in starting a Guideline plan, name an individual in the US as trustee.
In the event there is no US-based representative who can take on this role, foreign companies can contract with a third party to take on the role of plan trustee. Please note, Guideline does not aid in securing legal assistance, nor do we cover any associated fees.
How do I change the trustee?
If you need to change the trustee due to the requirements or for any other reason, Guideline will need an executed Trustee Change Packet to appoint a new individual. For additional details, please view our Trustee Change Packet FAQ.